Troubled retailer Waterstone’s and other ailing high street book specialists have been far too slow to react to competition from online booksellers, according to the Managing Director (MD) of The Book Depository Kieron Smith.
Commenting to Retail Gazette, the etail boss, who was Head of E-commerce at Waterstone’s for one year between 2006 and 2007, claimed these companies could have improved their chances of survival had they acted much sooner.
“Back in 2002 I said that high street booksellers had all shot themselves in the foot, and I feel quite vindicated by that,” Smith remarks.
“Many of the companies knew about the threat online retail posed to their businesses at the time, so they probably had the opportunity to turnaround their fortunes then.”
Almost ten years on from this and the signs are clear that the growing popularity of online businesses is having a hugely negative impact on the high street bookselling sector.
HMV Group announced at the turn of the year that 20 of its Waterstone’s stores will be closing during the course of 2011 as it looks to manage its cost base, while fellow book retailer Borders left the UK last year and is now struggling in its home country the US.
Smith has been a direct beneficiary of the problems in this market, though, and his global firm continues to go from strength to strength.
“I guess we have picked up quite a lot of the business from the decline of Borders and Waterstone’s,” he said.
“Our revenues have grown in the last two years, so I expect the missing sales from the high street have come to us and Amazon.”
At the start of 2011 The Book Depository announced that sales in the six months to the end of December 2010 increased by 70 per cent year-on-year to £60 million.
As a consequence it is now targeting a revenue figure of more than £120 million for the full 12-month period, helped by the fact it sells books to 102 countries, having added 20 countries to its distribution list in the last year.
“We virtually achieved all of 2009/10’s sales in the first six months of this financial year, which is a nice position to be in as a retailer in the current climate,” Smith explains.
“Additionally, we have made a profit every year since launching the company almost seven years ago.”
The Book Depository was established in the summer of 2004 with a grand plan to provide “all books to all” and has a number of unique selling points, allowing it to stand out from the crowd.
Smith believes his firm was the first online retailer to offer free worldwide delivery and he estimates that The Book Depository has at least one million more titles available within a 48-hour delivery window than rivals Amazon.
Prior to taking on his current role in August 2008, Smith spent time at a host of familiar high street entertainment retailers, including WHSmith, Ottakar’s and Game Group, as well as Waterstone’s.
Apart from his time at Game - where he was Head of Online Operations - all of his career has been spent in bookselling; but does he have a solution to faltering sales on the high street having worked in the sector for so long?
“I hope there is still a way forward for bookselling on the high street but it is certainly a challenge for them to tie up all the parts,” Smith adds.
“There’s a wealth of stuff published out there and sometimes it is a case of grabbing your own titles to recommend rather than following the crowd.
“People want to see something a bit different on the high street - maybe it is about local tailoring and engaging with local communities.”
The Book Depository, for example, aims to sell as many different books as possible. It also adopts a ‘fewer copies of more titles’ attitude to selling and continues to increase stock levels every year.
But not all of the industry players can adapt so easily to a changing marketplace.
With online booksellers offering greater choice and cheaper products than the high street, Smith admits that it will be difficult for bricks and mortar stores to continue to function at their current level and in their existing formats.
As well as the aforementioned big names, smaller chains such as British Bookshops & Stationers (BB&S) have also encountered serious problems as a result of changing consumer requirements.
Earlier this year BB&S went into administration and is currently in the process of disposing with its stores - some 22 of which were sold to WHSmith for £1.05 million in February.
“One of the major concerns I have about retail in this country is that it is too UK-oriented and so dependent on one market,” Smith notes.
“If you can hedge your bets slightly and create a global part of your business then this can certainly help.”
The Book Depository has certainly done this, and its presence around the world is helped by its customers, who participate in affiliate schemes, refer-a-friend campaigns and generally help evangelise what the e-tailer does.
“Much of our success is down to the work we do with our customers, who sell to their friends and relatives and promote us through blogs.”
It seems likely that the high street bookselling sector will continue to diminish, but this is happening despite what seems to be an ongoing desire for consumers to visit these stores.
Smith states: “People still really enjoy perusing the range of books available in stores, but the problem is this is all they are doing.
“They look through products in shops and then buy them online. Books are essentially a commodity product.
“The challenge for high street brands is to function in an effective multichannel way and I don’t think this has ever been grappled head on.”
With online booksellers such as The Book Depository and Amazon now so well established and holding such a large market share, high street bookshops, though once leading the market, are now being left behind.