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New Waterstone's terms thrashed out

14.03.08 Graeme Neill

Waterstone's is asking publishers for up to five extra percentage points of discount for when it rolls out its new consolidation centre in June, as discussions over terms near their final stages. Commercial director Neil Jewsbury said that talks with the publishing industry would be finished by mid-April to enable the retailer "to get on with business as usual". The Burton upon Trent warehouse will go live in the first two weeks of June, with the first store to be the Burton branch. "We want to go live with all publishers in one store, then all publishers in a region, then all publishers across the country," said m.d. Gerry Johnson.

Publishers are being told that savings are "double-ended", in terms of cutting down on distribution costs as well as the levels of returns. Instead of returns being sent back to publishers, they are to be recycled across the chain. "The current level of returns is out of control," said one publishing sales director. "It's about 23%."

The changes to terms are being determined on the size and -performance of individual publishers, with levels being discussed of up to five percentage points increase in discount. The sales director said that while he was concerned about potential teething problems with the new supply method, Waterstone's had been frank with publishers. "It has been great in showing us there are real savings here," he said. "Talks have all been upfront and not at all aggressive."

"Waterstone's has been very good in engaging publishers and keeping us involved," added another sales director.

Johnson spoke to delegates at the Independent Publishers Guild's conference last weekend about the "difficult process" that will have to be gone through with terms discussions. He urged publishers not to let discussions over terms colour their overall relationship with Waterstone's. "If we fall out over terms, keep that in a box about terms, and don't allow it to enter the box about growing sales, and bringing good books to customers."

Retail waterstone's Graeme Neill Home Neil Jewsbury

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By Clive Keeble

Typical supermarket mindset from Waterstone's ; run an inefficient supply chain and then demand that your suppliers (via additional discount) meet the adoption costs of central supply. Perhaps if Waterstone's had the spunk to accept *firm sale* on *all* stock they might get a more receptive response from many publishers.

14 Mar 08 08:10

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By Kirsten Elliott, Akeman Press

When Waterstones first switched to getting all their books through Gardners, instead of taking books from local publishers like ourselves directly, I told them it was fraught with inefficiencies, besides being ecologically unfriendly - and received irate e-mails from their head office telling me that they knew what they were doing. Well, it hasn't worked out - hence the change. In the meantime, our policy is now that our maximum discount is 35% - before the changeover Bath Waterstones had demanded and were getting 40% from us. But why should big boys get a bigger discount, when it is the independent booksellers who are frequently much more efficient? If Waterstones don't like it, they will have to go without - and locally, our books sell rather well. We also only pay refunds on returns that are in saleable condition. If all publishers took this firm line, instead of caving in, these huge discounts would disappear. And the independents, like Keeble Books, would be appreciated for the excellent and well-informed outlets that they are. As far as I can see, most Waterstones - and there is an honorable exception in the Galleries in Bristol - are little more than suprmarkets, and the present staff often have little or no love of books. Those who did have left in disgust.

14 Mar 08 09:55

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By David R N Livesley - Woodstock Vermont

Funny old world.....here we go again.....as an ex-negotiator for Walker Books with Waterstones, I spent many fruitless hours trying and ultimately failing, in getting a reasonable long term terms settlement for my company. With each new management change a new desire for improved margin was demanded using the big stick which was effective. If you fought the battle....it came down to a threat to purchase a minimum of your companies titles, and this was I know put in place for other companies. Can I prove it...hell no they were not that stupid to put it in writing. My former company ended up giving 60%+ discount on a regular basis when all the retrospective discounts were added back in. I find it amazing that any retailer who runs inefficient systems, demands that it's suppliers bail it out time and again, and then also help pay for the introduction of their new system! Funny observation....Borders are dismantling their central distribution and Waterstones are opening one up. The only folks who make money are the haulage companies who trundle books around the country...and the clearance companies who buy up the un-pulped returns. All of this shenanigans is one of the many reasons why after 25 years I am now longer working in this sector of commerce.

14 Mar 08 12:37

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By JULIAN RIVERS

Well it was never going to be free was it ? All this stuff about "green savings " may be a side issue but essentially this is a drive for Waterstones to equal supermarket publisher supply terms . I believe incidentally that such chains are owed terms in line with the supermarkets , they buy responsibly, and show massive commitment to stocking and selling books which are core to their business. Supermarkets are exploiters of our product, Waterstones are nurturers of books and authors .

14 Mar 08 15:32

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By Jez

Although annoyed at some comments I've never felt prompted to post before. I'll come clean form the start I work in a Waterstone's bookshop and when I last checked my feet werent cloven, I didnt have a tail and I dont think I smell of fire and brimstone. I've got to reply to some of these posts. I'll ignore Clive's sweeping generalisation and tired supermarket comparisons. (interesting that the 2 quotes in the article from publishers didnt seem too bad). But Kirsten.. that really doesnt do you much justice "the present staff have little or no love of books" and that old supermarket chestnut again. I know I shouldnt be bothered or rise to the bait. I just think is an awful insult to myself and the people I work with or have worked with , all of who are passionate about books ....maybe not the books you publish but fair enough I dont live in Bath. To think that because we work for a chain means we have no interest, enthusiasm and love for what we sell is just ridiculous. i would invite you to where i work , show you the recommends i love doing, introduce you to some of my customers, etc but I dont think it would make any difference as you'd probably patronise me by saying we were an "honourable exception." Where i work is not perfect by a long way but i feel I have enough spunk thankyou very much and I dont have any feelings of disgust!

