Waterstones md tells conference that chain is not 'remotely close' to where it wants to be
Elliott Advisors, Waterstones' new owner, "seem to be sympathetic and rational and sensible", and the chain was "reasonably confident" that its aims and those of its owner were aligned, Waterstones md James Daunt told the Independent Publishers Guild autumn conference yesterday (18 September). Daunt spoke about the Waterstones distribution hub in similar terms: the new owners "appear willing to invest" in the improvements that Daunt and his colleagues had identified as essential. As for Waterstones' own, newly acquired subsidiary, Foyles, "We won't be doing anything in a hurry, until we really understand how to make Foyles a better shop."
Daunt conceded that Waterstones had been "extremely distracted" by the search for and acquisition by a new owner following Alexander Mamut's decision to pull out. Now, he and his team were "back at work" - as they need to be if they are to enable Elliott Advisors to profit from its purchase in four or five years' time. "By no means do we think that we are remotely close to where we should be."
He identified several areas of focus. First was Waterstones' stockholding: the chain should concentrate on ranges that bookshops were especially suited to selling, and not on those - such as technical books - that internet retailers could provide just as well. Waterstones had been increasing its sales of non-book items by about 1% a year, to about 13% of the total; it was aiming at 18%, "and at that point we'll stop".
At present, Waterstones was guilty both of buying too much and too little, Daunt said. The fronts of shops were "bursting at the seams", while, further back, steady sellers were not being replenished as booksellers tried to create room. This was "the opposite of what we want to do". Publishers may be alarmed at the prospect of lower initial subscriptions; but Daunt and colleagues believe that the policy will enable books that prove to be in demand to sell even better. Ultimately, he said, to applause from the floor (though not all publishers would be happy at such a move), Waterstones wanted to move to firm sale terms.
Waterstones will open new shops, including non-branded ones in small towns. But not, he said, where independent booksellers were already operating - a plan, since reversed, to open in Stockbridge, which did have an indie, had been "a mistake". On the subject of branding, he said: "Personally, I find chains - or the notion of chains - dispiriting."
Waterstones' biggest challenge - certainly the predominant theme of Daunt's tenure - is to balance the centralising tendency of a large organisation with the devolution of authority that will enable local branches to thrive. You could never run a bookshop in Abergavenny centrally, he said; but such a shop could certainly benefit from logistics support from a parent company. If Waterstones' owners provide the backing, the chain aims to increase stockholding at its hub from 20,000 to 80,000 titles.
Part of the strategy to be more responsive at local levels has been the relaunch of the Waterstones loyalty card. Use of locally sourced information, at this early stage of the relaunch, had already produced "very significant results".
Foyles had offered "opportunistic expansion" following an approach by chairman Christopher Foyle. It has a devolved structure, with publishers' reps visiting branches and taking orders. This system would continue for some time to come, Daunt said.
The chain was spending "serious money" on refurbishing some of its larger branches, including ones in Edinburgh, Liverpool, Newcastle, Leeds and Cambridge.
The result of all this, Daunt suggested, would be annual sales growth of 2% to 3%.
In answer to questions, Daunt said that he did not expect small publishers to give Waterstones the same terms as the chain negotiated with the conglomerates; that the chain was trying to work out how to create a "more dynamic" relationship with its customers; and that it wanted to create a single repository of data rather than the three - one for the hub, one for the shops, and one for the website - that it currently possessed.
Photo: chair of the session Amanda Ridout with James Daunt