Balancing the books: how Waterstones came back from the dead

From The Guardian:

Late on Thursday afternoon, would-be wizards across the UK dropped what they were doing to join the professors of Hogwarts for Harry Potter night. At 6pm in the basement of Waterstones’ six-storey London Piccadilly building, staff were scurrying around with bowls of jellybeans and bottles of raspberry lemonade, but the Harrys and Hermiones were nowhere to be seen.

A couple of elderly customers looked faintly disgruntled to find their favourite section closed for a private party. Two young sisters, Alex, 11, and eight-year-old Polly, fidgeted by the closed door clutching a box of quidditch balls, while Yang, a 22-year-old physics student from Korea, appeared baffled.

Five minutes later they started to arrive, threading their way through book-browsers on the hushed shop floor. Young women pulled Hufflepuff blazers and Hogwarts ties out of backpacks, a small girl produced an owl cage, a larger one donned scholar’s robes. Soon, the queue snaked up the stairs and across the ground floor. “I’m reading the fifth book again at the moment,” said 28-year-old

Alex, jiggling her wand. “This is the third event I’ve been to and it’s quiet compared with the launch of Harry Potter and the Cursed Child last year, when they transformed the second floor into Diagon Alley.”

In many of of the chain’s 275 branches across the UK, similar scenes were being played out. “Our first wizards have arrived for #harrypotterbooknight” tweeted staff at the Bradford store, who had earlier professed themselves “totally giddy kippers” at the prospect of the night’s revels.

But Harry Potter night wasn’t the only cause for celebration for staff and customers of the 35-year-old company. A day earlier it had revealed that it had gone back into profit for the first time since the recession under the leadership of its very own wizard, banker turned career bookseller James Daunt, who was brought in to rescue the chain in 2011 after a buyout by the Russian billionaire Alexander Mamut.

. . . .

With a mixture of tough love and an unshakeable belief in the power of the physical book, which seemed quixotic in the era of e-readers and online discounting, Daunt began to turn things around. He closed underperforming stores and fired 200 booksellers, at the same time as declaring that his managers would be given back responsibility for their own stock, because what sold in Hampstead might not go down well in the Highlands. One of his boldest moves was to inform publishers that he would no longer do business through sales reps and they could no longer buy window space – which meant turning his back on £27m a year.

Instead, a small team of buyers – in close consultation with Daunt himself – would select titles to feature as books of the month across all the stores, while individual managers were free to tailor much of their stock to their customers’ tastes. One of the centrally chosen books of the month for 2016 was a historical novel, The Essex Serpent, from Serpent’s Tail, an inprint of indie publisher Profile Books. Its author, Sarah Perry, had written one previous novel, which had been respectfully received before sinking beneath the waves.

. . . .

“Waterstones’ role in the success of The Essex Serpent is nothing less than extraordinary,” says Franklin. “They have – to date, and they haven’t finished yet – bought 100,740 copies of the hardback. And that gives them a 70.53% market share.”

. . . .

When a book has become as successful as The Essex Serpent, it’s easy to forget how it so easily could not have happened. For a tiny outfit like Somerset-based children’s publisher Chicken House Books, selection by Waterstones can make the difference between many thousands of sales and virtually none at all. Chicken House has had four of its titles selected as children’s books of the month – the latest being Maz Evans’ debut novel Who Let the Gods Out, a “freewheeling fantasy” in which a 12-year-old boy finds his home near Stonehenge beset by bumbling Greek gods.

Barry Cunningham, who set up Chicken House in Frome in 2000, points out that the relationship with Waterstones doesn’t simply involve selling the book. “They’re experts in how to catch the fleeting attention of buyers, so they’ll advise on how a book looks, the words on the back, or even the title. In this particular case, there’s a lightning flash running around the edge. They said they really liked that, but could we bolster it.”

Part of the new strategy has been to customise orders, so as to drastically reduce the numbers of unsold copies that are returned to publishers. A report from the US in 2013 revealed an average return rate across the bookselling trade of 15%. When Daunt took over, the percentage returned by Waterstones was “far higher than that”, but has now been reduced to 2-3%.

Link to the rest at The Guardian

10 thoughts on “Balancing the books: how Waterstones came back from the dead”

  1. By almost turning themselves into a franchise of indie bookstores – but with bigger purchasing power.

    Good luck to them – if they attract buyers on the hoof, they’re doing something right.

    And if they stop their participation in the ritual of the return, or cut it significantly, they are actually saving everyone money.

    27 million pounds for window space. Wow. Somebody pays for that, am I right? Out of someone’s profit/operating costs.

    • inform publishers that he would no longer do business through sales reps and they could no longer buy window space

      Wow. The people who sell the things decide what to sell, not the people who make the things. (Shades of the old Soviet Union, where you got whatever they made, like it or not.) It’s the exact opposite of Shatzkin’s “Vendor Managed Inventory”.

      • You know who else doesn’t do “Vendor Managed Inventory”?

        Starts with an ‘A’ and Shatzkin can’t figure them out either. 😉

  2. PG missed this lovely snippet:

    “Publishers pushed a cheap-and-cheerful approach with ebooks, and it seems to have become more the associated domain of trashy, poundshop-type products,” said Simon Lowe, a former bookseller. “With the refits of Waterstones reflecting a more boutique, upmarket style, the physical and digital realms of bookselling seem to have separated and become distinct, rather than competing with each other.”

  3. Part of the new strategy has been to customise orders, so as to drastically reduce the numbers of unsold copies that are returned to publishers. A report from the US in 2013 revealed an average return rate across the bookselling trade of 15%. When Daunt took over, the percentage returned by Waterstones was “far higher than that”, but has now been reduced to 2-3%.

    This one inventory management improvement strikes me as having greater impact on the bottom line than Harry Potter parties, yet Claire Armistead gave it only the paragraph quoted here. She chronicles a couple of Waterstones misses: 1) Marlon James, A Brief History of Seven Killings: initial order – 220 copies, total sales to date – 57,534; 2) Paul Beatty, The Sellout: initial order – 260, total sales to date – 65,048. I suspect Waterstones missed others.

    Anyway, the evidence says Waterstones is no better at picking winners in the book race than they are in picking horses in the Irish Sweepstakes.

    On the scant evidence provided, it seems to me that all the theater matters less than the improvement in inventory management. That and telling the publishers’ sales reps to go pound sand.

    YMMV.

    • They can always order more!

      It’s better than returning for trashing perfectly good books no one wants, a system invented before computers were in widespread use.

      Which always sounds incredibly stupid to new people when they hear about it for the first time.

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