In-Store Experience and Travel Help UK Retailers Defy Closures Trend

Despite challenging economic conditions, some retailers in the U.K. are planning to open new stores.

In recent months, weak consumer demand has fueled a wave of retail closures across Europe. And in the U.K., store closures recently hit a five-year high, according to the U.K.’s Centre for Retail Research.

But that hasn’t stopped a number of outliers in the country from bucking the general trend and opening new branches. From supermarkets to stationers, a handful of businesses that are defying the retail slump offer a ray of hope in an otherwise gloomy picture.

The latest British company to unveil expansion plans is chocolate maker Hotel Chocolat, which, as PYMNTS reported last week, is set to open 50 new stores over the next three to five years.

Even more optimistically, a year after withdrawing from the U.S. due to weak sales, the retailer is reportedly considering a second crack at the North American market.

So what’s behind Hotel Chocolat’s sudden burst of ambition?

For starters, the company has rebounded with a vengeance from the lockdowns of 2020/21, and in a Thursday (Jan. 19) trading update reported that its sales in the 26 weeks to Christmas were up 65% compared to 2019.

And while some businesses are plowing resources into growing their online sales, Hotel Chocolat appears to be banking on its in-store proposition to help drive growth.

The company said in the recent update that despite the overall increase in like-for-like sales, online revenues over the holiday season declined year-on-year, “due to return to stores together with a deliberately lower marketing spend.”

It added that “we expect the trend of customers reverting to stores to shop to continue in the second half, which is advantageous to the brand because our stores are well invested to deliver an uplifting experience for customers.”

Hotel Chocolate isn’t the only retailer in the U.K. to recognize that the in-store experience is a key part of its consumer appeal.

Retail chain Marks & Spencer (M&S) also recently announced plans to open 20 new outlets across the U.K. by 2024, including eight full-line clothing, home and food stores and 12 food halls.

In the long run, the company’s plan is to transition to a different mix of store types. A recent press release said it is “aiming to rotate from the 247 stores we have today to 180 higher quality, higher productivity full-line stores that sell our full Clothing, Home and Food offer whilst also opening over 100 bigger, better food sites.”

Like Hotel Chocolat, M&S's in-store sales growth has outpaced eCommerce, increasing by 18.8% in the year to June versus just 4.9% for online sales, the company reported in its first half earnings last year.

As Stuart Machin, CEO at M&S, commented in the latest release, “stores are a core part of M&S’s omnichannel future and serve as a competitive advantage for how customers want to shop today.”

WHSmith Buoyed by Travel Resurgence

Where M&S and Hotel Chocolat are counting on the in-store experience to support their expansion plans, another British retailer, WHSmith, is growing its store network in step with the post-covid return of global travel.

Less than a year after opening the first WHSmith location in the U.S., a checkout-free store in New York’s LaGuardia airport that deploys Amazon’s Just Walk Out technology, the company is in the middle of a major international push.

In fact, while WHSmith’s latest results show that its U.K. high street sales grew just 2% in the 20 weeks to January, for its global network of travel stores in airports and train stations, business is booming, with sales up 77% in the same period.

Commenting on the numbers in a recent press release, WHSmith Group CEO Carl Cowling said the global travel retail business is “growing strongly across all regions.”

He added that in the financial year to date, the firm has opened over 40 new stores and has a further 130 in the pipeline including key tenders at Reagan National Airport and Palm Springs Airport.

Of course, WHSmith also operates online businesses but there’s no real eCommerce equivalent to the airport convenience store. Stocking a variety of drinks, snacks, books, and last-minute travel essentials, WHSmith has been able to ride the global rebound in international travel throughout 2022, translating passenger footfall into sales.

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