“They will not forgive you, if you fail”
James Daunt, CEO of Waterstones, does not believe in conventional branch concepts: for him the future belongs to individually managed bookstores — even in competition with online retailing. We met him in his flagship store at Piccadilly Circus to talk about the impact that his new owner Elliott Advisors has made, the threat posed by online giant Amazon, and his differentiated way of managing a bookshop chain.
Interview by Laura Grotjohann
What is the secret to a good book shop?
Although there are many factors, for me it really comes down to three qualities: Firstly, you need friendly and knowledgeable staff that is engaging with the customers. Secondly, the place needs to look attractive. Here, it’s not about money, not about looking shiny and new, but about creating a good atmosphere by, for instance, installing clever lighting. Then, of course it’s about what you put in it: you need to have some really good books that are specially geared to your customer base. The challenge is to get the combination of these three things right for each location.
For about a year now Waterstones has been owned by the US -hedge fund Elliot Advisors — what sort of an impact has it had?
The business needs to be aligned to the interests, motivations and desires of the owner. Clearly we have a financial owner who wants us to grow and make more money so they can sell us for more. That is no different to our previous owner. For us, that is fine for the moment, because we do want to grow, we do want to make more money, we do want to expand the business. In this respect, we are aligned with our owner and it is working perfectly well for us. However, I do can see that this won’t always be the case and we will need to find a form of ownership, probably with the next owner, where we can enter a more stable stage.
US-Giant Amazon is continuing to increase its market-share all over Europe — is online retailing unstoppable?
Online will continue to grow — this is particularly acute here in the UK, but I am sure it has its impact on almost all markets. Amazons growth, though, is entering a period of equilibrium for us here in the UK. This being said, we need to be very good at what we do: you will not be forgiven by your customers if you fail. So you really need to get those three components — informed staff, attractive shop, good and appropriate books for your customer base — right. Otherwise, your customers go straight to Amazon and why shouldn’t they? It works, it’s cheaper! Here in the UK we don’t have any price maintenance, so Amazon can and does discount very substantially: they retail at probably 30% to 50% less than Waterstones. This might sound surprising, but I find those numbers comforting, because why does Amazon need to discount that much in the first place? Because a book that you buy online simply doesn’t feel as good as one you buy in a bookshop.
What are your strategies to fight back the dominance of the online-retailer?
For me it is all about reinvesting in the qualities that people appreciate, that are different in within a book shop to online. [Amazon’s]market share gains are relatively small now and a lot of those are structural, because of the way we are changing our business: our stores carry many less books than they used to, because we believe that we shouldn’t be selling the books where we don’t add value. This concludes that we are now selling much less academic books and technical books. Instead, we reset our focus and carry more children’s books and young adult books, as well as things that aren’t books. It’s challenging, but if you do it carefully and well, you can make your bookshop more interesting and more stimulating and above all make browsing enjoyable.
You once called the EU a “significant protector, a shield from the anticompetitive practices of Amazon” (The Times, 29 Nov. 2018) — in terms of the unknown economic effects, how do you think the uncertainty of Brexit will affect Waterstones, independent bookshops, and the British book market in general?
They are only unknown in as much as we don’t know whether they going to be catastrophic or disastrous: Brexit is a self-inflicted cataclysm, it is just one of these tragedies that happen in history and we happen to be a part of at a particular unfortunate moment. I think the Brexit is politically, morally, socially and economically a catastrophe, but within the narrow world of books it is unfortunate in every respect. I happen to be a great believer in the EU, and even though she is not perfect, I believe in her as a protector of minority interests. So I regret the path we seek to be on, though, I don’t think it’s given yet. In fact, I know that in 10–20 years’ time, we will be back in the EU again, because it is insanity for us not to be. It is also very bad for the EU.
The book market in Germany is currently undergoing quite a few big changes — the insolvency of KNV and the Fusion of Mayersche-Thalia — are you aware of changes in the German or other European/international book markets?
