Last month HMV sold Waterstones for £53m to a fund controlled by a Russian Billionaire (they are tiring of football clubs it seems) and this is either the best money ever spent or history may show the purchase of a sinking ship. Waterstones is profitable at present and people will not stop buying books but the world is changing….fast.
That evening I tweeted something along the lines of “Amazon is where I buy the books I need, Waterstones is where I find the books I want” and in the responses a few people made the comment that they find the books at Waterstones and then go home and buy them cheaper at Amazon. This lead to a healthy debate, which in summary went something like:
Side 1: Your model (of browsing but shopping cheaper) will become extinct
Side 2: They don’t offer me any greater service so why should I buy it?
Side 1: You are consuming their ‘service’ by going into their shop and availing yourself of their stock
Side 2: But the staff doesn’t help me or offer me anything more than I can get online
Side 1: Do you ask?
Side 2: I shouldn’t have to
Side 1: Do you go into a bar, wait in the middle and complain about not getting served?
Side 1: The margin erosion means there are less staff to serve you and they are just focussing on operating the shop
Side 2: But that’s not my problem
Side 1: What you are doing is the equivalent of walking into loads of bars tasting loads of drinks and not buying anything
…and so it went on (it was Friday evening so at times it was a little spirited and if the person involved is reading this apologies for an editorial licence I may have taken to make the point)
It ended amicably with the other person (Side 2) admitting it had provoked thought and me (Side 1) realising that the other side wasn’t to blame that actually it’s Waterstones (and other businesses in the same situation) who to use a line from ‘The Untouchables’ are taking a “knife to a gun fight”.
The internet has changed the world, no more so than for retailers who are competing with businesses that have very different (leaner) cost structures and can operate their “stores” without the joys of rent, rates, shop fit, staff, localised stock etc etc and it strikes me (and I am by no means (x1000) the first person to say this) competing on price with someone who has a dramatically lower cost base than you is setting course for extinction. The pureplay internet retailers (i.e. those with no stores) have become very smart at providing some of the value of an in-person shopping experience with user reviews being the clearest example of them really understanding their customer.
Consumers are price sensitive, there is no disputing that but I recently asked a room full of people what their favourite retail experience was and not one person’s answer involved price. 95% of the answers involved the people they were served by. To me Waterstones need to stop selling books and start creating a book buying experience – that walking into a Waterstones would be like going to your book club where people have opinions and are able to tell you what they think. Whilst no one is price insensitive it is not the only factor…
When the video revolution first took hold (I am showing my age) a video shop opened locally to my parents home which was independently run and staffed by people who had a vested interest in the shop and liked films. Going there was great because firstly they had “The Cheers Factor” (everyone knew my name) but secondly they shared their opinions when asked, “if you like X I imagine you will like this” or “It’s like X but faster paced”. That shop (for the moment) is a Blockbuster and the biggest focus is selling package deals of coke/sweets/popcorn…
I may be shockingly naive in the way I see this and Waterstones may already be trying to do this but unless they dramatically and consistently change the way their staff engage with customers they are allowing the consumer to make a decision that is purely based on cost and not helping others (like Side 2 on Twitter) see the value in shopping with other criteria in mind or more importantly see the value that a specialist book shop adds over the online alternative.