Blink and you’d have missed it. On Friday it was announced that Waterstone’s have bought Foyles. Ten years ago this would have been a major news story, and featured in the first few pages of The Times. Today it didn’t feature at all in the main newspaper and only managed a few columns on page 7 of the Business section. It shows how little the media cares about the books sector nowadays. The reason? Probably because most journalists haven’t been in a bookshop for years and fulfill all their bookbuying needs from Amazon.
Fifteen years ago, the UK bookselling industry was thriving. Waterstone’s competed with Books etc, who competed with Ottakars, who competed with Borders, who competed with John Smith & Co, who competed with Blackwells, who competed with Dillons, who competed with Heffers. They all competed with more than 1,600 independent bookstores, of whom my own bookshop, Politico’s was one.
In 2018, Ottakers are gone. Swallowed up by Waterstone’s. Same with Dillons. Books etc went bankrupt. As did Borders. Blackwells have retrenched from 70 shops to 45, including the closure of their famous Charing Cross Road shop in London. Meanwhile they also took over Heffers, Hatchard’s, Hodges & Figgis and James Thin.
There are now only around 850 independent bookstores. Numbers have declined for eleven consecutive years.
Waterstone’s too has been turned around by its transformational chief executive James Daunt, who survived the change of ownership from a Russian oligarch to an American hedge fund. He’s overseen a small cut in the number of stores from just over 300 to 283, but it hasn’t all been about store closures. He’s also opened some new stores, some of which have a local branding rather than the Waterstone’s name. The strategy has caused some controversy in places like Southwold, but financially it’s been a success, I’m told. James Daunt deserves a lot of credit for his stewardship of Waterstone’s. There was a time when it was a basket case of a company, with many in the industry fearing it might go the same way as Books Etc.
Foyles have been a bright light for the independent sector in recent years, opening a string of new stores on London’s South Bank, in two London mainline stations, at Westfield Stratford and in Birmingham, Chelmsford and Bristol. From being seen as the fusty old maiden aunt of the bookselling sector, they transformed themselves into something rather innovative. But financially, they’ve never had a strong balance sheet. Foyles had sales £26.6m in 2017, but made a loss of £89,000. Waterstones achieved sales of £388m in the period to April 2017, reporting a profit of £18m.
This is about buying market share. With this deal, Waterstone’s turnover increases by around 7%, and with the increased margins, Foyle’s should achieve profitability.
James Daunt has pitched the purchase of Foyles as a vital cog in his strategy to take on Amazon. He said…
Together, we will be stronger and better positioned to protect and champion the pleasures of real bookshops in the face of Amazon’s siren call. It is an exciting and invigorating time in bookselling as good bookshops are rediscovering their purpose in the fight back against online and e-reading.
No. What the purchase of Foyles is about is creating a book chainstore monopoly in the United Kingdom. Given Waterstone’s already has a dominant marketshare on the High Street one wonders if the Competition & Markets Authority might have a gentle look at this deal. Daunt is keen to emphasise that Foyles will remain an independent brand and will be operated as an independent business from Waterstone’s. Of course it won’t. Not in the medium to long term, anyway. Why else would it also have been announced that Paul Currie, current chief executive of Foyles, and finance director John Browne will leave the business once the sale is completed at the end of the year.
Economies of scale will be made. Publishers’ margins will be tightened. Publishers who currently sell to Foyles will be told to increase their discounts on their books to the same margin they give Waterstone’s. On average, there will be a 3-5% loss of margin. At the very least.
Foyles has always championed smaller publishers. Quoted in The Bookseller, Jason Burley of Burley Fisher and Camden Lock Books warns:
“The vast majority of the large bookshops in this country are now under the control of James Daunt, which is slightly worrying. It’s concerning and it’s not a good thing for choice. Indies bring a different choice of stock and a variety in the way they choose their staff – they are eccentric and quirky. I would include Foyles in that but I wouldn’t include Waterstones.”
James Daunt comes from the independent sector himself. He still owns Daunts, who run eight shops in London and the Home Counties, including their flagship store, pictured above. The question I have is whether the James Daunt, independent bookseller, approves of the deal James Daunt, the MD of the chain bookseller has done.
As a former independent bookseller and publisher it really concerns me the power Waterstone’s now has. OK, perhaps I should worry more about Amazon, but if Waterstone’s is pitching this deal as an important part of the fight against Amazon, excuse me if I laugh.
If Waterstone’s really wanted to take on Amazon they wouldn’t have such a pisspoor website. They’d be trying to compete with Amazon on their offering online. Bob Woodward’s new book ‘Fear’ is selling on Amazon at £14 including postage if you’re an Amazon Prime member. On Waterstone’s it’s £16.99 plus postage. Waterstone’s site is actually ugly. The purchasing process is easy enough but there’s nothing on the site to encourage you to return. I have no clue how many books Waterstone’s sell through their website every day, but I doubt if it’s 1% of what Amazon sell.
I’m sad to see Foyles lose their independent status. I can remember my visits to Foyles as a teenager, buying books from their dusty politics department on the third floor of their Charing Cross HQ. And then queuing up three times to actually be able to complete the purchase. I started my collection of Times Guides to the House of Commons there.
Times change, I get that, but in these days of globalisation and sector consolidation I do regret the constriction of customer choice we are now being offered in so many areas of our economy.
Yes, we’re getting better value - think about it: the price of books hasn’t increased in 20 years - but it’s not all about the lowest price.
Or is it?