Last week the shareholders of HMV reached an almost unanimous decision to approve the sale of its Waterstone’s bookshop chain to the Russian billionaire Alexander Mamut. Today, the business officially changed hands and bookseller James Daunt took over as MD.This is great news for everyone in the publishing industry, not to mention readers who value specialist booksellers with large stockholdings.
Alexander Mamut
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.But how?
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.
31 comments:
This is really interesting - I hope that mamut and Daunt see it! :-)
What good suggestions -- I hope someone at Waterstone's is listening. I love reading, and I love books, and you are absolutely right -- ordering on line is great (assuming you know exactly what you are looking for, either author or title), but nothing beats the chance to browse the shelves and see something that appeals to your personal (albeit quirky) taste. Even my favourite local bookstore (the University of Washington Bookstore in Bellevue) has seen a major decline in the amount of stock. They now carry giftware and greeting cards and candy bars, in an attempt to lure people in. But to my mind, you still can't beat a table full of interesting covers and titles. Thanks for your thoughtful post. It must have taken ages to write. Good job!
Canadian Chickadee
Another thoughtful and interesting post! For what it's worth, I agree with everything you say. Unfortunately, town centres have become increasingly homogenised in recent years. Add to this the fact that most councils now charge for parking, and internet shopping looks more and more attractive. When a shopping trip involves a parking charge, crowds, and assistants who insist on calling the customer 'mate' - and then to find that they don't have what you went there for anyway - and you can see the attraction of the internet.
You are, of course, quite right when you say that nothing can beat real browsing.
Sorry if this has turned into a rant!
Here endeth the lesson......
In my opinion James Daunt should pull up another chair and offer it to you.
This is the first time I've seen a picture of Mamut. He reminds me of David Dixon, the guy who played Ford Prefect in the TV HHGG.
(Splendid analysis of the situation, btw.)
A fascinating analysis - I too hope someone is listening. Browsing bookshelves is one of life's great pleasures. In Oxford we have a large Waterstones competing with Blackwells and it does have a much more varied stock than many - yet there are rarely people browsing the shelves as the majority don't go past the 3 for 2 tables at the front.
I think you should apply for the job Steerforth! What have you got to lose other than a stamp? And however good Mr Daunt is, he can't do it all by himself and will need more than one able and dynamically-minded right hand man like yourself who knows the book business inside out and moreover cares that it not only survives, but thrives, to help him turn things around. This posting could serve as your application!
Cometh the hour, cometh the man! Lx
Cardiff's branch of Waterstone's is as bland as they come, but always seems busy. You're right about the staff morale and need for a large injection of excitement. A stroll around Waterstone's with the all-black theme; no chairs; pink-haired staff with sensible black shirts; no posters advertising signings, talks or events and piles of hideous 'gift' paraphernalia is totally uninspiring.
it's time the internet was challenged, some things will never be possible to replicate like smelling a book before you buy it, hearing a review from someone who's read it, (not just reading reviews) and walking around with a small bag swinging from your wrist - a little present for yourself which is instant gratification. Daunt and Mamut have a potentially golden opportunity. It's a shame you're not in the middle of them.
Interesting post. I only know the book trade from the perspective of a shopper so I really can't say if your ideas would make money, but they do sound like they would make a good bookstore.
These ideas all make good sense to me. But how to weed out the ineffective middle managers? That's going to be a big task...
What do you think about the loyalty card? I think in theory a loyalty scheme makes it more of a big bland retailer, but if what they want to do is make good recommendations to customers then this is how they do it!
But are people really incentivised to shop just for points? What else could the card give you that would make you want to pay more at Waterstones than you would at Amazon?
A good loyalty card scheme needs to offer a 'golden handcuffs' relationship between the customer and retailer, so that Amazon are no longer always the cheapest option. That will obviously have an impact on margin, but that would hopefully be more than cancelled out by the extra sales.
Waterstone's needs to stop the inexorable drift to Amazon. A lot of people find Amazon very browser-unfriendly and only go there because of the price, range and convenience. That perception needs to be changed.
How much extra are people prepared to pay for the convenience of seeing the book first and having it immediately? That's the big question?
Sam - That's tricky. I hope that the more abrasive characters will realise that their faces no longer fit. There is one person in particular who has behaved appallingly over the years. They need to be purged.
Tim - you're absolutely right! I thought he looked familiar.
Thank you Lucille, LUCEWOMAN and Laura for your vote of confidence. I'd imagine that James Daunt will have no shortage of experts offering their advice!
Chickadee - Interesting to read that 'non-book product', as they call it, can be found in Canadian bookshops too. Booksellers hate it, but the margin's usually too good to resist.
Martin - I have to say that I agree. I hate going shopping. Last time I went to Brighton I paid £15 for the privilege of being stuck in a crowded shopping mall full of bland, identikit shops.
Annabelle that's another problem. I've beefed-up the range in shops, only to find that the books are still there after six months. But to reduce range because the stock is slow-moving is abandoning your responsibilities as a bookseller and in the long term, makes a shop's demise far more likely.
Booksellers and publishers need to work together to find a way of maintaining range without hitting the bottom line costs.
