James Daunt: the man who saved Waterstones

Shock news just in: bookshops are rallying. Waterstones is looking likely to break even this year after ‘sensational’ sales on Black Friday last month. Its managing director James Daunt receives my congratulations warily as we sit in an engine room at Waterstones on Kensington High Street, a world away from the teeming shop floor. ‘Not many businesses leap with joy when they break even,’ he says, ‘but given where we’ve been, it is quite an achievement. We came within a millisecond of losing everything. We were loss-making, dead in a ditch.’

He’s not given to overstatement, this man with an urbane, gentlemanly manner. But the Amazon effect, coupled with encroaching e-readers and tough market conditions in the UK, meant that by 2011 the HMV group was willing to sell Waterstones for £53.5m. Enter the Russian oligarch Alexander Mamut, who really liked his local bookshop, Daunt Books in Holland Park. He bought Waterstones and appointed James Daunt as MD to turn it around. (Daunt still owns the Daunt shops, but is not involved in the day-to-day running of them.)

Achilles James Daunt, 51, to use his full name — a centuries-old family tradition — was in some ways a risky choice, having previously thrived in more rarefied conditions. A diplomat’s son, born in Islington, he went to Sherborne school and Cambridge, where he read history, and worked at JP Morgan for four years. What effect did that have? ‘Made me a bit better with numbers? Actually they are very formative, those first years out of university, particularly if you go to a place with an extremely strong culture as there was at JP Morgan. There was a strong emphasis on doing first-class business in a first-class way.’

Following his heart at the age of 26, he took a loan from the now-defunct Business Expansion Scheme to buy, for £240,000, arguably the most beautiful bookshop in London: the Edwardian former antiquarian booksellers at 83 Marylebone High Street. As he and his wife Katy brought up two daughters, Molly and Eliza, in Hampstead, Daunt Books grew, slowly, into six artfully curated bookshops in the capital’s loveliest enclaves (Marylebone, Holland Park, Hampstead, Chelsea, Belsize Park and Cheapside) — very different to the 300 Waterstones up and down the country. Daunt’s taste isn’t particularly populist — during our interview he has a crack at Fifty Shades of Grey (‘sometimes, for reasons no one can ever understand, a book sells in bucketloads…’) and he prefers authors getting up and talking — ‘or reciting poetry to 30 people’ — to big celebrity signings. He admits to being dazzled by Hillary Clinton. ‘There was a buzz. Even the 200th person whose book she signed came away delighted.’

The book signings of vlogger sensations Alfie Deyes and his girlfriend Zoella — whose book Girl Online has just broken a record for a debut author by selling 78,109 copies in its first week — were less successful. Or rather, too successful. With nearly ten million YouTube subscribers (largely teenagers) between them, crowd control is key. Daunt appears to still be recovering from the signing Deyes did in September: ‘I witnessed it. At Waterstones Piccadilly. There were about 8,000 pre-teen girls. Yes, they bought his book. But we had to call the police. Every floor was rammed; there were queues all down Piccadilly. It was dangerous. People were spilling into the road. That was the first one. Now we know.’

Indeed, ever since, care has been taken to keep the peace at book signings, including Zoella’s. The secret location was revealed only to ticket holders. And on the Waterstones website, ‘Can I bring my friends?’ was answered: ‘No… We must stress that there will be no opportunity to view Zoe for non-ticket holders.’

Daunt looks quizzically at a copy of Girl Online. He is a famously big reader and flinches even at the idea of bookshop stickers defacing his books. ‘You need to treat a book with the most respect you can.’ And this means defying price wars. At Daunt Books, nothing is discounted. ‘That isn’t our strapline, but we don’t do discounts at Daunt’s. I don’t think books are overpriced.’ Since starting at Waterstones he has brought in ‘buy one, get one half price’, and done away with three-for-two offers. ‘It was a cynical thing because more often than not people wouldn’t want a third, but the publishers would pay anyway.’ Offering a free book devalues it? ‘Exactly. That is where Amazon has been most destructive. In its devaluation of talent, of the editing process. I mean, how are authors supposed to eat?’

As well as cutting discounts, his first major decision at Waterstones seemed, on the face of it, mad: he was going to stop accepting promotional payments from publishers. ‘That was a big call,’ he says, wincing. ‘A substantial risk.’ Placing certain books in windows, on prominent tables or in offers — a ‘planogram’ was sent to each store so each layout could be precisely the same — amounted to revenue of £27m per year. ‘It was an apparent lifeline, but I thought: “That’s actually the way we slide into the ditch.” My problem was that they paid you to put every book in the same place in every shop. And books that might work in Kensington might not work in Blackpool.’

I heard a terrible rumour that the hand-written ‘staff picks’ were dictated by central office. He laughs. ‘I don’t know if that was true in the past, but it’s certainly not true now. Not the handwritten ones.’ He thinks customer reviews on Amazon are highly fixable: ‘Everybody does it, don’t they? Gets their Aunt Mildred or whoever to review their book. I would. You’d be nuts not to.’

His changes included dropping the apostrophe from Waterstones (for IT reasons) and instigating regionally centralised buying, which was initially controversial but reduced returns from 25 per cent to seven per cent. (‘Returned books are pulped. It’s a disgrace. The idea that signed copies are immune is a myth.’) He sacked 200 people in management. Some stores closed due to rising rents. He also took the strange step of selling Kindles, the spawn of his nemesis, Amazon. Why Kindle? ‘Well, I wish to God it wasn’t, but it’s the best one. And I’m in the business of selling people the best. It’s part of the service. Personally, I don’t understand why you wouldn’t want a physical book, but clearly some people don’t.’

The decentralisation improved morale. ‘Staff are now in control of their own shops. Hopefully they’re enjoying their work more. They’re creating something very different in each store. We have a lot of different markets.’ In what way? ‘Much as Asda sells different things to Waitrose. If you pile up the latest celebrity thing in Hampstead for 1p, it ain’t going to sell. And if you pile up an esoteric history in Gateshead, it isn’t going to shift. We have different books on display in Harrogate than we do in Kensington, for blindingly obvious reasons. There’s a different economy outside London. In Middlesbrough half the high street is vacant and there isn’t a lot of money. It’s a town that’s in big trouble, but our shop has reinvented itself there; it’s got rocking horses and pretty much all day long pre-school kids are sploshing about with paint. It’s not the most profitable shop, but it’s got spirit.’