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Foyles has struck a "significant" strategic partnership with a global travel retail group, which could see the roll-out of a national presence for the London-based bookseller.
The 115-year-old firm has partnered with FTSE 250 company SSP Group to bring a curated range of books to new store concept Urban Express. Led by former W H Smith chief executive Kate Swann, SSP operates a number of strategic partnerships at travel hubs in 30 countries, such as with retailers Marks & Spencer, but has recently begun developing in-house concepts. The first Urban Express store has opened in London Bridge train station as part of its £1bn redevelopment, and features a curated range of 150 titles under the Foyles brand.
But the mini-chain’s chief executive Paul Currie sees the deal as an opportunity for the seven-shop bookseller to establish a national presence, with a roll-out of the Urban Express concept expected in travel hubs across the country. "This represents a huge opportunity for us in the UK and it could be a step-change for Foyles," Currie said. "SSP has recognised there was an opportunity to create a concept store for urban travellers who are generally time poor. Once commercially proven, the London Bridge store will be the beginning of a significant rolling-out programme for the concept. I think this could potentially represent a national presence for Foyles."
While Currie did not reveal the number of stores planned, there were "a lot of discussions taking place at the moment" for Urban Express stores in other travel locations. Part of the company’s five-year "business transformation" project, The Bookseller understands the link-up has the potential to bring in turnover comparable to Foyles’ current annual sales, which stood at £26.6m in the year to 30th June 2017.
"The partnership is a valuable addition to our core business. The relationship represents a significant turnover opportunity for Foyles when developed into a five-year business plan," Currie said.
The SSP Group calls itself a "food travel expert" that employs 35,000 people worldwide, with an annual revenue in the year ending September 2017 of £2.4bn, up 11.7% year-on-year. Underlying operating profit in that period was £162.9m, up 27%. The company runs food outlets such as Ritazza and Upper Crust, and partners with brands such as Burger King, Starbucks and Yo! Sushi to run outlets in airports and stations. Currie believes the partnership could also represent an opportunity for Foyles outside the Urban Express concept.
"We believe that this could be developed into a more bespoke book offer with SSP as our partner," the chief executive said. "SSP is an expert in travel retail and has a lot of influence in this competitive sector. It will be the first of what we hope will be many stores, and could potentially be a very significant offer."
In addition to the extra revenue, it is hoped the venture with SSP will also boost the Foyles brand. Foyles, founded in 1903 by teenage brothers William and Gilbert Foyle, has four shops in London, including its flagship store in Charing Cross Road, and branches in Birmingham, Bristol and Chelmsford. "For us it is about getting our brand further out there. This will enhance our brand and the DNA of Foyles," Currie said.
The deal will also help to shake up the bookselling travel market, currently dominated by rapidly expanding W H Smith Travel, which has 839 stores in the UK and around the world. "From the customer’s point of view, it is healthy for there to be some bookselling competition in the travel retail space," Currie, formerly of Hamleys and Molton Brown, said. "Books are the only category we sell and that, therefore, is our expertise. We want to share that skill."
It is understood that Foyles’ brand value was a significant factor in the company securing the agreement, which was a year in the making. Foyles has also proven popular with travel customers, operating a bookshop in London’s Waterloo station since 2014.
The proposition
The new shop is based in a "prime location" behind ticket barriers in the passenger waiting area of the new London Bridge station, which expects to receive over 60 million passengers annually when fully operational. It is estimated that 68% of the station’s users will be from the ABC1 demographic, with an average "dwell time" of 17 minutes, described as "perfect" for Foyles to trade.
