Will the Waterstone’s Management Review Save the Struggling Book Retailer?
Posted by: FSPRetail , 23 August 2011
Last week Retail Week reported that Waterstone’s new managing director James Daunt will conduct a review of Waterstone’s, after Alexander Mamut took over the book store.
Earlier in the year Mr Mamut’s purchase surprised many as the book retailer showed no clear business benefits. It was believed Mr Mamut’s aspiration to own the chain stemmed from an intellectual ambition, rather than a financial one.
Waterstone’s is the last large specialist bookseller in the UK. As mentioned in a previous post (Waterstone’s vs Amazon) the retailer has seen many customers drift to online retailers such as Amazon.
The strategy now appears to be leaning toward that of an independent book store, with the appointment of James Daunt who is the founder of Daunt Books. Daunt Books is a chain of six book shops in London (Marylebone High Street, Fulham Road, Holland Park, Cheapside, Hampstead and Belsize Park), known for knowledgeable staff, wide ranges and an emphasis on giving the customer a ‘pleasant experience’. Unlike Waterstone’s, Daunt also never discounts prices.
Daunt said in the Telegraph last week that he plans to steer Waterstone’s to a new strategy that will ‘work with stores to develop the bookshops as engaging places that reflect the distinct tastes of their customers’. However, will this be enough to save the struggling retailer in time? Waterstone’s BIS guide has been in the head above water category since 2007 suggesting long term difficulties with the business and an increasingly urgent need for a quick solution. With FSP’s shop audits suggesting typical sales densities below £400/ft2, greater footfall and reduced costs seem just as essential as better customer experience in a strategy to improve profitability.
With only 6 shops throughout London, the experience of building Daunt Books over a 20 year period is a far cry from rescuing Waterstone’s.
Waterstone’s has 300 stores in a variety of locations including Amersham, Bradford, Knutsford, Lowestoft, Petersfield, Slough, Tenterden, Telford, Trafford Centre and Wolverhampton. Demand at many of these locations is very different to central London, with weaker concentrations of ‘high value’ customers, a much stronger need for ‘good value’ purchases and stronger greater emphasis on children’s books and gift purchases.
Outside of London shopping patterns have also changed. Footfall in many medium and smaller scale provincial towns is increasingly diluted as a result of competition from supermarkets, out of town retailing and the consolidation of comparison goods multiples within a decreasing number of the largest centres. This has led many retailers such as Arcadia to strategically consolidate portfolios into fewer stores, while others such as The Officers Club have shed unprofitable locations as part of pre pack administrations.
For a large number of retailers, many of the types of town where Waterstone’s currently has representation can no longer sustain profitable stores. Weak sales densities suggest a need to focus on building a sustainable core of profitable locations and with 75% of Great Britain’s population falling with the main catchments of just 100 retail centres, more significant consolidation of Waterstone’s (Waterstone’s will close 11 stores) seems inevitable.
Waterstone’s Vs. Amazon
HMV Sells Waterstone’s
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Tags: RETAILERS, FUTURE OF RETAILING