British Bookselling Today: to Whom Does the Future Belong?

LOGOS 8(1)/sc/ 2nd 31/10/06 8:55 pm Page 24

LOGOS British bookselling today: To whom does the future belong?

Tim Coates Bookselling in the UK today is in as nervous a period as I can remember. The last twenty years have been dominated by the development of new, large, national bookselling chains, most notably Waterstones and Dillons. These chains have brought with them a transfer of power from publishers to retailers. The oldest and largest chain, W H Smith, finds itself usurped and seriously strug- A graduate of University College, gling to hold on to what once was its dominant Oxford and the University of market share. In its fight to survive, it has played the final card in its hand by bringing to an end the Stirling, Tim Coates joined Net Book Agreement, which for 100 years had W H Smith, the UK’s largest been one of the world’s strongest and most strenu- bookseller/newsagent/stationery ously defended instruments of resale price mainte- chain, as a business analyst in nance. This change has opened a Pandora’s box 1975. After a stint as Marketing into which we are only just beginning to see. The flourishing publishing industry seems to be losing its Director of Webster’s bookshops collective confidence and we are witnessing a spate (which were acquired by of major financial crises which imply a period of W H Smith), he was appointed instability ahead. Managing Director of all In my view, the British book industry is suffering from the consequences of too many years specialist bookshops owned by of looking inwards for inspiration and ignoring the Smiths, under the name of wishes of its customers. Inevitably, this means there Sherratt and Hughes. will be yet more change in the years to come as Subsequently, when Smiths publishers and booksellers learn to respond to the new deregulated market in which they find them- acquired Waterstones, Coates selves. became Managing Director of the The most significant statistic in British combined Waterstones/Sherratt bookselling today is that 80% of all general books and Hughes group (seventy-eight are bought from publishers by just ten companies. shops), a post from which he These huge market shares have been built during a time when no price competition was allowed and resigned in 1991. In 1992, he retailers benefited by being able to retain in their founded the Book Shed, now one entirety the high margins they had extracted from of London’s largest independent publishers. W H Smith and Waterstones, for exam- bookstores. ple, typically aim at making 60% gross profit on the cover prices of the books they sell. Such high margins contain the seeds of their own destruction.

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British bookselling today: To whom does the future belong?

I have been in book retailing for twenty book department brought instant increases in prof- years. I started with W H Smith as “market plan- itability to the store as a whole. Books were “under- ning manager”. This job required me to view each retailed”. Bookselling needed to be expanded and of the market sectors in which Smiths operated and enjoyed. But the company kept being diverted by advise on the allocation of the company’s resources. totally different products, such as satellite TV, DIY How much space should be given to books, to and travel. And while it was pursuing these exer- records, to greetings cards, to magazines? How cises in diversification, the British book market was much advertising money should be spent on each assaulted by someone who understood the possibili- product sector? Which products should be given ties of good literary bookselling, someone moreover priority in investment or development? Which sec- who at an earlier stage of his career had worked for tor required money spent on display? How could Smiths. the whole pattern be evolved into coherent shops that the public understand and enjoy? * * * * * This was in the late 1970s, when Smiths was going through a thorough self-appraisal. The When Tim Waterstone started his first company has always had an inherent fear of going bookshop in the UK, he had a clear goal – to cater seriously into the book business. It believes that the for the British public’s appreciation of literature and book market offers insufficient growth and is vul- of books. It does not do the Waterstone concept nerable to the development of the non-print media. justice to call it a retail chain. This implies formula It regards books as somehow elitist and intellectual, bookselling and the requirement of meeting certain inappropriate for the mass market with which it minimum standards. Waterstones was, and is, more wishes to deal. It is suspicious of the business cre- like a club of like-minded intellectual and literary dentials of those who publish books and those who enthusiasts. Management in Waterstones did not are serious about selling them. It is paradoxical, mean control. It meant exhortation and enthusi- therefore, that at that time Smiths was the coun- asm. To Tim Waterstone it was a great game, and try’s leading bookseller. In many towns, it sold more he demanded extraordinarily high standards of books than all the other retailers combined. knowledge and service from everyone he hired. Incredibly, Smiths never believed its own Waterstones’ branches competed madly with each market experience. Impervious to the fact that other to provide more than Waterstone himself or books have proven their resilience in the face of all anyone else could have demanded. varieties of electronic products, from television to In only eight years, Waterstones’ book- the Internet, it has always given books a minor role shops were able to replicate an incredibly high stan- in its branches. It opened a national chain of record dard of bookselling in the shops the company shops and invested heavily in music CDs, in the opened all over the UK and Ireland. They were also face of the fact that the book market is much bigger ingenious in locating sites suitable for bookshops in and more sophisticated and far more profitable to a property market which was impossibly difficult. retail. Margins on books are greater than on any During the early years of Waterstones, I was the other product sold by W H Smith. Roughly half the Managing Director of a chain of bookshops called population of the UK buy and use books regularly, Sherratt and Hughes, which was owned by WH which ranks books as a market only behind food, Smith. This brought me into competition with clothes and financial services. The British book Waterstones and, when Smiths finally began to trade is blessed with a marvellously enterprising take books seriously and purchased the Waterstones publishing industry, innovative, quality-conscious, chain, I had the privilege of working with Tim widely established and mature, which in the past Waterstone for a couple of years. Fundamentally, he twenty years has improved both its capacity to dis- had built a very profitable business for which tribute and its capacity to publicize books. Smiths may have paid a premium, but with intrin- For a time, under the leadership of Sir sic and substantial permanent value built round the Simon Hornby and Sir Malcolm Field, Smiths did simple thesis that good bookshops are about a fan- begin to respond to the fact that every enlarged tastic range of stock supported by intelligent,