The retail industry in the UK, as a relatively mature and oligopolistic sector, can be characterised by overcapacity, price-driven marketing, and a high concentration of firms (Morschett, Swoboda, & Schramm-Klein, 2005, p. 275). WH Smith has a history of over 200 years of development dating back to 1792 (Figure 6, Appendix). However, WH Smith is one of Britain’s leading retailers of today and known for its chain of High Street stores, travel outlets at airports, train stations, motorway service areas, hospitals, workplaces and bus stations selling books, stationery, magazines, newspapers, and entertainment products (WH Smith, 2009a). Most of WH Smith’s business outside the UK (United States, Canada, Australia, New Zealand, Hong Kong and Singapore) was subsequently sold as financial targets were not met. For the year of 2010, WH Smith is planning to expand its business to non-European markets (i.e. India), were it plans to open six outlet stores at the Delphi airport in 2010 (WH Smith, 2009b).
This paper offers a case study of the UK retailer WH Smith. With regard to the structure of this essay, initially a short company overview will highlight WH Smith’s areas of operations. Thereafter, the company’s internal capabilities and its external environment will be examined in chapters two and three, respectively. This will then give the foundation for a substantial analysis of WH Smith’s positioning strategy. Recommendations on how to ameliorate the company’s strategy will be presented in chapter five. Finally, in a retrospective analysis of this paper the findings on the strategic development of WH Smith will be summarised and an outlook will be given in the concluding chapter six.
Table of Contents
1 Introduction
2 Analysis of WH Smith’s Internal Capabilities
3 Analysis of WH Smith’s Environment
4 WH Smith’s Positioning Strategy
4.1 Segmentation, Targeting and Positioning (STP)
4.2 Marketing Mix
4.3 Generic Strategy evaluation
5 Recommendations for Improving WH Smith’s Strategy
6 Conclusion
7 Reference List
Objectives and Topics
The primary objective of this case study is to provide a comprehensive analysis of the retail strategy of WH Smith. It evaluates the company’s internal organizational strengths and external environmental challenges within the competitive UK market, ultimately proposing strategic improvements to ensure long-term viability and competitive advantage.
- Internal capabilities and corporate structure of WH Smith.
- External environment analysis utilizing PESTEL and Porter's Five Forces frameworks.
- Evaluation of positioning strategy through the Ansoff Matrix and STP model.
- Strategic recommendations based on the Retailer Four Axis Growth Opportunity Matrix.
Excerpt from the Book
4.2 Generic Strategy evaluation
With regards to the generic strategies of cost-leader, differentiator or focus, WH Smith seems to be a retailer, which is stuck in the middle between cost-leader and differentiator. This is based upon the fact that it tries to compete on price with other retailers such as Amazon and supermarkets that tend to sell the same products and are able to undercut WH Smith’s prices. On the other hand, it also tries to be different by competing not only on the high street but also in travel locations, which enables WH Smith to compete with some of its rivals better as they are only focused on books or entertainment products (such as Borders or HMV). This strategy of being a cost-leader while simultaneously following a differentiator strategy can, according to Porter, be fatal as they may lose focus and end up being out played – i.e. “being stuck in the middle” (www.whsmith.co.uk, Datamonitor 2009, Mintel 2008).
Summary of Chapters
1 Introduction: Provides an overview of the UK retail industry and establishes the scope of the case study regarding WH Smith’s business history and current strategic focus.
2 Analysis of WH Smith’s Internal Capabilities: Examines the company's organizational structure, financial performance, and core competencies, identifying key internal strengths and weaknesses.
3 Analysis of WH Smith’s Environment: Analyzes external factors affecting the company using PESTEL and Porter's Five Forces, focusing on market competition and economic challenges.
4 WH Smith’s Positioning Strategy: Evaluates the company's strategic growth route using the Ansoff Matrix, STP model, and Marketing Mix to understand market engagement.
5 Recommendations for Improving WH Smith’s Strategy: Suggests strategic improvements and long-term development plans utilizing the Retailer Four Axis Growth Opportunity Matrix.
6 Conclusion: Summarizes the key findings of the strategic analysis and emphasizes the necessity for WH Smith to adapt to a changing marketplace.
7 Reference List: Compiles all academic and industry-specific sources used throughout the research.
Keywords
WH Smith, Retail Strategy, Internal Capabilities, PESTEL Analysis, Porter's Five Forces, Market Penetration, Segmentation Targeting Positioning, Marketing Mix, Competitive Advantage, Growth Opportunity Matrix, UK Retail, Corporate Strategy, Strategic Management, Consumer Trends, E-commerce
Frequently Asked Questions
What is the primary focus of this analysis?
This work provides a detailed examination of WH Smith's corporate and retail strategy, assessing how the company navigates the competitive UK retail sector.
Which theoretical frameworks are used in this paper?
The study utilizes several analytical tools, including PESTEL, Porter’s Five Forces, the Ansoff Matrix, the STP model, and the Retailer Four Axis Growth Opportunity Matrix.
What is the central research aim?
The aim is to evaluate the company's current strategic positioning and propose recommendations to help WH Smith improve its performance and maintain a sustainable competitive advantage.
How is the company’s internal environment described?
The paper highlights WH Smith's historical background, hierarchical management structure, and the importance of its travel outlets versus its high street retail presence.
What are the major threats identified in the external environment?
Key threats include the economic recession, increasing competition from online retailers like Amazon, rising operational costs, and changing shopping behaviors.
Which sectors are considered the company's core markets?
WH Smith focuses primarily on books, stationery, and newspapers, while aiming to minimize reliance on the highly competitive entertainment sector.
How does the author characterize WH Smith's strategic position?
The author argues that WH Smith is currently "stuck in the middle" of Porter’s generic strategies, attempting to be both a cost-leader and a differentiator.
What is the significance of the travel outlets for the company?
Travel outlets are identified as a high-growth, monopoly-like success factor that provides a consistent revenue stream despite the decline of traditional high street shopping.
- Quote paper
- Robert Stolt (Author), 2010, Analysis of WH Smith's Retailing Strategy, Munich, GRIN Verlag, https://www.grin.com/document/145272
