High street bookstores need to become richer experiences if they are going to succeed, according to the CEO-elect of Waterstone’s, the UK’s largest bookseller.
On May 20, HMV Group , Waterstone’s parent company, agreed to sell the chain to A&NN Capital Management, the investment vehicle of Russian billionaire Alexander Mamut.
The deal is pending shareholder approval and should be completed in June.
Struggling with falling high street sales of DVDs and music as customers turn to online retailers and supermarkets, HMV has posted a series of weak results, and has accumulated debt some four times its market capitalization.
The sale of Waterstone’s for 53 million pounds ($86 million), along with a plan to refocus the company’s retail outlets on selling consumer technology products are part of HMV’s plans to revive a group which has been a fixture of UK high streets for close to 30 years.
The man tasked with saving Waterstone’s from a similar fate is James Daunt, founder of Daunt Books, which runs six boutique bookstores in upmarket areas of London.
The group is small and intimate enough that Daunt spends much of his day on the shop floor, and his departure means "We’re going to be down one bookseller," he told CNBC.com.
Waterstone’s has just shy of 300 stores in the UK and Ireland and Daunt said that the chain’s ubiquity and uniformity have become a barrier to its success.
“One isn’t trying to replicate [Daunt books],” he said. “What one can aspire to do is to produce the best possible bookshops for each location. I think that’s not something that we should feel is impossible.”
Impossible or not, this is a problem that booksellers and retailers around the world face.
However, some remain confident enough to bet on the sector.
In the US, John Malone’s Liberty Media has put $1 billion behind a punt for Barnes and Noble, principally a bricks-and-mortar retailer, albeit one with its own e-reader and a significant online presence.
Calling the term "retail offering" an "ugly word", Daunt said that Waterstone’s and other chains have become too much like other retail outlets, and forgotten what he sees is the compelling advantage of bookselling.
"It seems to me fairly self-evident that if you’re selling coffee and muffins as Starbucks do, you’re probably going to have the same thing up and down the land. There’s not a lot of things you can play with there. If you’ve got a supermarket, you’ve got 10,000 lines, you can have some variety. You can have the foie gras in Mayfair and the extra Shredded Wheat somewhere else,” he said.
Tailor the Offering
"Bookshops, almost uniquely, have hundreds of thousands of lines to choose from, and therefore we, as retailers, can tailor our offering in a much more active way than any other retailer can. I think one of the oddities of modern chain retailing is that they haven’t taken advantage of the systems available to them to do that," he added.
Online retailers, led byAmazon, have long been seen as the successor to the high street bookstore, offering a greater range of products at a lower cost.
With e-books too becoming increasingly popular, the future for not just the physical bookstore, but even the physical book, is far from certain.
Daunt acknowledges that the industry is subject to unpredictable change.
The arrival of Amazon was only the start and "now the big ones" – digital formats – "are rolling in," he said.
However, he is convinced that by creating “a proactively pleasant experience” in bookstores, the sector can remain relevant and successful.
"The role of a bookshop as an immediate intermediary is to be an attractive browsing environment. That is the leap of faith that Mr Mamut has made in making this investment, and indeed Mr Malone in buying Barnes and Noble… that you believe that the physical presence of the highly attractive browsing bookshop is one that has a place on the modern high street," Daunt said.
"The physical bookshop has an awful lot going for it. I would, in a way, be looking at the Amazon business model and scratching my head and saying ‘is it good enough, this online offering?’ All they’re doing is selling on price. They’ve got absolutely nothing else going for them. It’s a miserable experience buying from a computer screen," he said.