“I AM EXTREMELY motivated to keep the shops open and keep booksellers employed, and that is why I’m doing it. None of us are in this for the glory or the riches.” James Daunt is speaking 18 months into his role as managing director of Waterstones, and responding to a question he says he has been asked too many times: how can he continue to run a 300-strong bookselling chain at a time when the physical book market is in retreat? The response, while simple enough, is revealing. He believes in the bookshop, and the value of the bookseller.
It has been 18 months since Daunt unexpectedly took on the toughest job in the British book business. In that period Daunt has had to make some tough decisions, not always palatable to his suppliers, not always easy for his staff to absorb, and not always explicable to outsiders. And yet a year and a half in, Waterstones is still standing, still trading from 290 stores and still employing thousands of booksellers. What facts there are support Daunt. So far.
Daunt talks to me via mobile on the train back from the Chelmsford Waterstones, the latest shop to be refurbished in a programme that is now picking up pace. Despite the challenges of his position, he is in positive mood. Not short of confidence, Daunt has occasionally looked like a man wearing an uncomfortable suit, never more so than when he announced the Amazon Kindle deal on YouTube. But a few months on from that the mood has shifted. The Kindle is out, and the refurbishments are finally being put to the test. Daunt is finding his range. He says the business is approaching this Christmas with “passion and energy”, with the chain’s staff responding to the “sense of belief” he has instilled. He adds that Waterstones has never enjoyed better relationships with publishers.
The revamps are also helping. “We have been quite surprised by the impact of the refits,” he says. About 20 branches have been refurbished so far—the (revised) aim is to have 50 completed by mid-December. Daunt says sales are up “significantly” in the new ranges such as stationery, toys and coffee, and there is also growth in books, with titles given “breathing space” under the new look. Overall, those new-look shops are showing double-digit sales growth, a remarkable turnaround for a business that has been on the back foot since the days of Gerry Johnson, the m.d. who was replaced in January 2010 by Dominic Myers.
The timing of the refurbishment comes relatively late into Daunt’s tenure, right before the busy Christmas period and, intriguingly, not long after the Kindle deal. But Daunt has not been idle. During his reign Waterstones has renegotiated terms with most of the big publishers, built a Russian Bookshop in its Piccadilly branch, scrapped their three-for-two offer, returned the Waterstones logo to Baskerville (sans apostrophe) and done a deal with the “devil”. Still, it’s been a long haul to get to the point where forward momentum is again a possibility. Some people would have wanted the refurbishments to come through more quickly, perhaps even Daunt: “When I think about what percentage of the estate is acceptable, I still think it is pretty low. Tired is the euphemism I would use.”
Waterstones operates stores in a range of places and retail formats: Hatchards, of course, a rump of former Dillons and Ottakar’s stores, and the campus shops. “We had to take a long time to think about it,” Daunt says. “We then had to pilot it in all the different types of stores we have. We then had to scale it out: it’s a lot more efficient to buy 800 new tables than 80.”
Publishers may not yet be seeing the improvement in their Waterstones orders. Publishers began talking of Waterstones underbuying and not supporting, in particular, frontlist titles in the spring—but more recently the talk has become increasingly vocal. Daunt doesn’t deny that the issue exists. “We are selling more books than we are ordering, and that will go on up until Christmas,” he says.
After Christmas he expects the situation to adjust itself, but for now publishers will have to deal with the austerity. Daunt says he is trying to “empty out the stores after years of overbuying”: “We are trying to let the books breathe. In the old days some of these titles were not even displayed, they were never even given the chance to sell.”
He says the old approach left the chain ludicrously over-stocked. “There was £20m of stock sitting in stock rooms, and £20m sitting under tables. Nobody buys a book from under a table, or from a stock room.” And he argues that he is trying to make the transition easy on publishers: “This is a period of adjustment, but we are trying to make it as painless as possible by moving that stock around the chain. We could have begun to send them back, with the huge disruption and cost that would have involved.”
Fired up by Kindles
Publishers hoping for a return of the three-for-two promotion will also be disappointed. Daunt culled it a year ago, saying it had run its course. “It was a poor retail experience, and W H Smith and the supermarkets were doing it better,” he says. “A lot of those books were also disproportionately going to digital: the days of being able to sell 20,000 Lee Child books through Watertones using that promotion were gone. There wasn’t room for Waterstones to pay the bills on those margins.”
