This is great news for everyone in the publishing industry, not to mention readers who value specialist booksellers with large stockholdings.
Also, on a personal note, as it is almost five years to the day since the bookshop chain I worked for was bought by HMV, it has been hard not to to feel a certain schadenfreude at the demise of those people who thought that bookselling was no different from any other area of retail. I hope that there will be no need for the word ‘product’ in James Daunt’s Waterstone’s.
But before we put out the flags, a word of caution. HMV may have mismanaged Waterstone's for over a decade, but can a change ot ownership make that much of a difference in a market that appears to be undergoing an irreversible transformation?
However good Alexander Mamut and James Daunt are, they still might fail.
Before we look at the uphill struggle that faces James Daunt, lets focus on the positives:
- In spite of Amazon and the supermarkets, Waterstone’s is still a profitable business
- In 2010, its market share was just under 30% of total book sales
- It frequently achieves high scores in customer satisfaction surveys
- It is the only large specialist bookshop chain in Britain
- Publishers want Waterstone's to survive
But the reality is that Waterstone's is dying, albeit very slowly. The sales have been slowly shrinking for over five years and many shops are now making a loss, including the 'flagship' Piccadilly store. Several years of negative growth have produced an entrenched mentality in the senior management and rather than trying to increase sales (or 'grow' sales, as they now say), the emphasis is on reducing costs: the beginning of the end.**
The main management failures of Waterstone's are as follows:
- They failed to establish an strong internet presence in the mid-90s and after a half-hearted attempt, let Amazon fulfill its online orders until 2006 - a move that rivals Decca's decision not to sign the Beatles
- They became obsessed with wooing the mass market at the expense of their traditional market of 'heavy book buyers'
- They recruited too many middle managers from other areas of retail, who knew nothing about books and came from businesses that valued compliance and uniformity over creativity and passion, resulting in a chain of bland, unexciting bookshops
- The whole business was dominated by a counter-intuitive stock control system that looked and felt like a second rate MS-DOS program from 1989
- They reacted to changes in the book trade, rather than anticipating them
One of the most salutary (I know this word has been out of fashion since the 1870s, but I like it) lessons I learned in the book trade was when Waterstone's took over Ottakar's, rebranding every shop in the chain. For me, it was a cataclysmic event. For my customers, it was just another day. Very few of them even noticed the huge new black sign over the door.
Getting the book buying public excited about Waterstone's again will be a huge challenge.
To make things worse, the high street is going into meltdown. Long established brands like Mothercare, Habitat, Thorntons and TJ Hughes are either going into administration or slashing the number of stores, as customers increasingly migrate to the internet.
It's not a good time to work in high street retailing.
In an ideal world, James Daunt would have a few months to get his head around the business before coming up with a plan to save the chain. Unfortunately, time is a luxury James Daunt doesn't have. The crucial Christmas promotions will have to be signed off almost immediately.
On the one hand I don't envy James Daunt, but on the other, this is a fantastic opportunity. The death of Waterstone's needn't be inevitable. Other chains have suprised their detractors by reversing their fortunes and it's possible that James Daunt and Alexander Mamut may go down in posterity as the men who saved Britain's last bookshop chain.
If I was sitting in James Daunt's chair next Monday, these would be my priorities:
1. Increase the stockholding.
There was a time when you could go into most branches of Waterstone's and expect to find all of the backlist of authors like Ian McEwan or William Boyd. Not any more. Without a decent range, Waterstone's is finished. Of course, keeping a large range of slow-moving backlist titles is expensive, but if publishers are really serious about supporting Waterstone's, they should provide the stock under more favourable terms. Surely it's in the publishers' interest to have their books in shops rather than in a warehouse?
If customers can once again feel confident that they can find the book they want today (at a competitive price), they'll be less likely to automatically default to Amazon.
2. End the blandness.
Whether you're looking at the homepage of www.waterstones.com or gazing at a shop window, the overall impression is one of blandness. Dull, safe posters with insipid, dumbed-down bylines and predictable 3 for 2 promotions that have the same titles in month after month - that's the modern Waterstone's. In Ottakar's, shops competed with each other to come up with the quirkiest, most eye-catching windows. In Waterstone's, compliance has been valued over creativity.
Waterstone's branches need to make their shops as exciting as the books: eccentric, unpredictable, magical places, buzzing with energy, otherwise what's the point of going there?
