Feature: Bookshops meet new market demands
A new breed of retailers is shaking up the UK book sector, writes Mark Ludmon
May 22 2003
Ottakar’s refers to its outlets as “lifestyle stores” while Waterstone’s now includes restaurants and bars among its list of facilities. The old image of the hushed, dusty bookshop is gone and a new breed of retailers is taking over town and city centres.
In April, Ottakar’s swallowed up Hammicks’ 24 bookshops across the south-east only a year after taking over the long-established James Thin chain.
With its cafes and children’s entertainment zones, Ottakar’s reflects how booksellers are increasingly trying to meet consumers’ demand for “shopping experiences” rather than simply a place to buy the latest Frederick Forsyth.
The latest takeover proves the book trade is undergoing the same consolidation as other sectors. The UK market is forming into just four retail groups, putting increasing pressure on small independents that struggle to compete on the high street with the group buying power of larger companies.
With WH Smith holding the top spot in terms of sales, Waterstone’s remains the second-biggest bookstore chain in the UK with 197 outlets, with plans to open more this year. Number three is Borders Group, which owns Borders and Books Etc, but its position is being challenged by Ottakar’s which now has 117 sites.
Many of the big names of the past are no longer there, such as Dillons, which have been consumed through mergers and takeovers. Hammicks was a familiar name on high streets in the south-east for 35 years, seen as something of a faithful underdog that valiantly struggled on despite changing ownership and a lack of investment by its South African parent company, Johnnic.
Commenting on the sale, Hammicks managing director Trevor Goul-Wheeker said: “It makes great sense in creating a company with scale and buying power. That’s what you need to compete with the big chains.” At the same time, his company’s rivals have been changing the face of bookselling by building city centre superstores and modernising their offer.
Borders arrived in Oxford Street, London, five years ago, an export from its US-based owner which has been transforming bookselling on the other side of the Atlantic since the 1970s. Its first store, covering several floors, was marketed as a cafe and meeting place, with armchairs and sofas throughout, and not just a place for shopping. Now there are Starbucks coffee shops in all 20 stores as well as concessions run by upmarket stationer and greeting card chain Paperchase. Gone is the traditional nine-to-five mentality – Borders stores are normally open seven days a week, sometimes from 8am to 11pm.
In an interview with retail magazine New Urban Futures, Borders UK marketing managing Matt Taylor said its offer was constantly evolving: “The mix is still dominated by books but music, DVDs and magazines are a big growth area for us. We are enhancing the shopping experience and adding value for the customers. In the past, the perception of bookshops was very elitist but now it’s an enjoyable experience.” Investment means that it should maintain its number three position, with new stores opening this year in Manchester city centre and Birmingham’s new Bullring.
Waterstone’s has also been opening larger stores, including its flagship in Piccadilly, London, which is the biggest bookshop in Europe. As well as selling CDs, videos and DVDs at some outlets, 25 stores have cafes, mostly run by Costa Coffee – its Piccadilly branch even has a bar on its fifth floor. However, the company insists it is still in the business of selling books. Faced with increasing competition from internet sales, Waterstone’s formed an alliance with its biggest threat, Amazon, to provide its own specialist online bookselling site.
Compared to its rivals, Ottakar’s is a newcomer, created in 1987 to plug a mid-market gap, mainly in the centres of smaller towns. While admitting to being a national branded chain, the company describes itself as “a collection of intensely individual bookshops” run with a degree of local autonomy by its managers. Like Borders, it originally experimented with selling classical and jazz CDs but this was not a great success.
Spokesman Jon Howells said: “We decided to sell solely books. Everyone on the high street is selling CDs and DVDs.” Like its rivals, it has put coffee shops into a third of its outlets, nearly all through an arrangement with Costa Coffee. As well as providing a more relaxed shopping experience, they provide a space for the local community to meet, such as reading groups.
The company is also rolling out a concept called Launchpad which brings an “element of entertainment” to the children’s areas of its stores. It includes interactive games and gimmicks such as talking Daleks.
Tradition can also be a selling point. Blackwell’s, which has 80 stores after buying some James Thin sites and Heffers of Cambridge, continues to thrive on its academic reputation after more than 120 years. Although it has no coffee shops in its stores, it started selling books online in 1995.
The strength of booksellers’ strategies will continue to be tested as the high street faces declining sales growth. While Ottakar’s reported an upturn in sales last month, HMV Group chief executive Alan Giles noted that Waterstone’s had experienced a “noticeable slowdown” while Borders Group issued a profits warning following lower-than-expected sales in all its divisions.
But, according to research group Nielsen BookScan’s annual General Retail Market report, the number of books sold in the UK increased by nearly three per cent year-on-year to nearly 134m in 2002. With a fifth Harry Potter due in the next few weeks and other best-sellers on the horizon, booksellers continue to say they feel positive for the year ahead.
