Although this will be over-shadowed by Asda/Sainsburys this week, Waterstones being sold is a testament to how much the high street has changed over the last ten years; the rise of ecommerce, digital services growing relative to physical products, consolidation of the high street.
However, most interestingly, it makes it clear that there is a new post-Amazon model for physical stores, and that there is a route to transitioning from bricks-only retail to a digital-ready store portfolio, even if it can be a painful journey.
There were several key elements that made this possible:
- Right-sized store portfolio - it is worth bearing in mind that Waterstones took over Ottakar's in 2006 (and Dillons in 1999) so it had consolidated a large portion of high-street bookselling in itself, before being forced by market changes to reduce its store portfolio to fewer, larger stores where they could offer a more comprehensive customer offer and manage costs more effectively.
- Focus on customer service/experience - customers still enjoy browsing and flicking through physical books. Digital still doesn't do browsing as well as a store, especially when combined with knowledgeable advice and other footfall drivers such as food/drinks or book signings/speaking, so Waterstones is creating a niche that the likes of Amazon struggle to compete with.
Fundamentally, Waterstones has transformed itself from being a bookshelf to a literary leisure concept - adroitly moving from a declining to a growing market.
Is the journey complete? No - retail continues to be ruthlessly competitive and the bar on retail-tainment is being raised everyday. It is no longer good enough to just put in a coffee shop or give colleagues iPads, there needs to be real multichannel connections and reasons for customers to engage.
Amazon's New York bookstore is great example of experimentation in creating a digital store. The whole store is intricately intertwined with amazon prime, giving alternate prices for prime customers and creates in-store equivalents of online classics, for example 'People who bought this book also bought...' shelves. Data analytics to provide targeted insight is clearly going to be a growing trend in making stores more customised and relevant.
Winning bricks and mortar retailers are re-imagining the purpose of their physical space. For those who haven't yet begun to act on these trends, Toys R'Us and Maplin are just today's chilling examples of the prospects of those who don't.
What James [Daunt] has done is to go some way to restoring Waterstones to its original DNA: decentralism, concentration on literary stock and staffing and values.