Getting customers into Waterstones shops was also a factor in the Kindle deal. “Once we’d determined what our customers wanted, I wanted to give it to them. Our booksellers are very enthusiastic about it and it makes sense. The old folly of stocking those second-rate devices, was hugely damaging to the credibility of the Waterstones brand.” Daunt won’t be drawn on how that deal came about, though denies the industry rumour that it was imposed on him.The chain’s ultimate owner Russian oligarch Alexander Mamut “has no relationship with Amazon at all”, he says.
Daunt says customers shopping for Kindles are also buying books, though he is aware that after they have left the shop with the Amazon e-reader, getting them back into stores may prove difficult. “If the migration to digital does go beyond a certain point when retailing books becomes less viable, then we’ll have to sell more things other than books,” he says. “That seems unlikely, but the industry is moving at a speed that is somewhat surprising.”
Daunt says the business is now “extremely adaptable, more so than we used to be”. In an environment where book-buying habits are changing so swiftly that is a necessity. Even if the product mix changes radically, the environment remains important. “Bookshops are still hugely attractive places within which to sell other items,” he says.
He says Mamut backs him in this although he is not involved in the day to day running of the business. “He is very interested in the overall direction of it, and the ethos of the business.” Daunt won’t be moved on the financial performance, though says that its first year should not be taken as a reflection of future performance. Turnover and staff numbers have shrunk in line with the estate. “The intention is to be running a profitable and sustainable business, albeit one in an environment that is changing.”
Daunt reckons the story around the chain will get more interesting next year, when expansion enters the frame. “We’ll continue to adjust the portfolio. There is still duplication in some areas and some shops are too big, but we’ll also look to open new stores. If we have a good Christmas, this should create the resources to begin that.”
As for his future, or that of his own chain Daunt Books, he is circumspect. “I’ll be very pleased to get back to the shop floor,” he admits, “but I don’t mind if that is at Waterstones or at Daunt Books.”
While the Kindle deal garnered column inches, the Waterstones fightback
may ignite on the physical side. Lisa Campbell travels to Brighton to
visit one of the chain’s new-look shops
“LAUNCHING THE KINDLE is obviously important as a single piece of work,
but it is not the only thing we have been doing this year.” So says
Waterstones spokesman Jon Howells when we meet to discuss the launch of
the Kindle in Waterstones in October. That news, of the bookseller’s
partnership with its fiercest rival, sent ripples around the international
press when it landed in May.
What received less attention was the equally if not more important promise
that the chain would refurbish a third of its estate, costing “tens of
millions of pounds”, by Christmas—an investment its booksellers said was
much needed following the arguably overly prudent reign of HMV.
From the start of his tenure, m.d. James Daunt has reiterated that the key
to gaining and maintaining loyal customers was to make Waterstones stores
“beautiful” places to visit. “Above all, you, the booksellers, supported
by your regional managers, grab your shops by the scruff of the neck and
make them great, stimulating, irresistible bookshops for your book-buying
communities,” he exhorted staff in one of his first email communications
Small to wholesale changes
While the world’s eye was on Daunt’s digital strategy, plans to spruce up
the bricks-and-mortar side of the business have been slowly taking hold,
beginning with a trial in Twickenham and moving onto locations such as
Greenwich and Nottingham, later fanning out to Belfast.
The project brief was simple but far-reaching: 100 store refurbishments to
be completed by Christmas, WiFi rolled out across the estate (to help
customers download Kindle books in-store) and own-brand Café W coffee
shops with grey branding and locally-sourced goods installed. “At
Waterstones, we are committed to improving our bookshops quite radically
to offer the best possible book-buying experience,” Daunt says.
With a reputation for a hands-on leadership when it comes to nurturing the
transformation of his chain, the managing director himself embarked on a
summer tour of more than 100 Waterstones shops, visiting locations from
Ireland to Jersey, with the retail development manager Alison Belshaw,
sizing up the magnitude of the task in hand. “This was to see what the
bookshops were, what we wanted them to turn into and what he wanted them
to become. Part of my job is understanding his vision,” Belshaw says. “The
most important thing is that I am a bookseller and I understand.”
Starting off at Waterstones as a Christmas temp worker, Belshaw rose
through the ranks and has been based at Waterstones HQ in Brentford for
the past four years working in project management.It is Belshaw’s task to
ensure every picture hook tweak and furniture shuffle in each individual
store is carried out correctly and according to the “vision”. The
overarching aim is to make the shops lighter, brighter and more spacious.