14 Mar 08 20:27

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By Clive Keeble

Ah, Jez, but you failed to offer a response to the very pertinent comments made by David R N Livesley. Is it perhaps because they are highly accurate, and illustrate how Waterstone's will cherry pick on range with a publisher even though they make excessive discount demands (on the edge of commercial unviability) ; expect the right to refresh stock by making returns, and yet still have the nerve to expect suppliers to meet the adoption costs of central supply.

15 Mar 08 08:10

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By Kirsten Elliott

In response to Jez, be fair - I'm more than happy to praise those Waterstone's shops where the proper bookshop ethic is still in practice - I made that clear. But I actually know several people who have left in disgust. Just before one friend left, I heard him having a huge row over the phone with Head Office over its failure to comprehend how a bookshop works efficiently. Fortunately, some have stayed in the booktrade and are running excellent bookshops which local people find helpful and welcoming. Then there's the time and fuss it takes to order a book in Waterstone's. One bookshop in Bath is flourishing by being near a Waterstone's - some of his customers come to him because of their frustrations with Waterstone's. OK, maybe Jez works for one of the dedicated Waterstone's that is left, like the one in Bristol which is still a proper bookshop - but I spoke to some of the staff in some Ottakar's as the merger took place and they were dreading it, precisely because of Waterstone's supermarket attitude.

15 Mar 08 08:25

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By Kirsten Elliott

Further to my last - I haven't got it in for Waterstone's staff - it's the system that's at fault. Recent experience - very new member of staff at a Waterstone's in Somerset phones me to order a book. She's used her initiative to found out where we are. Very sensible - once I could have sent her the book and her customer would have had it the next day. Instead, I had to explain to her that, sadly, she would have to order it through Gardner's. How long a delay to customer? Goodness knows. At that stage they couldn't believe how well it would sell so didn't stock it. Result, thanks to Waterstone's system - one impatient customer who probably thinks it's Akeman Press's fault, and one new member of staff who has had her enthusiasm dampened very early on. Does that really make sense? And if Waterstone's won't stock our books unless we give in to their demands - and we won't - then Waterstone's customers won't be able to buy our books in their shops at all. Fortunately, we have a very efficient mail order service, which is about to become even more efficient. So good for us, good for the independents - not so good for Waterstone's. Or am I missing something?

15 Mar 08 09:12

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By Ron

The very strange thing about increasing discounts is that however high they go, publishers' profit margins always go higher. Look back through the recent news items of the Bookseller at how many large publishers are making record profits Whoever said there is only 100% in a 100% was wrong. The publishers always have another 20% up their sleeves.

15 Mar 08 12:32

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By Jez

Clive - as I work in a branch I cant really comment on David L's point. I'm not sure what you mean about cherry picking range ...isnt that what any retailer does with a supplier. Also i dont really see the issue of getting further margin if the dist centre provides savings for suppliers (the issue will be if the savings arent realised ). Kirsten - my issue was the wording of your original e:mail dammed everyone except bristol with the same brush. i'm glad you recognise there are other Ws out there with running excellent bookshops .. although I feel we differ in that in the region I work in I think this is the majority whereas I feel you think it is the minority. I also wanted to make the point that asan employee I'm tired of the sweeping supermarket statement that gets trotted out but I'm never exactly sure what it means .. i just know where I work doesnt feel to me like working in a supermarket and I'm sure it doesnt to the people who shop with us.

15 Mar 08 12:41

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By Clive Keeble

Jez, 'leading stockist' status (with extra discount) is offered to high street retailers, in many trades, on the (generally unwritten) understanding that they will take broader stock selection and not merely cherry pick choice items ; such a relationship gives the supplier extra visibility - in the stockists outlets - for a wider stock range than would be normally attainable. An interesting aside is that indie bookshops generally receive discounts of approx 2/3 those demanded by Waterstone's ; nevertheless, it is the independent sector which is growing sales, profitability, and market share.

16 Mar 08 10:35

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By jez

thankyou Clive for explaining your point. RE the independant sector growing sales and profit, I'm sure they are. All i know is that the branch I'm inis on a greatrun at the moment. Only on ebranch I know but I think our region s doing pretty well also.so its not all doom and gloom in the chains!

16 Mar 08 18:16

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By David R N Livesley - Woodstock Vermont

Ron, On the point of publishers profit margins you are indeed correct, but I would suggest that growth is coming from the few mega sellers....which funnily enough now seem to always have high cover prices....that are then reduced in the almost automatic 'buy one get an entire related backlist title from another/same publisher that pays its creative author peanuts in backlist royalties' type promotion, or the 3 for 2 (which consumers seem to love) and also selling books outside of the traditional high street. Ted Smart seems to be able to grow his business...which means there is a demand out there! The folks who should be shouting are the creatives who write/compile the books, as the royalties of the successful ones are being in my opinion abused by very creative accounting in some publishing houses and also poor agenting. The agents don't demand to see what is sold at what price to whom (as there is often have no right to have this information in the contract) and hence the net royalty per deal from which you could deduce who was a positive business etc. The aggressive agents build this into contracts, but i feel find it very hard to actually get really transparent information. Thus the financial success of publishers (which does keep the whole apple cart trundling along and I support) is down to the creative marketing by publishers. However the days of needing high street retailing groups are I feel numbered. HMV are attempting as a retail group to reinvent themselves and the city seems to like it, but I wouldn't put my money on their donkey in the race. Funny how W H Smith seem to have risen above all this alleged aggressive negotiation and now seem to keep most parties happy as the good boys of retailing! How different it was 4 years ago.... A good retail independent in any sector will always win out with a consumer as they offer personal service and do get customer loyalty. They just need a good location and ideally to own their freehold.

17 Mar 08 02:22

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