The tragedy for Waterstones under HMV’s ownership and underinvestment, was that our most precious possession—the loyalty and affection of our customers—fast eroded as the quality of the bookshops deteriorated. It was not just their physical appearance, dire as many of them became, but the quality and expertise of the inventory, the lifeblood of what Waterstones was always about.
Research had shown for years that we were catering for a consumer market of barely twenty per cent of the population. What HMV found impossible to understand was how we—the managers—knew these numbers, and yet accepted them. More than accepted them—embraced them. We knew that the one person in five who used our stores trusted and loved them. Successive Readers Digest surveys of the time, taken across a huge sample of 14,500 British families, ranked Waterstones as the fourth (out of more than eighty nominated) most admired retail group in the country, beaten by only the cherished Marks & Spencer, John Lewis, and Waitrose. For a bookseller, it was astonishing stuff. The key to it all was this; that the 20% of the population were heavy, committed book buyers. They purchased at least fifty books a year, and with Waterstones now across the country, they bought them from us. We fitted the profile of what they wanted a “real” bookshop to be. Rocket science it wasn’t. Effective retailing it was. Our £ sales per square foot across nearly 200 stores reached over £340. This was the highest of any multi-store bookseller in the world, though UK book readership was relatively high, it is true (eg to take 2007—just before the ebook revolution, the US market only aggregated $12.3bn, against the UK’s $5.8bn—around two times, despite a population at least five times greater).
So why did the HMV people, financed by what we would these days characterise as abusively short term focussed private equity suppliers, fail to see the jewel they had in Waterstones? The answer lay in that they despised it. There was an intellectual snobbism afoot, in reverse. Waterstones looked to them to be intellectually pretentious and far too pleased with themselves. Managing directors and chief executives were brought in at bewildering speed and frequency. And where did they come from? Absolutely anywhere of course—Boots (a pharmacy chain), Tesco (a supermarket chain), the music business—anywhere but from the world of books. Not, until Alexander Mamut bought Waterstones in 2011 and appointed the admirable forty-something London bookseller James Daunt to run it, was a single one of them up to the job. They were not even good nuts-and-bolts distribution people, as Waterstones’ sublimely appalling attempt at setting up a superfluous and grotesquely expensive central warehouse a few years ago demonstrated. They read nothing, and knew nothing about the world they were entering.
The result? They loved the author’s parties and the glamour of it all, but missed what was really going on. Publishing is, and always has been, an aggressively commercial affair. There never has been enough profit to go comfortably around. Missing this, the HMV appointees did not fight publishers on the grounds on which the publishers should have been fought; the way they were going about the business of helping Amazon establish itself in Britain. Resale price maintenance has gone, the coast is clear, so let’s do it, said the publishers. Let’s put Amazon into a position whereby they can buy from us on such favourable terms that in time they can discount everyone else into oblivion. And that included the booksellers who have been our supporters for centuries, in good times and in bad.
What the publishers seemed not to realise was that Amazon in their concentration on consumer pricing, were impervious to the overall welfare of the industries in which they were operating. It’s all so very simple. Make and build your brand on a reputation for absolutely rock bottom pricing. Even say it upfront, insultingly and aggressively, in your advertising—go, Mr. Consumer, go to Harrods or wherever it is, inspect and admire the goods, then come home and buy them from us. Online. At a deep, deep discount. And f**k Harrods or whoever it is for their trouble. More fool them. And more fool Waterstones.
No one of course can now put the genie back in the bottle. It was the publishers who largely allowed Amazon to create its model. How? In business school speak, by dealing with Amazon on a wholesale model, and with the traditional bookshops—their lifeblood for centuries—on an agency model. In simple terms, Amazon was allowed at their inception to buy from publishers at far, far lower prices than their bookshop competitors. It was a savagely disloyal mistake. Every publisher knows that now, even finding themselves in all sorts of legal knots as they try, second time around, to control price setting in the ebook market.
Yes the creation of an overarching book mail order house was desirable, particularly in the US, where the tradition of mail order trading, responding to a high level of rural population demographics, had become firmly part of the fabric. But the publishing industry was and is one of delicate balances and cross supports. It has a sublime role in a civilised society. New authors need to be found. They need to be nurtured. They need to find their audience. Their audience needs to find them.
It’s actually as simple as this. New authors, building their customer base, need physical bookshops. Physical bookshops are lovely tactile, friendly, expert, welcoming places. Physical books, which can only be seen and handled in physical bookshops, are lovely, tactile things. Destroy those bookshops, and the very commercial and cultural base to the book industry is destroyed. Once and for all. Like Humpty Dumpty, it can never be put together again.
Read Tim Waterstone’s first column “The Way Books Used to be Sold” on the founding of his book chain Waterstones.