Magazine article Marketing

Helen Edwards on Branding: Waterstone's: Labour of Love

Magazine article Marketing

Helen Edwards on Branding: Waterstone's: Labour of Love

Article excerpt

Russian oligarch Alexander Mamut must not let his heart rule his head in his pursuit of Waterstone's.

According to The Times Business section last week, a Russian oligarch is 'chasing Waterstone's for love'. Alexander Mamut, 51, made his estimated dollars 1bn fortune as a banker during the Boris Yeltsin era. Two years ago, though, he declared that he is 'not in business only for money', and proved it with a book-retailing dalliance in Russia, which failed.

Undaunted, he has recently taken a 6% stake in Waterstone's parent company, HMV, with a view to prising the bookseller away. It won't be easy. Simon Fox, chief executive of HMV, has vowed that no part will be spun off and that if anyone desires Waterstone's, they will have to stump up for the entire sickly group. Such is the price of love.

If the youthful-looking, blue-eyed, tousle-haired billionaire Mamut makes for a creditable Romeo, Waterstone's is a Juliet well past her best. The business, founded by Tim Waterstone in 1982, with its impassioned belief in bringing good literature to the high street, and its knowledgeable, bookish assistants, has aged into a confused purveyor of gift-wrap, cuddly toys and greetings cards, with books seemingly tacked on as a 3-for-2 afterthought.

It gets even harder to see the attraction when you take a closer look at the market context. Waterstone's is assailed on three sides by the forces that define modern bookselling. The mass market is served by the heavy discounting of best-sellers in supermarkets; Amazon is the natural successor to the 'long-tail' stock policy that once made Waterstone's special; meanwhile, e-readers put books into people's hands with an immediacy that cannot be matched by any physical retailer.

There are still enthusiasts who love to browse through real books on real shelves, but boutique retailers, such as Daunt in London, occupy that space more credibly than Waterstone's. Even its eponymous founder concedes from the sidelines that it has expended too much of its resources 'chasing the mass market'.

All the evidence appears to point one way: the large-space, high-street, general bookseller is a defunct business model. Borders, which has a similar positioning to Waterstone's in the US, is expected to file for bankruptcy, having posted losses of dollars 800m since 2006.

Still, if passion can raise a brand from nothing to start with - which was certainly true for Waterstone's - why can't more of the same rescue it from its difficulties? The answer is a bit like why it's harder to revive an ailing marriage than to ignite a new love affair: baggage. …

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