A new e-book store, a repositioning of range, a greater focus on local promotions and increased non-book sales are among the strategies of Waterstone’s to improve its business. The management of HMV Group is meeting City analysts today [Friday, 26th March] to discuss its future plans. HMV Group is hoping that the new initiatives at the bookseller will improve net profit margin in the short term to 2-3% and in the medium term to 3-4%.
This week the chain reorganised its buying team structure to allow individual stores to tailor its range. Among the other plans are a revitalisation of the brand “to reflect its specialist appeal”, increasing non-book sales from 6% to 10% by 2013 and “maximising the Borders sales transfer opportunity”. According to its presentation, there are £60m of sales from Borders up for grabs in locations overlapping with Waterstone’s.
The group is also envisaging savings of between £4m and £5m from the Waterstone’s book hub for the 2010/11 financial year.
There is no mention of whether Waterstone’s will change its store base but it appears HMV Group will try to renegotiate leases rather than exit stores. The statement said leases of around 42% of its shops would expire within the next five years, “enabling the group to target improved terms at lease renewal”. The retailer will launch a new e-book store in May 2010.
Simon Fox, group chief executive, said: “We have a clear plan to quickly revitalise the performance of Waterstone’s, and to maximise its position as the high street’s last remaining book specialist.”
Between 2006 and 2010, the TCM top 50 has declined by just over 3% from 2006 to 2010, while the number of books sold outside the top 5,000 has increased by more than 5%. Overall, the TCM increased by around 2% over the period.
Myers will say that while range sales account for more than 60% of total sales. An area of opportunity is in non-fiction range, where sales are growing. Waterstone’s will also reduce the number of titles on promotion next year from just over 12% in the 09/10 financial year to just under 8% in the 2010/11 financial year. However, Myers said the chain will “retain overall price competitiveness”.
Waterstone’s predicts that the total book market will remain stable between now and 2012. Between 2009 and 2012, the chain predicts the physical book market will fall by around 3% with digital growing to become 8% of Nielsen BookScan’s Total Consumer Market by 2012.
The Bookseller will be speaking to new m.d. Dominc Myers later today, with updates about the new strategy to published online throughout today.