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Myers wants end to supply chain "madness"
18.03.11 | Charlotte Williams
Waterstone's m.d. Dominic Myers has called for a streamlining of the supply chain, claiming the current system is slashing £150m off margins and is "madness".
Speaking during the "Question Time with the Retailers" panel at last week's Independent Publishers Guild conference, Myers said the industry needed to make changes to its "static" distribution model. He said: "There's an excess of supply chain infrastructure. Given the physical book market will only go in one direction, that situation hasn't got any better. In fact, it's gone completely static."
He continued: "My calculation is that there is 3.7 million square feet of book distribution space [in the UK]. We have 150,000 of that in our hub. If we need that for one-quarter of the book market, why do we need 3.7 million square feet of space in total? You take an average cost per square foot of £50 for that space, it's actually gone up to £150m that the book industry is now subsidising in one way or another, and that feeds through in terms of the margins that you generate and we generate."
Myers made the comments during the panel discussion on discounts in the industry, and said: "Why are we talking about discounts when there are large costs in our industry about which we are doing precisely zip? Look at this panel. We have a shed, as do Smiths and Amazon. It's madness. As an industry we need to do something about it and quick."
Also on the panel was Blackwell's c.e.o. Andrew Hutchings, W H Smith senior trading controller Toby Keir, Amazon books category director John Gahagan, Foyles c.e.o. Sam Husain and Patrick Neale, co-owner of independent Jaffé & Neale.
Questioned about the ideal returns rate, Myers said: "Returns should be much, much lower than what we have currently," adding: "Our desire is to have returns significantly lower. Last week it was 12% but it should be in single digits. We're recycling around 20% of returns through the hub." Explaining the reasons why returns can be large, Myers said: "The reason why stock is coming back is because it's the wrong stock that has been ordered, or in the wrong volume. Some of those titles are no longer justified space." Keir largely supported Myers' viewpoint on returns, and said: "Returns are getting better but from quite a high starting point. How we solve that conflict is a big issue for us."
However, Blackwell's Hutchings disagreed with Myers' single-digit stance, saying a decent rate of returns would be 10% to 15%. He said: "If we have to get to a point where the returns rate is so low then it means we are not taking enough risks, or getting behind new titles we début."
Amazon's Gahagan said the internet retailer's returns rate was "at a lower level naturally", but it wanted to improve on this as well as focusing on increasing availability.
Reacting to the panel's comments, Osprey Publishing m.d. Rebecca Smart said talks lately with Waterstone's on returns had been about balancing cost and display, and said: "We are finding them [Waterstone's] really, really supportive at the moment, more so than ever."
Myriad Editions m.d. Candida Lacey said it was "so hard to cope with returns". She said: "I just feel they should be more realistic [with orders] . . . [Myers] said he was aiming for single figures and that's about right, I would much prefer to see it lower."
However, Steve Connolly, New Holland m.d., said "very cautious frontlist ordering has been more of a problem than returns".
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Dominic Myers comments above, and earlier statements re range, are very much at odds with recent findings.
Last Saturday my in-store business sold 2 comparatively recently published illustrated titles - one of which according to Waterstone's on line is not stocked (vide Marketplace redirection) despite at that time Berts had approx 200 copies, and Gardners approx 100 copies ; the other was only available in 2 branches and offers 2-3 weeks delivery despite availability both from publishers and wholesalers.
These two books resulted in approx £75 sale for which my business was very welcome : I could list dozens of similar instances and fear for Waterstone's vulnerability in these straightened times.
"We have 150,000 of that in our hub. If we need that for one-quarter of the book market, why do we need 3.7 million square feet of space in total?"
Because your 150,000 does not hold stock, you nit-wit. It carries a very limited amount of stock on a tiny range of titles - no more than 1,000 - and otherwise simply repacks books received from stock holding distributors.
These distributors, by-the-by, have invested enormously over the last five years to deliver almost without exception an exceptional service. Unfortuneately, they assumed they would deliver to individual shops nationwide, not to a central hub which merely duplicates their work at great additional cost (how much? £10m p.a., £15m p.a.? more!?!)and minimal saving to themselves.
Whose bright idea was that?
