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FEATURES ONLINE BIG STORY Visit the website to read more practical features WATERSTONES retail-week.com Turning over a new leaf at Waterstones Since he was brought in to rescue Waterstones by its owner in 2011, James Daunt has made some tough decisions. So what's the story behind his novel approach? By Nicola Harrison ooksellers by nature are "gen• "RIGHT FROM self running a relative giant that has tle folk", according to Water- THE BEGINNING been riddled with problems, from out• | stones managing director dated systems to a lack of cash. James Daunt. But what does I SAID 'WE SELL Daunt was parachuted in by Russian Bthat bod e for the turnaround of the OUR WAY OUT billionaire and former banker Alexan• books retailer? Daunt is, after all, a OF THIS HOLE der Mamut, who saved Waterstones bookseller through-and-through, hav• OR WE SINK" from likely administration when he ing run his six-store book chain Daunt James Daunt, Waterstones bought it from HMV, which went bust Books for 24 years. 18 months later. While Daunt, a self-confessed intro• "Alexander Mamut saved Water• vert, clearly has passion and know- stones, and that was a miracle because how when it comes to books, does he he was prepared to do that and no-one have what it takes to transform a else was," says Daunt. cumbersome 300-store retailer that Daunt says he and Mamut are on the some claim has lost its relevance to same mission: to keep bookshops on the consumer? the high street. And in Waterstones' Judging by some of the tough deci• case, they are making some headway. sions he has made since taking charge While Waterstones is not out of the in 2011, the evidence suggests he does. woods yet - sales are still falling and it Along with a dramatic shift in the is in the red - the numbers are going in way Waterstones buys and merchan• the right direction. Pre-tax losses fell to And Daunt says in the current year dises its books, the well-spoken and £23m in the year to April 27, 2013 - he expects Waterstones to report an articulate Daunt slashed costs in order Right: The children's Waterstones' first financial year under improved sales decline again after to secure a future for the business. department in the leadership of Daunt - from £37.3m gaining share, and he anticipates break• He did that by kicking off a round of Waterstones' the previous year. Total sales slipped ing into the black at an EBITDA level. "horrible" restructuring that resulted in Wakefield branch; 2.9% to £398.5m, an improvement on But he will not rest on his laurels. about 200 store staff at manager level Below: James Daunt the 14% slump the previous year. "We generate a modest amount of cash losing their jobs. but a business like ours needs to gener• Daunt can be tough when he needs ate a lot," he says. "We're a£400m busi• to be. "Right from the beginning I said ness and we should have an EBITDA 'we sell our way out of this hole or we of around £20m just to stand still. sink, and not all of you are good We're not quite there yet but we cer• enough'. That's a very hard thing to say. tainly think we're going to get there." One of the problems of booksellers - or For a man with one of the toughest one of the nice things about us - is we turnaround jobs in retail, Daunt seems are nice, intelligent, sensitive, quiet, relaxed and has an air of quiet confi• booky people, so doing all of that was dence as he sits in the top floor cafe of really quite difficult," he says. Waterstones' flagship Piccadilly store. Running a £400m-turnover business Perhaps that comes from working marked a new chapter in Daunt's suc• with an owner with very deep pockets cessful career as an upmarket book• who has invested £2 5m into the retailer seller. Daunt Books - which he still each year since he bought it. owns - is cherished by the well-heeled "We have had the good fortune of middle classes of Hampstead, Maryle- having an inspiring owner who has bone and Chelsea. Now he finds him- allowed us to invest," says Daunt. 18 Retail Week March 14, 2014 www.retall-week.com The risqué business of being on TV BIG STORY Retailer comment, p25 WATERSTONES "He's learned, he's cultured, he cares evenly throughout the estate, regardless "IF YOU DON'T just somebody who wants to sell the about bookshops. He has his own of the nuances of particular markets. INVEST FOR right books to the right people." ideas. His primary motivation is to see The retailer also had an unhealthy fixa• DECADES, As part of the plan to get the top line Waterstones restored." tion on promotions. "Front-of-store growing again, and in the face of physi• was almost the same everywhere," says THERE IS A LOT cal book sales falling, Daunt is also A new chapter Daunt. The returns rate was running at OF CATCHING looking to build Waterstones' 'related Daunt has kick-started great change, between 23% to 25%, and Waterstones • ip DO" products' revenue. The retailer oper• but it has not been easy. could no longer afford it. James Daunt, Waterstones ates cafes in 17 stores at present, and "Big retailers are quite slow old "When you're operating shops in book sales in those shops have gone up beasts to change," he points out. "If you Hampstead and Harrogate but also in as a result, according to Daunt. Water• don't invest for decades, there is a lot of Bury and Burnley, you can't really sell stones is also selling more stationery, catching up to do." the same books in all of those places," toys and games. Under Daunt, Waterstones has he says matter-of-factly. The retailer is piloting a new store for• invested in its supply chain, store So Daunt set about introducing a mat in Wakefield, reflecting some of the revamps, and a new EPoS and finance more local offer across Waterstones' changes made at its revamped station• system to replace one that had not been estate. "Every shop has to become ery and gifting area in the basement of updated in years. much more individual to present a its PiccadiUy flagship. "But it's not just that you're grap• personality which is distinctive and The black fit-out associated with pling with systems, you're also dealing local," he maintains. Waterstones has gone and the shop with a very strong and particular cul• The returns rate was slashed to 7%. instead features bright fixtures and ture," says Daunt. And that was "For me that's extremely important - mixes books with associated product in reflected in the buying process. we're putting the right books in front a new way. "We're trying to make it flex• Under the ownership of HMV, the of customers. I clearly sound like ible and we're trying to make it accessi• retailer focused on buying best sellers and have a history of being an up• ble," he says. in huge volume and distributing them market bookseller. I'm not actually, I'm But with a physical market in www.retail-week.com March 14, 2014 Retail Week 19 FEATURES ONLINE BIG STORY Visit the website to read more practical features WATERSTONES retail-week.com decline, and the unstoppable growth of to come through our doors," he etail powerhouses such as Amazon, is says. "So I like the supermarkets, but there a future for the high street book• it doesn't do great things to our shop - and if so, what will it look like? market share." Daunt believes the bookshop has a future, and one in which it will con• Books in the blood tinue to sell physical books. Clearly Daunt admires Waitrose. But "I can't think of anywhere else that could he ever see himself running everyone enjoys being in," he says. "You another retailer? After all, if he man• enjoy being in them when you're in a ages to turn Waterstones around, Daunt buggy, you like going round them on a will be a man in demand. "I have a Zimmer frame, and all points of age in great interest in the way other retailers between. They're just nice to be in." work and I admire hugely what they do In future, bookshops are more likely at Next and Waitrose, and I absolutely to have cafes in them to increase dwell unapologetically go and steal what time, and they are more likely to have a others do. But I am a bookseller. large children's department and more "You could put the riches of the events, according to Daunt. The decision to stock Amazon's Kindle was based on customer demand world before me to run the Body Shop He points to a positive trend in the or whatever it is, and I wouldn't do it. US, where the growth of digital books online to connect the reader with "YOU CAN SIT IN [Nextboss Simon] Wolfson sells frocks, is slowing. "The big question for us is authors and other book lovers, to ena• OUR CAFES AND that's what he does. I expect he would how much time do people spend read• ble Waterstones to recreate its special• READ YOUR royally screw up the bookshops if ing? With tablets, Netflfx, social media ist in-store service as best it can.

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