Last Christmas was, perhaps, the most important one for the book trade since the demise of the Net Book Agreement. The tills rang as usual and thousands of books were sold, but the end results made dismal reading for most booksellers thanks to a fundamental shift in the way people buy books. Internet retailing has revolutionised bookselling, particularly since internet usage has changed from being the province of geeks to a mainstream activity and now 60% of people in Britain shop online. But in addition to internet retailing, bookshops have also faced competition from supermarkets who buy in bulk and sell cheap.
Last year, when highstreet booksellers realised that the sales weren't coming through, they began an orgy of price cutting that led to many key titles being sold at cost price. The end result of this was the the profits were slashed and one chain went to the wall.
This Christmas Waterstone's has said that it is going to keep its nerve and focus on the positives. They have doubled their marketing spend and have taken the radical step of advertising in the Sun, which would probably have Tim Waterstone turning in his grave if he wasn't still alive. They also hope that the acquisition of Ottakar's and the resumption of independent online trading will herald a stronger Christmas. But will it?
There is certainly a strong selection of titles this year and the pricing is very competitive, but what I hear on the shop floor alarms me. Customers seem very clued-up. They like our wide range of books and we're their first port of call when they want to make a buying decision, but once they've chosen a title there is no guarantee that they'll buy it from us. I overhear people saying that they'll buy it from Amazon or try the competition first. Even if we've taken £7 off a hardback novel, customers often believe that there's a better deal out there.
When I try to explain this fundamental change to people, the stock response is 'Oh but people will always want to buy books in bookshops.' Well yes, maybe, but it is not enough to keep half or even three quarters of your customers. I once ran a shop which took around £60,000 a month. The rent and rates were £15,000 per month, the wage bill was about £10,000 and this the stock cost about £35,000. Add heating, lighting, banking and other occupational costs and we were struggling for most of the year. The only thing that kept us afloat was the prospect of making £200,000 in December.
If bookshops like for like sales continue to collapse, then we will see closures. Independent booksellers may feel a certain schadenfreude if Waterstone's fails, but anyone who cares about books should support the high street, chains or otherwise. I remember the misery of having nowhere to buy books except a drab, poorly stocked independent run by a misanthropist, or WH Smith's. Waterstone's revitalised bookselling bringing city centre standards to small towns and while some independents died, many good ones continued to prosper.
My gut feeling is that book retailing has over-expanded during the last twenty years and will go through a period of contraction before it re-adjusts itself. Shops in downmarket towns and those with high rents may go to the wall, but the majority will probably survive. I am convinced that most readers want bookshops, but in a world where time is as important as money, people will also opt for the convenience of the supermarket and on-line bookstore.
There are a lot of changes taking place in Waterstone's under its new managing director and from what I can see, he's doing all the right things for a large retail chain. He's invested in on-line bookselling, tried to make Waterstone's more accessible to the non-traditional book buyer and is maintaining a sensible price strategy. But will this be enough? I certainly no longer feel that I have a secure job any more and even if I do, will I want to stay?
POSTSCRIPT - AUGUST 2013: Just over a year after writing this post, I took the 'jump before you're pushed' option and left Waterstone's. Since then, I've watched the chain go through a slow and steady decline (almost going under a couple of years ago), while Borders and many a good independent have disappeared from the high street. I saw the writing on the wall seven years ago, but underestimated the scale of the collapse and failed to foresee just how big an impact the ebook and smartphone would have on the bookselling environment. We need bookshops - browsing online is pretty frustrating - but don't seem to be prepared to pay for them.