Tamsin - I shouldn't think that James Daunt will have time to read any blogs at the moment ;)
CB - You say "I only know the book trade from the perspective of a shopper". I'd say that's the most important perspective of all!
I work in a Waterstones branch and have much sympathy with many of the comments, but .... Without discounted books Waterstones will die. A huge proportion of sales is 3for2, etc and if WHSmith and the supermarkets etc can do this at a profit so should Wats. Giftware (we call it RP - related product) is largely junk and an embarrassment. It is not on to blindly sell this c**p solely in search of margin - why not open a sweetie counter? We need to concentrate on what we are good at, not act like Son-of-Woolwoth. Staff are, as mentioned, key to success but paying graduates £5.93 an hour minimum wage is not on; Poundland pays more! Not a big deal for me personally but good people leave Wats as soon as they get a real job. Sadly Wats must shrink - too many loss-making and duplicate stores in locations where semi-literate customers shop around to buy "Madeleine" for £9.95 rather than £9.99. We would all love to sell quality hardback non-fiction at RRP but I'm not sure there are anywhere near enough customers in enough town centres to make a go of it. Good luck Daunters! Look forward to meeting you!
Good news:
I have worked with James Daunt. He is a ruthless business person and a highly effective manager. If anyone can save high st bookselling then it is him. I think it would be hard to perform worse than recent Waterstone's management so in one sense he is buying at a cheap price as it were. I think there is a possibility that (with the pro-active support of publishers) and a complete rethink of the role of digital within physical stores he can make Ws profitable for the long term.
Bad news:
Everything I know about James suggests he is unwilling/unable to accept the importance of e-books and the Internet in general. (This is a man who hung game from the ceiling of the cellar @ the Marylebone shop) His comments about Amazon suggest he sees it as an US vs THEM situation (High St vs Internet) where I think the route Barnes & Noble have taken in the US is more sensible. The world is turning and you either go with it or die. It is also turning very fast so Daunt will have to make big decisions very quickly - he'd better get them right.
One thing is for sure. To tempt people away from the Internet and back to more expensive books on the High St would be the stuff of legend. High stakes - ladies and gentlemen faites vos jeux!
I confess I find little to disagree with in what you've written. Having worked for the company for the better part of twenty years, it's refreshing to see an almost uniform expression of what needs to be put right from both those I work with and online. I think the secret does lie with staff in the shops, their control of buying, and sufficient allocation of resources (both pay & mentoring) - and with making those connections with the heavy book buyers that have gone into hiding throughout the country over the last decade in response to HMV's treatment of them.
Anonymous One - how could I forget that it was called RP? Time is the great healer.
My issue with linksaves and all of the non-book product is that we can measure the sales they generate for the business, but it's impossible to measure the sales that are lost by alienating traditional book buyers.
I really hate it when someone at Smiths or Holland and Barrett tries to sell me more things when I'm at the till. I find it crass and offensive. When I turned down the opportunity to buy some more overpriced vitamin tablets in H&B, the assistant added "Or even a Holland and Barrett magazine at just 74p?"
I bit my tongue because I knew that they were probably being threatened with some sort of KPI.
Anonymous Two - I hope that those book buyers do come out of hiding. I'm not sure if there are enough of them to sustain 296 shops, but if James Daunt does transform Waterstone's, then anyone who cares about books should put their hands in their pockets and support the chain.
I'm getting very confused by all of these anonymous comments. I've just discovered another one in my spam box, which is now the second of the last three anons.
Thank you Anonymous no.2 - it's good to hear from someone who actually knows James Daunt.
I like a man who hangs game in the basement - it sounds like something James Heneage would do - but if he isn't going to get to grips with the internet and dogital bookselling, that will be a great shame. People are beginning to turn against Amazon: once the underdog, they now seem very corporate.
It's not an either or choice. Waterstone's is a bookseller. Rejecting the potential of the digital age is like a 1930s bookseller refusing to stock paperbacks.
There was no point in Daunt Books worrying about internet sales and ebooks, but Waterstone's is a very different affair.
'Dogital' bookselling?
Please forgive the typo.
My darling Steerforth,
It has indeed be a while since we both jumped the fence,and although I'm sure you have your finger closer to the dying pulse of the Widow, I'm not sure that anything can be done to prevent the imminent inquest. Retail chains have proved time and again that they are unable (even if theoretically willing) to respond to the specific needs of idiosyncratic locations (i.e. anywhere that is not a clone of a clone of a clone of Milton Keynes). Pinning part of the blame on the donkey of middle management from beyond the realms of literacy is a bit misleading. Even Saint James (of blessed memory) employed some pitbull derivatives of low ability in that field.
Jake - I regard the middle management as a symptom rather than the malady itself.
I think the problem with Waterstone's was that HMV regarded the culture of bookselling with suspicion, full of people who were more interested in reading than selling.
HMV didn't value or trust its booksellers enough to run the business and actively sought out people from other areas of retail to manage the operational side of the business. In theory it all made sense: "You sell the books, we'll look after the P&L..." but the result was disastrous.