Shut the Hub and that would be a start to culling the glut of excess warehousing D Myers is complaining is costing the industry millions.
I echo comments above by Anonymous.
Hilarious comments from Myers, claiming the UK has too much warehouse space just after opening a massive, ineffective, costly warehouse!
The main problem with Waterstones is their empty shops. My local has bays and bays of face out stock, no range and empty bays at front of store.
Plenty of cards, soft toys, cups, note books - but books? Nah...
The best thing Myers can do is make Waterstones a bookshop again..
Waterstone's is in trouble?
They seem to be able to spend huge amounts of money on garish purple shirts for staff and horrible bright pink shelving for their bestselling books, not to mention window decoration, posters, etc.
For a company that seems to be clinging to life by the fingertips, the people in charge sure know how to spend money.
Wait, don't tell me, you have to spend money to make money.
That's true, but why not spend the money on, oh, I don't know... books!?
I've been into waterstone's recently and asked for a book.
They didn't have it (it was, fact fans, one of the 'Sharpe' series by Bernard Cornwell) and offered to order it for me.
How long would it take?
They said three-to-four working days... after a brief discussion, the poor staff member looked genuinley guilty for not being able to supply the book quicker and did, infact, suggest Wasterstones website might be quicker!
Hit the Hub.Shut the Hub. It's the biggest waste of space in the industry. What a cheek DM coming away with this nonsense when the hub has been so disastrous! And if you want to cut returns then stop returning books - duh! Have a few sales shops that sell returns/seconds/etc.etc. they need a couple of people on the till and can be short-term leases in secondary locations - what doesn't go at 25% off rrp can go at cost price and the very small amount that's left can get further discounted. That will add to profits & immediately get rid of all the handling costs of returns, admin costs of returns, all the freight charges of the individual parcels. why does this chain so resolutely keep its head in the sand instead of making money?
Please remember, the shopfloor staff feel the same way as you... you can laugh at this catastrophe from afar. They have to live it, day after day, and it's becoming a joke I'm sure.
Hub = FAIL
Mr Myers comments seem superfluous, given that it's likely that Waterstone's will soon be under new management.
Next week, HMV will have their crucial meeting with the banks and Simon Fox will repeat the tune he's been playing for years about developing new channels for the digital age, but will the banks listen?
Hopefully, Waterstone's will find a new owner - not an asset-stripper, but one who will help the business play to its strengths rather than fight a losing war against the internet sellers and supermarkets. There will have to be some tough decisions and more stores will have to close, but hopefully we'll be left with a viable business. If that happens, it's vital that the publishing industry gets behind the chain.
The worst thing that can happen is for Waterstone's to remain part of HMV. HMV is sinking - everyone can see that - and they will drag Waterstone's down with them unless something is done.
Crystal Balls, I agree!
Why, Mr Myers, you're right up there with Charlie Sheen in regards to your nonsensical ramblings.
Have you been on the Tiger Blood?
For Waterstones to lecture anyone on supply chain madness would be hilarious were it not so tragic. As a small publisher selling a successful range of local books, a few years ago (after years of selling and supplying directly to local Waterstones shops) we were forced under the Waterstones centralisation policy, to supply via wholesalers. Now when a store needs books from us we send them to the wholesalers who send them to the hub who send them to the shop 10 miles down the road from us .... efficient or what? The net result has been that our business with Waterstones has decreased by some 60-70% while doubling with everyone else ... and they wonder why they're in trouble!
Poor Mr Myers, he's taken on an impossible job and an impossible situation. Please Mr M get Waterstones bought out of HMV's clutches, close all non or marginally profitable shops, train staff and give them a satisfying and diverse career structure, treat you publishers with respect, order reasonable quantities and return same; otherwise Waterstones is going nowhere.
Gerry Johnson's brainchild of the HUB is an enormous mistake. Myers is saddled with it and can't admit this, but has the audacity to talk about "supply chain madness," without realising the irony of his remarks.
Get rid of the hub as as soon as its practicle to do so. Filling the shop with non-book tat, only diminishes the brand and deters genuine book buyers from shopping there, because they believe it erodes the range. If suppliers are temporarily halting supplies to Waterstones it can only be a blow for availability and thus sales at the company; and thus prompt customers to go elsewhere.
