Waterstone’s sold

I had a great post mapped out last night – Conran/Habitat/Mothercare/ELC/Portas with Bob Dylan and Granny Takes A Trip thrown in for good measure.  You’ll have to imagine that now, as HMV has announced the sale of Waterstone’s for a chunky £53m to Alexander Mamut, with James Daunt appointed MD.

Long-awaited announcements often contain a googly, and the Daunt appointment (with no mention of Tim Waterstone so far) is the surprise here.  So, no time to craft a tolerably honed piece today; fresh coffee and bullet points:

– Very exciting to see James Daunt in charge – his London shops are some of the best in the country, and Marylebone is what a flagship should be.

– However, the Daunt formula is unabashedly high-end, with sites in Notting Hill, Hampstead, the City etc.  How will the best of this specialist approach translate to middle England, where there isn’t the propensity to buy a lot of serious books, or to pay full price for them?  The trick is to take an “elitist” formula, and translate it into something that works for the middle market.

– Many stores will have to close.  In all the time they have had to run due diligence, I assume the Mamut team has identified the store/location types that will work for them in 3-5 years time (ie after a new equilibrium has been established in the trade, with Amazon’s dominance approaching iTunes magnitude, and the supermarkets significantly reducing their book commitment).  Waterstone’s has a lot of store types:

  • City centre flagships
  • Mall stores (eg Reading Oracle)
  • “Interesting” town centre stores (eg Reading Broad Street – the church)
  • “Market town” stores (much of the ex-Ottakars estate)
  • Academic stores

– Each of these (and you could sub-divide the list further) has a different customer profile, a different landlord profile (and occupancy cost-base), and different operational requirements.  If you were planning a retail chain today, you might have “big” and “small” versions of a clear offer – which is what Daunt and to some extent Foyle’s have achieved; but you wouldn’t have this agglomeration of so many different store-types, and with so much still-evident mixed parentage (original Waterstone’s, Sherratt’s, Dillons, Ottakars/Hammicks, “new” Waterstone’s).

– James Daunt has thus far bucked trade (and chain retail) wisdom by:

  • Paying booksellers well
  • Refusing to discount
  • Delivering range breadth, rather than unit quantity
  • Creating attractive and well-maintained bookshops

These aren’t just qualities that Daunt has quietly delivered – they have been regularly emphasised, as core beliefs and as points of business principle.  They are exactly the qualitites that work best in good independent bookshops.  Which principles will survive, and what compromises will be made as the new strategic programme is rolled out?

– Great news – we hope – for bookshop lovers.  And accompanied by an Amazon press release, stating that, “since April 1, customers are purchasing Kindle books over hardcover books at a rate of more than 2 to 1”.  Waterstone’s is and will remain the number one bookselling chain.  But it is no longer the nation’s biggest bookseller, and its suppliers will satisfy its requirements after they have delivered what Amazon wants.

That’s quite enough thinking out loud for one morning.  The change of ownership is a huge step forward for Waterstone’s, and they will have the support of everyone in the book trade as they reinvent themselves in the months ahead.



One Comment on “Waterstone’s sold”

  1. Great post Philip. It will be great to see how Waterstones changes as a result of James Daunt’s appointment. Perhaps the pre-HMV passion for books will come back again…