One other thing I hadn't mentioned is that at the same time that Waterstone's was taken over by HMV, it merged with Dillons, so you had two chains with very different cultures being transformed by a third chain that knew nothing about bookselling.
What a mess!
As for James's occasionally dodgy recruitment policy - we were both beneficiaries ;)
Steerforth -
True, HMV certainly didn't seem to believe that booksellers could be capable of reading both a P&L account AND a work of contemporary fiction [insert your own comments on creative accountancy here].
As for recruitment policy under JH, well yes indeed. Do remember the gentleman who was sent to run Gloucester partly because he expressed an interest in rugby union?
Was he rather feral-looking man who like Sci-Fi and Erotica?
My local Books Etc got rebranded to Waterstones. One one hand great - I could use my loyalty card, on the other hand bad. They slashed the sci-fi section to virtually nil (in a male dominated customer base) despite complaints from customers. It's now rare for me to find a book I don't know and if it's disposable fiction I'll check the Kindle price before I buy.
In Barnes and Noble on holiday I spent hundred or more on books I couldn't easily source at home (often MMP editions of series that have been switched to 'literary pbk' half way through). And ok the shop was bigger but there was so much more choice!
From a writer's perspective the focus on competitive pricing is not much fun. When books are sold cheap on Amazon, there is less money for anyone entitled to a royalty, and this seems often to be beyond the publisher's control (either that or they're happy to take the money and perhaps less concerned about the author getting paid).
It's interesting that in the original post you suggested both competitive pricing and making shops more exciting. I'm not sure that you can have both, in that only people writing for the largest publishing houses on the most mainstream subjects can make a living on Planet Discount. So you'd end up with 3 for 2 tables, only in a slightly altered form.
I've been impressed by the number of former Waterstones managers who have set up independent bookshops. In my part of the world there's the Yellow-Lighted Bookshop in Nailsworth (actually he was Ottakars) and Rossiter Books in Ross on Wye. In Bath there are now two excellent independents, Mr Bs and Toppings.
These shops have knowledgeable staff, stock suited to the local environment, great events programmes, etc. I realise these are affluent towns (although the Big Green Bookshop up in London N16 is definitely not in a rich neighbourhood), but I still think their success is worth noting.
I have the greatest sympathy for people who work at Waterstones now and are concerned about the future, but I'm not sure a large chain of stores can take on Amazon and win. To win this war bookshops need to offer what Amazon CAN'T: an evening out, book groups, conversation, expertise - in short a connection with the community. Lowering prices may be necessary, but, without the overheads, Amazon can probably go lower...
James - I agree with everything you say and it's heartening to know that good bookellers can still make a living without sinking to the lowest common denominator.
The problem for Waterstone's is that it probably only has 50 branches (maybe fewer) where that sort of bookselling would work.
As a whole, the chain needs to be seen to offer value otherwise the drift to Amazon will continue.
My gut feeling is that even it survives, Waterstone's will have to contract during the next few years, with unprofitable shops closing as leases expire. Hopefully, the whole process will be managed a lot more humanely under James Daunt and job losses will be kept to a minimum. Perhaps it will bottom out at a level where a small 'bookish' chain is sustainable in the long term.
Perhaps if individual Waterstone's stores had more independence they could adopt an approach that best suited their location.
I think that booksellers, like publishers and authors, need to accept that people want more than just 'a book' these days - they want a much more immersive experience, meeting writers, joining discussions, getting sneak previews and 'extras', etc. Bookshops can do this.
I think HMV's treatment of the W booksellers was historically conditioned: through the 90s those running HMV had improved profits by reducing stock range in opposition to those in their company who thought that HMV should stock range - referred to as the 'music lovers' with some derision by their bosses. Without the internet as significant competition and with declining independent shops and the rise of the dvd they did indeed make greater profits, and drove the dissident voices out of the company.
When they took over W they found 'book lovers', likewise seriously committed to range, and I'm sure they thought this is the same problem we had in HMV. And likewise tried to drive them out.
Unfortunately books and the book market are not the same thing as the music equivalent; and the rise of Amazon provided an alternative for those heavy buyers - of books, music & film (ignoring the issue of free downloads).
This has now left - to varying degrees - both HMV & W with most of their heavy buyers (who would be more likely to pay close to rrp) alienated and buying online; a lack of expertise - experienced staff who could potentially claw that market back; focussed around a light mass-market audience who historically don't stick with books through a recession and are competing for that market against supermarkets who are viewing books as loss-leaders. Or something like that...
I couldn't agree more. HMV is a victim of short-term strategies, implemented by people who didn't care where the business was in five years time as long as the current financial year was okay. You could argue that the News of the World followed a similar trajectory.
I couldn't agree more. HMV is a victim of short-term strategies, implemented by people who didn't care where the business was in five years time as long as the current financial year was okay. You could argue that the News of the World followed a similar trajectory.
I couldn't agree more. HMV is a victim of short-term strategies, implemented by people who didn't care where the business was in five years time as long as the current financial year was okay. You could argue that the News of the World followed a similar trajectory.
Very interesting. It's not often that books are talked about in the sense of a business. Nice to see someone taking the time to try and find a way to improve the standing of books and book sellers.
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