Urban Express aims to be a stylish but efficient shopping environment, with other brand partners at launch including frozen-food brand Cook and fine-wine merchant Berry Brothers. The curation of the Foyles range has been led by head of buying Jasper Sutcliffe, with the implementation handled by regional stores area manager Patrizia Sorrentino. Customers are being offered 150 different titles across fiction, non-fiction and children’s under the banner "Foyles: Chosen for you", all at full price. After a week on sale at the London Bridge outlet, the current bestseller is The British Book Awards’ Book of the Year Eleanor Oliphant is Completely Fine by Gail Honeyman (HarperCollins), with John le Carre’s A Legacy of Spies (Penguin), Robert Webb’s How Not to be a Boy (Canongate) and Cressida Cowell’s The Wizards of Once (Hodder Children’s) also proving popular.
Trusting another firm to run a concession is not without risk for a brand, and to reflect Foyles’ expertise and knowledge in bookselling, the new concept will carry a Foyles chart and showcase recommendations from the firm’s booksellers. Urban Express staff have also undertaken training in the first stage of Foyles’ in-house training programme.
Sutcliffe said: "The selection of books on offer has to work very hard for the space they have. It obviously won’t offer the range of our other shops, but it is a distillation of what makes Foyles ‘Foyles’ in 150 lines. We had to think about what Travel audiences wanted. Staff picks are hugely important for us and so there are staff recommendations in the shop and there will be a chart, which will be updated regularly, but there is no price offer." He added: "We learned from our Waterloo store how important the children’s section is, and have modelled the Urban Express stores on that. A lot of passengers want to pick up what we call a ‘guilt purchase’, where someone is working late and they want to buy something to take home for their kids."
The fine margin
Despite Foyles’ excitement over the initiative, it is calling on publishers to help the new format become a success by offering a higher discount on titles. (Foyles’ level of current discount was not revealed). To that end, The Bookseller understands the company is holding meetings with publishers this week to ask for their support. "The challenge for us is always margins, and we are working with our publishing partners to find ways to recognise that challenge with us," said Currie.
"The second challenge is supply chain. We have got to build new ways of working with publishers: we have got to think outside the box. Is there an industry option? Is there a new way to do it? That is something we are putting to all of our publishing partners," he said. The challenges are understood to spring from tighter security in train stations, which means shops cannot take regular deliveries of large boxes.
Analysts: high rents led to WHS dominance
Foyles’ deal with SSP Group may finally see it create inroads into the bookselling travel retail market, dominated by W H Smith for more than a decade.
Rival bookselling businesses have long felt shut out of travel hubs, owing to the high rents charged by airport and train station landlords and, as a result, W H Smith’s Travel arm dominates that market in the UK. The chain, run by chief executive Stephen Clarke, has increased its number of travel stores in recent years, operating 839 as of April 2018, which is 229 more outlets than its high street operation (610). Last year W H Smith revealed its travel business had generated more revenue and profit than its high-street estate for the first time, helped by an increase in passenger numbers, investment in store formats to maximise sales per square foot, and the deployment of more staff in shops to improve service levels, along with stocking higher margin items such as souvenirs and travel accessories.
Foyles chief executive Paul Currie said its partnership with the SSP Group would provide some welcome and "healthy" competition in the travel retail space for bookselling.
However, W H Smith has said it plans to continue to win new space in the market, retain existing spaces and develop new formats. As such, analysts believe it will be hard to end W H Smith’s dominance in the sector. independent retail analyst Nick Bubb said: “I don’t know how long W H Smith has had the monopoly...but it has certainly been the case for 10 years or more. The rents are high in airports, so the operators must be pleased with its proven ability to deliver good returns for them.
“Contracts must come up for renewal every few years, but there is no evidence that whs ever loses them to other players. I guess a reinvigorated waterstones might be in a position to pick off one or two units in the UK, but it’s hard to see W H Smith’s dominance being seriously threatened."
Douglas McCabe, c.e.o. at Enders Analysis, hinted that more competition would be good for publishers and customers. "Travel environments are critical for a range of retailers, books and magazines among them. However, W H Smith’s stranglehold on these spaces has not always been a benefit to book buyers or publishers. Range and curation have long been somewhat limited. Rents are just too high for anyone but the largest retailers," he said.