As for the website, it should be a bibliophile's paradise, with videos of author interviews, YouTube clips of signing sessions and a vast archive of author information. At Ottakar's I was on the editorial committee of an award-winning fiction microsite and we produced hundreds of author biographies. I presume that Waterstone's now own that data, so why isn't it being used on their website?
3. Embrace the e-book.
As with the internet, Waterstone's made a half-hearted attempt at competing with Amazon and squandered a vital opportunity to get on the digital bandwagon. The game isn't over yet. Thousands of backlist titles have yet to be digitised and if Waterstone's can come up with a genuinely competitive alternative to the Kindle, they may be able to stop their shops becoming showrooms for Amazon.
4. Put staff morale at the top of the agenda.
The working culture in Waterstone's has been awful. An obsession with compliance has produced a climate of fear, where disciplinary action is routinely used as a motivational tool. When shops are earmarked for closure, staff often find out from the trade press before they receive any communication from the senior management.
The key to Waterstone's recovery is the enthusiasm and passion of its booksellers. But it will be hard to improve staff morale if the store managers are stuck in the back office for most of the day, completing one spreadsheet and after another. The excessive bureacracy should be trimmed down so that managers can spend more time selling books.
Staff morale in James Daunt's own chain is good, by all accounts. I hope that he can persuade some of the more abrasive characters in Waterstone's middle management to change their approach.
5. Give power back to the shops.
When I worked on a few projects for Ottakar's head office, I had access to the company's sales data and used to love analysing the sales performance of particular titles in different shops. Why did book X sell 57 copies in one shop, but only 4 in another, when both stores had a similar turnover? Sometimes it was because one shop had sold out, but more often than not it was because the local market was very different.
There has been a lot of talk in Waterstone's about responding to the local market, but when I walk in the front door, all I see is a bland, one-size-fits all approach. Each shop should have a unique offering that reflects the passion and knowledge of its staff, along with a strong awareness of the local customers.
6. Ditch the new Waterstone's logo:
Alright, number six isn't essential (I know some people even prefer the new drooping breasts logo to the traditional, angular W). The main thing is shops with more books, and a range and pricing that reflects the local market.
I could go on. I haven't even touched on the thorny issue of closing unprofitable shops, fixing or scrapping the central distribution hub, introducing a half-decent EPOS system or paying people more money. But that's enough to be going on with.
You may completely disagree with me (indeed I hope some people do, as I like a good debate). Perhaps Waterstone's would be even worse off today if it hadn't been run on strict retail lines. I don't know. All I can say is that as an Amazon customer, the main thing that would get me back into Waterstone's is a quirky, exciting range. However good Amazon is, you can't beat real browsing.
I wish Alexander Mamut and James Daunt the best of luck (and God knows, they'll need it). If they can bring Waterstone's back from the brink of extinction, to the point where it is a viable business with a future, both readers and publishers will owe them a huge debt.***
* The title should really be 'How I Would Go About Saving Waterstone's' (I wouldn't be arrogant enough to assume that I have the answers), but I went for the punchier option.
** Since writing this post, it has been announced that during its year under Dominic Myers, Waterstone's increased its profit by £6.7 million. This is a great achievement, but doesn't alter the fact that unless the business reverses the decline in sales (last year's were nearly 4% down on the previous year), its days are numbered. Also, let's not forget that during Myers tenure, Waterstone's sales received a temporary boost from the demise of Borders.
*** Two years on, the chain appears to be trying to replicate the success of Daunt's by turning Waterstones into a collection of mini-chains, or 'clusters'. Unprofitable stores are being closed the moment their leases expire, while some of the more successful shops have undergone refits. There has been a cull of middle and senior managers. As for ebooks, after looking at all the alternatives, James Daunt reluctantly decided to embrace the Kindle rather than waste time and money on a white elephant.
I agree with most of Daunt's decisions, but I'm not convinced by his new buying structure. I would have given the shops complete autonomy, but perhaps James Daunt felt that after the HMV years, there weren't enough real booksellers around to take that risk.
The chain is now in a race against time to contract to a sustainable level at a rate that keeps pace with the declining year on year sales. I suspect that they are being outpaced by the migration of sales to Amazon's Kindle offer.
****Three years on, it looks as if Daunt has done it. Ebook sales have levelled out and Waterstones looks set to break even for the first time in years. The medicine has been bitter, for some at least, with many redundancies and the loss of some very talented people, but it was an ineluctable fact that the costs of the business were too high. I remained sceptical about Waterstones until I saw its new branch in Lewes, which is one of the best bookshops I've ever seen.