Digital Investment

So Blackwell are restructuring and in order to preserve cash are scaling back their digital ambitions. This does surprise me but I imagine it is a result of the credit crunch. If you’ve a cash shortage and can not raise credit for investment in the current climate then things may well have to be cut.

The reason that it surprises me is that I know that Blackwell have experience of good returns on digital investment. Three or four years ago I went to a Publishers Association seminar at the rather grand Stationers’ Hall. At the seminar a Blackwell’s representative explained that since they had moved to exclusively electronic ordering for their shops they had reduced their transaction cost from something like 27p to 4p per transaction. It had required quite a lot of investment but the return had been worthwhile. Of course further returns on digital investment are going to be harder to achieve – 4p to 1p per transaction would be very tough.

Given this experience you would think they might see digital investment as a sensible strategy. It isn’t difficult to see other areas where digital investment might create a return. The most obvious is the Blackwell online shop. Functional as it may be, it looks a little dated in comparison with the revamped Amazon and Waterstone’s sites and doesn’t really take advantage of Blackwell’s more academic focus. Where for instance is the ability for a student to check whether or not their campus bookshop has the book they want? This functionality is available on the Waterstone’s site but would probably be even more useful to Blackwell’s customers.

Still it appears for the moment that any changes are likely to be more fundamental in what is a worrying time for Blackwell in particular and the book retail trade in general. Let’s hope they got through this. Waterstone’s needs the competition. The UK book trade needs a strong Blackwell too.

Better Late Than Never

So Waterstone's have announced their results for the Christmas period and Gerry Johnson has declared himself satisfied with a like for like drop in sales of 2%. Given the wider retail climate this doesn't seem too bad but it will be interesting to see what bonus he gets this year - but it is hard to believe it will be anything like the £360,000 he reportedly got last April. It could have been worse – at least the chain will survive for the moment which is more than can be said for Woolies, Zavvi and a host of others.

I can't say I am too surprised. My Christmas shopping was done on the Monday before Christmas in one of the UK's largest towns. It boasts two Waterstone's – one in a town centre mall and one on the high street.

First I went to the mall shop. It was mobbed. There was a queue from the tills down the entire length of the store which looked as though it would take an age to negotiate. Although it was just before Christmas I wasn't aware of any big discounts but I had walked straight past the front of house displays to the 2 for 3 tables and shelves of fiction. These were busy enough so I imagined plenty of people were paying full price or the standard 3 for 2 prices.

I left without queuing and went to the high street shop. This too was mobbed but it is a smaller shop and the queue was smaller – though still very big. Fortunately a security guard (of whom more later) noticed me staring at the queue in dismay and directed me to the children's department where there was another till and a shorter queue. After 20 minutes I was served and left happy – but amazed at how busy the shop had been. One person in the queue in front of me had bought 10 books (three 3 for 2 offers and a tenth book) costing over £100.

From this brief experience I concluded the following:

1. Christmas may have been late but for Waterstone's it was looking good


2. Waterstone's was seriously understaffed at Christmas


3. Waterstone's will have lost sales due to the staffing levels this Christmas

Looking at the results it seems I was little off with 1. Yes it was late but it was only OK. I was definitely right about 2 and we'll never know about 3. If they hadn't had the 2nd store I would have left anyway and bought my gifts elsewhere and I certainly considered leaving the 2nd shop too. I imagine many people took one look at the queues and went elsewhere. If they did it represents a badly missed opportunity in what was a very competitive Christmas season.

Now Christmas is over I must head into town to see how the shops are doing. I fear that given the wider economic climate I have a 4th conclusion to make and that is that one of these 2 Waterstone's will close before the year end. They are less than 10 minutes walk from each other and though they could be said to be in different parts of town it does seem likely a cost conscious chain will not support the two overheads. We'll see. I wish them the best. The UK book trade needs a strong Waterstone's.