HMV part 2 … Waterstones

If you didn’t know, the people who own HMV also own Waterstones, the bookshop. So are they in the same position as HMV?

The problems and pressures facing the company are very similar, but in my opinion there are some differences, sadly for Waterstones not enough to counter a strategy of denial and inaction.

Neil from Interacter responded and asked about my thoughts on Waterstones. Here is the reply post:

[Slightly with some additional detail]

Agreed on HMV. Dead unless they change, and I don’t think they will change enough. The evidence so far is denial of the inevitable. If you work at HMV, print out these comments (I doubt they use the Internet!!) and leave on the desk of exec team with a post it note saying “read this if you want to have a job in 12 months”. Seriously. Do it.

Waterstones … interesting. Here is why. I’ll stick to 5 points.

1) Experience: Waterstones ‘gets’ experience much better than HMV does. It could do much more in terms of being more social, focusing on the environment (more chairs, changing book layout [to show covers, not just spines], and adding more tablet layouts with recommendations, bit is a league ahead of HMV. So, overall a C+ or even a B-, but it needs to push the boundaries more. Drive card benefits more, incorporate social media better and KNOW ME and reward me. In terms of people – generally good. People in Waterstones love books, but needs to better publicise and leverage the expertise and knowledge that it has. The people are a huge asset, so use them better. I like Waterstones, but I don’t love it. That is your challenge. Make me into a raving, passionate fan. Also, get serious about technology. Book finders need to be much better … and be accurate. ‘We may have that book’ is useless. Sort out your stock control. RFID could help here with tracking. INNOVATE! The website is is need of a major haul as well. One example, one of the best sellers of the year, Steve Jobs book has NO bookseller comment or review!!! This shows that Waterstones website is about flogging books (and is not great at that). What it needs to be is a place for those passionate about books to learn, connect, explore AND BUY! Website marks: 1/5, almost no social media, no external links of reviews, limited information, nothing to attract me to explore deeper, no seasonal content that I want to read. Completely generic selling site.

2) Pricing: This is a joke at Waterstones. Full price for everything outside of discounted top sellers (or it feels that way). In many cases this means up to TWICE the price of Amazon. This is unsustainable as a business model. It doesn’t need to be a discount retailer, but full pricing is not sustainable when my iPhone can scan the barcode and allow me to order from Amazon in less than 10 seconds. The solution – REWARD ME – as a regular purchaser and BIG book buyer. You don’t need to be the cheapest, but also, don’t rip me off. I recognise I need to pay more to have the book now, but if the cost is less than £2.80 (the cost of Amazon postage), you will lose my business and I will wait until tomorrow. If I have Amazon Prime, good luck – no chance.

3) Stock: Needs some real thinking and innovation here. Where are the special editions, smaller publishers, local content, self-publishers? INNOVATE. Amazon is building relationships directly with authors … what is Waterstones doing? They have a huge asset in the shops to use this. The online/offline experience needs fixing. What happens if they don’t have the book in stock that I want? Once I ask about this in store you need to offer to ship to me next day and match Amazon pricing on this. If you don’t, then you don’t just lose the sale, you lose the customer. When I last looked, the speed was from years ago … “we can get that book in 6 weeks”?? Really?? Or I can order on Amazon and have it at my house tomorrow. Start with some core use cases and nail these. Embrace technology – fix the supply chain, but innovate. Where is ‘print on demand’. Waterstones should list 20 million books in each store and be able to supply any one in an hour. Is ‘print on demand’ the answer? I don’t know, but supply chains measured in weeks are certainly not. HMV should have nailed this too, but with downloads growth, this may be too late now.

4) Business model. Needs to innovate and build loyalty much better. What about returns, buy-backs, selling my books for me? I don’t have the answers, but see no innovation from Waterstones in this area. The model needs to evolve – not completely reinvent, but evolve. Try new things and test concerns locally. Empower managers to try things. And whilst I am talking about local managers – give them responsibility for the store. Allow them to innovate, to invest locally, to build connections with customers. I have a more social experience in Starbucks with its book groups and community events than I do in Waterstones!!! Wake up. Start small, engage the community.

5) Long term future: Much harder to call than HMV. The problem is the business model is changing from underneath it, and I see no response from Waterstones that gives me confidence. The pressures are the same as music (i.e. supermarkets, online, electronic channels), but there is a greater affinity and love for bookshops, so there is a window to change. Books will endure, but bookshops may only exist in niches, so Waterstones needs to define what a big retailer can do and show the way. Learn from Borders. The writing is on the wall unless you make these changes. Borders in the US was kicked into touch by Amazon, but at least today Barnes & Noble is surviving. It embraced technology, innovates, discounts and builds strong loyalty through a reward scheme. Its online presence is well integrated and they are driving social strategy … so what is Waterstones doing … not all of this, in fact almost none of it.


Same problems as HMV – dying business model and an unwillingness to boldly innovate. Without a willingness to change, the outcome will be the same as Borders. Even more than HMV, I really hope this doesn’t happen. The ball is in their court though. Lets hope they start to make changes now rather than do what HMV has done and ruin the brand and the stores.


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