I am certainly interested in it and I observe it, but I clearly don’t have more than a superficial understanding of what is going on. However, there seems to be a similar-isch pattern in most markets: the chain model doesn’t work. I don’t think it works anywhere. This is ironic for me to say, as I run one myself, but the truth is that I am somewhat suspicious of the benefit of chain bookshops and what it is to be a chain book seller. Clearly every market is different, but I wonder: What should one be doing to be a chain bookseller? What is the role of bookshops and where do they sit within the ecosystem? Is it really all about getting bigger? We are becoming increasingly dominated by these large chains — the UK really just has one chain now — and there is a momentum to the growth of these, but how do you deliver an interesting individual book shop in within a chain? That is a big challenge!
Waterstones offers a diverse range of literary translations — which language areas are being predominately sold? Do you stock any books in their original language?
We carry large foreign language sections in our metropolitan shops in London, but only the key European languages in larger cities in wider UK. A factor that we struggle with is that European book prices are very high in comparison to book prices in the UK. Trying to sell a German novel for 20€ in a UK bookshop is, quite frankly, insanity. However, Waterstones does extremely well in literary translations; particularly Spanish and South American Literature seem to be exciting for our customers at the moment. I also noticed that the quality of the translations is going up and so is the investment in translations. So it is no surprise to me that we frequently have literary translation from new and vibrant voices from everywhere in the world at the very top of our bestseller list. I am very optimistic about how we are selling more good books and less bad books. We are a literary book seller, so we do and like selling mass market things, but actually what propels us and what excites us is the more creative end of [literary fiction].
You are known for your differentiated way of running a business — giving your employees full autonomy over the shop floor and opening unbranded book shops in small villages — how much bravery does that take?
Giving autonomy to individual shops is a difficult thing to do. On the one hand, it is challenging for the shops, because they have accountability and responsibility. On the other hand, these skills need to be developed and nurtured in order to be used sensible and well. It also is a difficult technical issue. Because how do you lever the strength of a bigger business in terms of logistics and still allow the independent thought and inspiration? It is certainly not easy — the pendant tends to swing one way or another — and it requires a constant vigilance to not allow the centre to impose itself too much, but having the checks and controls at the same time. You know, booksellers can do crazy things, so how do you keep that balance is our challenge. In generally, it works well, but sometimes it doesn’t: It is about allowing the bad as well as the good, but to have more good than bad.
Where do you get your inspiration from?
I think there are some good and interesting things happening on the Scandinavian book market — the creativity there really relatives its population! I am inspired by the way they train their booksellers, the quality of information, the level of education, yes, the sheer excellence of their booksellers. Their market allows strong entrepreneurial development, the independent bookshops and the chains are focused and effective and new models like Audio subscriptions are being pioneered — not to forget the significant numbers of bestsellers. Things are so different across Europe, but we are always learning from each other. I love trying to understand what is going on in different countries, in terms of the kind of display furniture, how furniture is being used, the design, the lighting and the types of format of books. I try to pick the best from everything and melt it together for our own uses, because we need this business to become really more dynamic, more interesting and more responsive.
Which book would always need to stay on your book shelf- which book would you never lend anyone?
laughs* I would never do that. I am not interested in antiquarian books, I don’t like dead books, I like books that are scuffed, because I believe books are to be read and enjoyed. In truth it is the great classics — Anna Karenina is quite emotionally draining and is a classic for a good reason. This being said, I find the relationship you have to a book changes over time — something you enjoyed reading when you are younger doesn’t resonate with you anymore some years later. To put the right book for the right time in your life into your hands — that is my job as a bookseller. Here, it is really important that we are not snobbish about books. When I ask customers what’s the last really great book that they have read, I hear the weirdest books. But I am not to judge, but to find the right book for the right time.
The interview was first published in German translation in the trade magazine Börsenblatt. Find the article here.
