After Waterstones revealed a £37.3m loss this week, the question on everyone’s most people’s lips is what can a company selling products so hugely impacted by the digital market do to ensure that they, not only survive, but thrive, in this new online world?
With a dramatic shift in the way consumers research and buy products, employing an effective multichannel approach is important for any kind of retailer, but especially those who operate in a marketplace where the products themselves have become increasingly digitised.
Although the value and size of the bookselling industry hasn’t shrunk, the look and feel of it has changed drastically over the last five years with the rise of e-books hailing the fall of physical sales.
Waterstones is the only physical retailer connected to Amazon’s Kindle, and in addition to selling the device, stores are equipped with wifi, allowing users to browse books digitally, and search for Waterstones’ online special offers. Although full details of the deal have not been disclosed, it is believed that Waterstones also makes a margin on the books sold through its Kindles which, with the growth of e-books, could prove to be a very smart move.
Whilst this may seem like a significant step into the digital age Waterstones has not fundamentally altered the way it sells books. The danger here is that Waterstones is not making a bold enough statement to shoppers, reassuring them that it is still relevant on the high street.
Waterstones has a website where customers can browse and buy titles. However it’s Managing Director James Daunt has eluded to the fact that they have no plans to increase this offering in the near future, or to directly compete with Amazon. Surely, simply partnering with Amazon to get a slice of their Kindle profits is not enough to ensure that Britain’s largest bookseller is able to retain its crown? So what else should Waterstones be doing?
The answer, it feels, all lies in understanding customer experience.
In a bid to enhance in-store experience and to provide consumers with the optimum environment to relax, browse and enjoy the physical book, Waterstones has opened cafés in various stores across the UK, some under its own brand of ‘Cafe W’. Aside from creating a great ambience, installing coffee shops in store works as a strategy to increase the time customers spend in store, even if they are just there to use the free wifi and read their Kindle. The opening of these cafes is also a shrewd business move as it helps to de-risk the business by utilising another format to generate revenue.
So despite the announcement of a sizeable profit financial loss, it is my opinion that, providing Waterstones’ management can create an environment where customers want to shop, and they can incentivise them to make physical purchases using tools such as their loyalty card and in-store cafes, there is no reason why Waterstones shouldn’t be able to keep its valued place on the high street. But then again I’ve given up predicting what the high street will lool like in the future!
- Dan Coen, director, Zolfo Cooper