This she has begun to achieve through small to wholesale changes in the
A prototype Belshaw and the Waterstones team are proud of is Waterstones’
Brighton store on North Street, which was one of the first in line for a
makeover. As with the other new-look stores, the first key change was
furniture: out with the opaque, block, wooden display tables and in with
open units and narrower table legs. The psychology behind the table design
is to “make it look nice and big” according to Belshaw, because “solid
blocks detract attention”.
“There is something about how it makes an environment feel,” she adds.
“The tables make quite a big difference. It does reach right down to what
we are doing with the books. If you do not get the interior right, we will
not encourage people to browse, and that is at the heart [the design
changes].” Three design styles make up the new furniture family, and they
are medium and large black square units and a smaller round table.
Bespoke and individual
Next is a change in the lighting which, all new, has been positioned to
attract attention to the display tables, with side spotlights helping to
emphasise books on bookshelves.
More cosmetic alterations have involved adding a canopy over the outside
windows to allow customers to view front bay displays, making the shop
appear instantly more enticing to passers-by. In the large front bay
window sits a giant bespoke poster for Waterstones Brighton depicting
scenes from the seaside resort, which is all part of Daunt’s emphasis on
Waterstones stores becoming more individual and playing to their distinct
customer bases. Each refurbished store is to have its own posters,
Waterstones says, as part of the curated look.
Daunt said in March that the business was “currently operating with 20%
less stock than under its HMV ownership, but has 21% more titles on the
shelves”. In Waterstones Brighton the fiction section has been extended
downstairs, with the lesbian, gay, bisexual and transgender literature
section also increased and made more prominent on the first floor. The
non-book product range has also been augmented, selling items more closely
associated with other books. “We have a lot more related products, but
because of the new style of furniture it doesn’t feel like that,” Belshaw
Even the introduction of the Kindle devices in-store has been designed to
try to ensure its alien digital presence smoothly fits in. The Kindles are
differentiated by being held in brown wooden display units, with pendant
lighting to show them off to full effect. But, as director of IT and
e-commerce Steve Monaghan says about the Piccadilly store: “It is
eye-catching yet it doesn’t stand out, and it feels like you are in
Waterstones. You still need to feel like you are in a bookshop.”
With Christmas fast approaching, the initial aim of refurbishing 100 shops
seems to have been a bit ambitious, but Waterstones said it expects to
have finished 50 store overhauls by 25th December, with some
transformation seen in at least one shop in every region (Waterstones
splits the UK into 15 regions), 10 of which will have own-brand Café W
Daunt’s vision so far is still intact, but it remains to be seen how his
mandate will be affected depending on the popularity of the Kindles and
the success of the Waterstones/Amazon partnership. “I do think the shops
will have fewer books,” Daunt has said on record. “But they will remain
absolutely first and foremost physical bookshops.”
Daunt replaces Dominic Myers, says the first thing he must do is overhaul
archaic Waterstones systems and look at digital.
21st July 2011
Daunt reintroduces centralised buying as his first major shake-up of the
company. Later says he wouldn’t return to decentralised buying “as long as
there is breath in my body”.
31st August 2011
Announces the three-for-two offer at Waterstones will be scrapped in
Begins negotiations with publishers to scrap promotional fees for books in
return for higher margin.
Publishers question Waterstones’ Christmas performance, with one publisher
telling The Bookseller they were 30% down year-on-year with the chain.
5th December 2011
The Independent runs an article with Daunt, and quotes him saying Amazon
was a “ruthless, money-making devil” and the “consumers’ enemy”.
12th January 2012
Waterstones reverts to original logo and drops the apostrophe.
8th March 2012
At the IPG annual conference, Daunt says Waterstones should be judged on
their performance over Christmas 2012.
Barnes & Noble sends out contracts to publishers to enlist their content
for Nook e-readers, at the same time as holding a stall at the London Book
Fair; rumours abound that talks have fallen through with Waterstones.
Daunt said the bookseller was investing “an extraordinary amount of money”
looking at developing its own e-reader.
Announcement that Waterstones will partner with Amazon to sell Kindles
in-store. Refurbishment plans revealed.
9th October 2012
Waterstones reveals new branding campaign and Café W plans.
25th October 2012
The Kindle goes on sale. “Fits nicely in your bookshop” is one slogan.