In 1991, one year after James Daunt opened his first eponymous bookstore in London, Waterstones unveiled its first U.S. bookstore in Boston. The U.K. chain grew its stateside presence to a modest size, maintaining a foothold in the country until the turn of the millennium. Like today, the 1990s saw many retailers forced to close, but for a different reason: they were ceding ground to chains, big box stores, and superstores. Among the chains expanding rapidly at the time was the bookseller Barnes & Noble, which had acquired several other bookstore chains and was subsequently blamed, together with the rise of Amazon, for the demise of thousands of independent bookstores.
Fast forward to the present, when Amazon is the unchallenged superpower in online retailing, indie bookselling is having a resurgence, and the much-beleaguered B&N has just been sold to Elliott Advisors for $683 million. And Daunt is now the man charged with running B&N and reviving its fortunes.
It will be one of many bookselling challenges taken up by Daunt, who, in addition to running his own chain that currently boasts nine stores, has been leading Waterstones for the last several years, having brought it from a state of near bankruptcy to profitability and a subsequent sale to Elliott Advisors last year. Aside from Jeff Bezos, Daunt is now the most influential man in English-language bookselling, running 293 Waterstones bookshops spread across the U.K., Ireland, the Netherlands, and Belgium and, when the B&N deal is completed later this year, 637 Barnes & Noble stores in the U.S.
Daunt appears ready for the responsibility. In an interview with PW, he said that when he assumed the role of managing director at Waterstones in 2011, the situation there was much worse than at present at Barnes & Noble. “At the very least, B&N is profitable,” he said, “but I may be stating the bleeding obvious that if sales aren’t turned around, there are going to be some adverse consequences—closing a lot of shops or, worse, closing all the shops.”
When Daunt first took control of Waterstones at the behest of then-owner Russian billionaire Alexander Mamut, the U.K. chain was losing tens of millions of dollars a year. It was a rocky start. Daunt led the company in cutting costs, which resulted in thousands of employees being laid off, including approximately half the managers and a third of the booksellers, according to the Guardian. He also engaged in several controversial experiments, including offering Amazon Kindle e-readers for sale in Waterstones stores, a practice that lasted for three years, and the opening of individually-branded, smaller format stores that lacked Waterstones brand. And yet, Waterstones began showing a profit again in 2015, and has continued to show modest gains ever since.
Considering the situation at B&N, Daunt said his priority with B&N is not to cut costs, but to find a way to arrest the decline in sales and return the company to growth, much as he did at Waterstones. The key, he said, will be investment.
“Elliott expects, at some point, to sell Barnes & Noble for a lot more than they bought it for—they expect to make tons and tons of money,” Daunt said. “But they also know that they will only do that if we can make the business shinier, bigger, and better. To do that, they will need to share some of their treasure with us. The simple fact is that B&N needs money: people want to shop in places that look modern, clean, and inviting. The B&N stores look tired and need a little botox.”
Daunt admitted that the task of turning around B&N may entail a steep learning curve, as the United States is a far larger and more diverse nation than the U.K. “You have to work out what you want to do in each location,” he says. “A customer walking into the Union Square flagship store, a store in Boston, or one in Jacksonville, may all want different things—and I’ll be honest here, I haven’t a clue what the customer in Jacksonville is like. Not yet, at least.”
Unlike B&N's previous leaders, who doubled down on Barnes & Noble's e-reader initiative despite losing more than a billion dollars on the program, Daunt is agnostic about whether or not the company will continue investing in e-book sales and the Nook. Back in 2011, it was widely believed Waterstones would team with B&N to sell the Nook; it didn’t, and went with Amazon instead, which resulted in poor PR and poor sales. Today, Daunt still believes in the viability of e-books, which he told PW remains "a sensible option for readers." He calls the chance to have another crack at selling e-books successfully an "exciting" opportunity.
"Nook just introduced a new model, so let’s see how it does,” he said, adding, “I don’t want to be selling someone else’s [e-reader], but I have no problem selling my own.”
Daunt expressed just as much enthusiasm for taking over BN.com. “When it comes to e-commerce, we learned from Waterstones that you need to do it intelligently, which is easier said than done,” he said. “The fact is, you aren’t going to out-Amazon Amazon, so instead you need to work with your strengths.”
He also sees the synergy between B&N stores and BN.com and the integration of online and in-store experiences—something that Foyles bookshops, the venerable U.K. chain acquired by Waterstones last year, was at the vanguard of developing—as an area for potential growth. "We have had a lot of success with the promotion of “click-and-collect” purchases, where customers order online and then pick up their orders at the store," Daunt said. "We are enjoying top line sales growth of 30% with this at Waterstones”
As for best practices that he can transfer to the U.S., Daunt said that the focus must be on the bookseller’s ability to cater to each customer base. For example, all discounting on titles is set by individual Waterstones stores. “Some in the countryside have more discount promotions, some stores on the London high street have none,” said Daunt. “The idea for us, as management, is to get out of the booksellers’ way and let them do their job.”
The answers for B&N’s troubles reside, Daunt claimed, within B&N. “There is a good group there who have thought long and hard about how to improve their business,” he said. “The people who are going to do the work are already there, and we just have to get the best out of them. I am a real bookseller and understand how stores work. I have done it before—the scale is a lot bigger, but so are the resources available.”
Above all, Daunt expressed calm about the transition, and advocated for patience. “There are some people who come in with a 100-day plan, but I am not like that and this is not that kind of situation.” He said that anyone who thinks there is a “magic bullet” to solve B&N’s problems is crazy. “I am not marching into B&N and saying 'here is the answer.' We are in a vocational trade and we make money by doing booksellery things. So that is what we will do. Nothing will change quickly. There may be the odd tough decision to make—hopefully not too many. I am looking forward to the challenge.”