HMV should sell Waterstones!
Re Hub abd His Lordship
Just an opinion from an ex manager, and firstly let me say not a bitter one. I just decided it was time to move on to pastures new.
There seems to be a continual reference to decline in range and and perceptions of customers towards the brand because of this. In my time we continually tried to pump range into the store ( pre hub ans post ) using the skills and tools availible , but to be honest in areas like Sport , Cookery , History etc , all this did was add lots of good backlist titles ( that would have been in the top 5000 etc ) , but you could not convince customers to pay full price for these , hence these titles often had a shelf life of six months, did not sell and were sent back .
As I think everyone knows backlist and it prices have been dramtically dented by outside factors. As an example my local Sainsburys were selling backlist Ian Rankin for 2.99 the other week . Hence why attmepts at selling differing product have been tried to increase margin and regain lost sales.
Perhaps Indies have a better chance , in offering better service to match the more expensive prices, perhaps in some locations they have a core audience willing or able to spend the money full price range titles.
What the future holds I do not know for the W, I hope it surives as we would be poorer without a national specialised bookseller. But the mantra of " Fill a store with range , they will buy it " will not solve the inherent problems the big W faces.
Like I said just my thoughts and opinions from the outside.
Alas the chain is a much more attractive chain to a potential buyer without the unprofitable shops and the hub and the easiest way to achieve this is through administration, maybe using one of these dubious pre-packs which rob the creditors and other potential buyers simultaneously? Any potential buyer will only pay a derisory distressed price now as they have to factor in the costs of ongoing losses with the u/p shops and however long the hub is locked in for - so that's unlikely to result in a sale. And if HMV goes into administration it will go for a song too but without all the drains on future income. One only has to look at British Bookshops to see how it could go - at least at the end of the process there will hopefully be a decent core business that can then rebuild - but the damage all round that will happen to get there will be massive. That said nobody wishes to see any of this happen - we still hope for a white knight or a magic bullet that will turn things around, but in this sort of situation for the md to have the time to go to conferences and preach to the rest of us - it's not just ironic - it looks like denial.
What a surreal statement from Myers. A large part of the UK publisher warehouse space is for distribution of books to the rest of the world (i.e. not for the UK trade) with another massive chunk being the bulk stock which feeds the notionally just-in-time forward stock held at the Hub. The Hub is a creature from a nightmare dragging down Waterstone's profitability while at the same time exposing it to ridicule. Here we are, in a narrow, heavily populated country with good communications and yet every unfortunate copy of Ian McEwan's new paperback has to go on a weird journey in and out of the Hub, shedding fuel, wasted cardboard, exhausted and baffled lorry-drivers and profitability at every turn!
What is missing from this article are Mr Myers far more contentious remarks to the BA academic conference about Waterstones and academic books: now that he's returned most academic stock to its publishers the threat is that outside of semester time they'll only remain in stock ON CONSIGNMENT - because he needs his money for more profitable books! That'll be the £2.99 Ian Rankins then. I look forward to seeing Gower Street reduced to a sort of upmarket WHS.
Poor Dominic Myers seems to be getting it unjustly in the back!
A lot of your writers show very little knowledge of the supply chain. Of course it makes sense in every possible way to have a hub - that's how all efficient complex networks work, including all major parcels carriers. My books from Bertrams and Gardners arrive via hubs. The point is the hub has to work properly that's all. Where's the sense in many different publishers delivering separately to a load of shops all over the country? Why are they complaining when they now only have to deliver to one point, where goods from the huge number of sources are amalgamated for the onward journey to store.
As I say this is the only sensible way to run a modern distribution system, and I speak as someone who once managed the largest hub in the country.
I presume that Waterstones have faith in their shop staff or they wouldn't have set them on in the first place....so why not stop insulting their intelligence and allow them to order for their branches? Better bought stock that reflects local need means less returns to the dreaded HUB.
And why do we have the HUB? As has been said more than once, it doesn't work so stop flogging a dead horse and let's get back to branches ordering from the publisher. Publishers/reps that is that do their job properly and don't overload shops with the latest supposed best selling title that is still their gathering dust while the rep has disappeared.
Oh for the days of proper publishers/reps and bookshops!
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