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Closures at HMV/Waterstone’s

The bad news, trailed in HMV’s Christmas trading statement last month, was made real yesterday with the confirmation of store closures and accompanying job losses.  You can read some of the details here: http://www.thebookseller.com/news/waterstones-close-11-stores-end-week.html and here: http://www.thebookseller.com/news/hmv-begins-store-closure-programme.html.

Some of the Waterstone’s closures represent necessary surgery that should have been carried out years ago – two Waterstone’s branches in Colchester, two in Chelmsford, etc.  Over the years, Waterstone’s has absorbed Sherratt & Hughes, Dillons, Hammicks and Ottakars, plus slices of Books etc, and inevitably this has created some duplication and redundancy of space.  Notwithstanding HMV’s current situation, and the greater changes overturning book and entertainment retailing, much of this rationalisation should have taken place years ago.

The HMV estate, by contrast, has grown more organically, with box-shaped stores in sensible prime-pitch locations.  Prime-pitch = prime rents; expensive when your market is fading, but perhaps it is easier to dispose of these, than the more eclectic elements of the Waterstone’s estate.

None of this hard-nosed, objective thinking is any consolation to those who are losing their jobs, or those who are fearful for their jobs; they have worked hard and lost out, and they have my most honest commiseration.  Nor is it consolation for the many customers whose favourite bookshop or record shop is on the closure list – every time a store closes, some part of its sales are lost to the trade forever, and talent and experience will be lost as well.

Meanwhile, the situation at British Bookshops & Stationers remains opaque; at least one store, in Salisbury, appears to be closing down, but messages elsewhere are very mixed, following the dismissal of head office staff.  My local BBS is unequivocally in close-down mode, 50% off everything.

Shops close for a multitude of reasons, but all the reasoning comes down to the ability of the shop, or the company as a whole, to generate the cash it needs to survive and prosper.

Every retailer is prey to external pressures – economic conditions and consumer confidence, which may be local, regional or national.  Locally, a structural change – the opening of a new mall, the closure of an employer or a university faculty – can have an immediate impact on the viability of a single store.  When these things happen in the good times, they can be absorbed; in the bad times, they can be terminal.

When the whole of the market in which you operate is restructuring, however, and restructuring away from physical product, away from high streets, and when there are no concomitant savings to be found in occupancy costs (payroll and other controllables already having been tightened, and tightened again), then the situation can become intractable.

I appreciate that some of you may think I am showing pretty outrageous gall in commenting on these closures at all, having been where I was when the last close-down of bookstores took place.  I know that retail markets change, and I know also that retail management cannot always accurately foresee the future.

I also know that every respectable retail executive wants to grow their business, and create more opportunities for the people who are on their team.  I understand the impact that job losses have on employees and their families; I sincerely hope that Waterstone’s can restructure to a sustainable size, and that at least one high street bookstore chain will survive after all the others have perished.

Meanwhile…

This is a book/entertainment sector blog, but the HMV/Waterstone’s news came on the same day that JJB Sports confirmed that they were in takeover talks with the healthier JD Sports, after posting -15.7% Christmas like-for-likes.

A while ago, JJB was the champion of its sector.  Then, pincered between the stronger fashion offer of JD, and the most basic value shout of  Sports Direct, JJB ran out of options.  Years of pain followed, and if the JD tie-up goes ahead, there will be store closures on a significant scale.

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