It seems a long time ago – some people won’t even remember it – that Amazon was simply an online bookseller.
But as Amazon continues to push the boundaries of retail, attempting to shake up categories ranging from food to fashion, perhaps under-pressure retailers can learn from books specialist Waterstones – one of the first to be disrupted by the Seattle goliath’s rise.
Sold by former owner HMV for £53m in 2011, Waterstones had been loss-making for the three years previously. But under the leadership of James Daunt profitability was restored and it was sold again to Elliott Advisors just over a year ago.
Now Daunt is to run not just Waterstones but the biggest books chain in the US, embattled Barnes & Noble, which has just been acquired by Elliott for $683m.
As would be expected, Waterstones now has a decent online proposition, including in-store availability details and two-hour click and collect.
But it is the changes that Daunt has made in-store that hold most lessons for others.
Where Waterstones wins
He has brought intense focus to rebuilding and enhancing Waterstones’ reputation as a specialist and an experiential destination.
That is evident in all sorts of details that combine to create the executional excellence that is essential for stores’ appeal.
It can be seen in everything from the hand-written reviews that dot the shelves, the front-facing of books to make the most of eye-catching covers that can frequently prompt a purchase, to the in-store marketing, which varies from type of content (such as suspense) to preference (such as short reads).
It can be seen in how the retailer creates surprise or serendipity by the variety and accessibility of presentation in-store, through to an events programme or the promotion of new titles available, internet-bookseller-style, for pre-order.
“The approaches it has taken to making its stores places where people want to spend time as well as money are evident among other successful bricks-and-mortar chains”
And it can be seen in the differentiation and localisation of branches to resonate and connect with the particular communities they serve, or the cafes and eateries that often bear comparison with specialist competitors rather than feel like a perfunctory add-on.
It’s notable that some of the US coverage of Daunt’s move there homes in on that. It’s a contrast to Barnes & Noble’s one-size-fits-all approach that could play well in a country as diverse as the States.
Such an approach depends on knowledgeable staff, and Waterstones – despite its recent run-in with some over whether it should pay the ‘real’ living wage – has them.
Waterstones cannot afford to take its success for granted. It only returned to profit in 2016 and, at just under £20m on sales of almost £400m, the most recent year’s earnings show that it has to work hard to make money.
But the approaches it has taken to making its stores places where people want to spend time as well as money are evident among other successful bricks-and-mortar chains.
Primark for instance, is at present leading the pack in creating absorbing retail experiences, evident most recently at the new Birmingham branch where a Friends-themed Central Perk cafe has just opened.
The combination of product and experience perhaps once again promotes the question of what metrics should stores be measured by?
At the recent World Retail Congress, one speaker from Ikea-supported research and design specialist Space10 wondered whether engagement per square foot should be one such yardstick. The relationship between that measurement and financial performance would of course need to be gauged too.
The store retains its preeminent role in retail, but space must be sweated in new ways as qualities such as experience, service – and the provision of services – become ever more important in driving transactions and cementing customer relationships.
Daunt’s overhaul of Waterstones shows that can be done – even when it seems against the odds as a new generation of competitors turn traditional retail models upside down.