Waterstone's on front foot

Waterstone's m.d. Steve Knott says he is bringing commercial retail discipline to the UK's largest dedicated bookseller.</p><p>
When HMV Media chief operating officer Brian McLaughlin took the podium at Waterstone's annual management conference last week, he launched a forthright attack on those who tell Waterstone's how to run its business.</p><p>
The chain, on the defensive for some time, has started to fight back. Steve Knott, formerly of HMV and BAA Retail, has kept a low external profile since he joined as m.d. last September. But the growing confidence means he can now set out a strategy to the outside world, and move Waterstone's further along the rocky road from its almost anarchic beginnings in the mid-1980s, through several changes of owner and the takeover of Dillons in the 1990s, to today's 197-branch publicly listed high street retail business.</p><p>
The vision from the top has come into focus. "We want to be the most successful book retailer in the UK and Ireland," Knott says. "We want to be the number one choice for our customers and suppliers, and have a very highly motivated workforce. We have to achieve the financial targets that enable us to finance sustained growth."</p><p>
The feedback to the conference from managers canvassed by The Bookseller last week was genuinely receptive to the message. "For years we were told that we needed to shift from a passion for books to a passion for selling books," said one. "This year it really felt like everyone believed it, and [head office] finally seems to be helping us do it."</p><p>
Commercially minded</p><p>
Knott prefers to describe the shift as "an evolution from what Brian started when he came into the business a year ago. If the business was initially going to survive and then prosper, it would have to become more commercial."</p><p>
This comes in the context of the departures this year of some of the most experienced staff at the chain. "We are trying to get the balance between people who are passionate about the books and the range, and people who are commercially astute at the same time."</p><p>
One manager at the conference asked why such changes were made when the message from head office was that Waterstone's was performing well. "Who said things were going well?" Knott counters. "The message was that we've been improving, but we've got a way to go. We've brought in people with vast retail experience. We are trying to get a balance between retail expertise and bookselling experience. This business has been too insular."</p><p>
There is no return to the morale crisis of 2000, when The Bookseller received letters every week from disgruntled staff and there was a drawn-out recruitment freeze. But rumours of a possible cull among assistant managers have recently hung in the air. Waterstone's clarified that there were four voluntary and four compulsory redundancies.</p><p>
"We're trying to get our house in order and have appropriate staffing levels for the appropriate turnover and market," Knott says. "The assistant manager change was just a small tweak to get ourselves where we need to be."</p><p>
Straight talkers</p><p>
Of the chain's relationships with publishers, which have been strained at times, he says that things are back on track. "David [Roche, product director] and I are establishing some very good relationships. I think they see us as straight-talking guys who have a clear direction for the business."</p><p>
The chain's core customer remains a person who values books as important to their life. But they are not the only target. "If we're on prime high street sites, particularly at times such as Christmas, Mother's Day, and Valentine's Day, we're going to get the occasional customer with a choice of whether to buy a book as a present or a pair of socks."</p><p>
Attracting such customers often comes down to the layout and in-store signage, he says. "We want our stores to be accessible, not intimidating or oppressive. So the person who's seen Alan Titchmarsh's book on TV, who doesn't normally buy books but happens to be a gardener, feels confident to enter a Waterstone's store and ask for it."</p><p>
Knott believes that the key to this is better store design. "We need an inviting sales environment. That's what we're going to do with the refurbishments--look at layouts and make them more commercial."</p><p>
The HMV influence</p><p>
He bristles at the suggestion that such strategies may be borrowed from HMV. "Personally I think it's good retailing. As I keep stressing, I haven't worked for HMV for four years." But where the "HMV blueprint"--mentioned on almost every page of the group flotation prospectus--does count is in psychology. "HMV is a professional retailer, employing professional retailing methodology with a powerful brand. There wasn't anything magical about its success--it was a lot of sheer hard work, and coaching people to think commercially."</p><p>
New graphics, signage, and clearer, better-placed store directories--all trialled in the relocated Stratford branch--are to be introduced across the chain.</p><p>
Such changes must be handled with care in order not to alienate regular customers. "Stratford customers are a fairly critical group. When we relocated, people said 'we don't want to lose our nice, old little book store'. We had to evolve the look and customise it. The proof of the pudding, apart from the fact it is performing well, is the overwhelmingly positive customer response."</p><p>
Science of space</p><p>
Every store should justify the way it is laid out, "based on some consistent science and space-planning methodology", Knott says. If a branch is strong in a particular genre, it will get space to capitalise on it. "The store manager and team will make that decision--so they own the space but we're all happy that there's a science behind it."</p><p>
It will mean reacting to changes in the popularity of certain categories. "You have to adapt, when genres such as computing have declined while cookery, gardening, and DIY are increasing."</p><p>
Knott will not discuss performance except in the most general terms until the annual results in July. But product director David Roche emphasises that books to be published in the second half of the year have the most potential for the chain.</p><p>
At some point, the City will demand that Waterstone's shows it has completed its recovery curve and started to grow again. "We are on that curve and it's going according to plan. As part of a public company we want to grow the business. Waterstone's has to grow, and we desperately want to do that. We want to open new stores as soon as possible."</p><p>
Whether HMV will retain ownership of Waterstone's in the long term remains to be seen. For now, the bookseller has laid out its own agenda.</p>