had acquired Dillons – an academic bookseller with its main store in Gower Street, London and a couple of small campus bookshops – in 1977 and begun to roll out a national chain of bookstores in the late 1980s, had always opposed the NBA. ‘I just thought the Net Book Agreement was stupid – it was an irritant,’ he recalled. ‘When we had a few shops, it didn’t matter that much, but once we had a national chain and we were branding Dillons nationally, it became more of an irritant.’26 Dillons began experimenting with price promotions in 1989, including an attempt – cut short by an injunction secured by the Publishers Association – to discount the titles shortlisted for the 1990 Booker Prize. In 1991 Reed Consumer Books withdrew from the Agreement – the first of the major publishers to do so – and in August 1994 the Director General of the Office of Fair Trading decided that the NBA should be reviewed again by the Restrictive Practices Court. A period of confusion and uncertainty followed. In September the Publishers Association announced that it would defend the NBA and the following day Tim Hely Hutchinson – then CEO (chief executive officer) of Hodder Headline – announced that he was going to de-net their books on the day after Christmas. In September 1995 Random House and HarperCollins both announced that they would no longer be bound by the Agreement, and shortly after the retailer WH Smith – previously one of the staunchest defenders of the NBA – announced a major de-netted promotion with them. The NBA was effectively dead. In March 1997 the Restrictive Practices Court sealed the coffin by ruling that the NBA was illegal. From this point on, retailers were free to discount books and to sell them at any price they chose.
Prior to the dissolution of the NBA, Britain had experienced the growth of book retailing chains in a way that was somewhat similar to the US. In the 1970s and before, WH Smith, the general high-street bookseller, newsagent and stationer, was the most important player in the retail book market in Britain. Originally established as a wholesale newsagent and stationer in London’s East End at the end of the eighteenth century, WH Smith had expanded rapidly in the nineteenth century thanks to a series of exclusive deals with the major railway companies to operate bookstalls in railway stations.27 By the 1970s WH Smith probably controlled as much as 40 per cent of the retail book market in the UK. The rest of the market was accounted for by some well-established, traditional independent booksellers, like Hatchards of Piccadilly, a few small chains like Blackwell and Hammicks and a plethora of small independent bookstores. Unlike the United States, Britain had not experienced the rise of mall bookstore chains in the 1960s and 1970s, as this phenomenon was linked to the social geography of the American city, with the migration of the middle classes to the suburbs and the growth of the suburban shopping malls based on high levels of car ownership.
The bookselling environment in Britain began to change significantly in the 1980s, thanks in large part to the rapid rise of Waterstone’s and Dillons. Tim Waterstone joined WH Smith in the late 1970s but was sacked in 1982. At the time he had been working on a paper on bookselling in Britain and had come up with a plan for a new kind of bookstore – ‘a store which would have an extraordinarily well-informed inventory, extraordinarily well-informed staff and a sort of messianic desire to sell books, independent bookselling at its best, but to have them as a chain,’ as he put it. He managed to raise £6,000 to open his first bookstore in the Old Brompton Road in London, and then raised further finance to roll out a chain of stores across the country. These were large bookstores in central, high-street locations, filled with huge amounts of stock including many backlist titles and designed in ways that were attractive to customers and conducive to browsing. The stores were similar in conception and design to the superstores that were being opened by Barnes & Noble and Borders in the US in the 1980s but the idea appears to have been developed independently.28 While Waterstone’s was actively expanding its national network, the Pentos Group began, from 1986 on, to roll out a national chain of bookstores under the Dillons brand; by 1989 it was operating 61 bookstores across the country. A third chain was started up in 1987 by James Heanage, an entrepreneur with a background in advertising who had spotted an opportunity to develop a network of attractive, well-run bookstores in small and medium-sized towns in southern England; the first two Ottakar’s bookstores were opened in Brighton and Banbury in 1988 and the chain continued to expand over the next decade. By the end of the 1980s, there were two major bookselling chains rolling out stores nationwide and a third chain opening bookstores in the smaller towns and cities of southern England. The volume of retail space for books was expanding rapidly and dramatically. All three chains were competing against one another and taking market share away from WH Smith. They were also forcing many independents out of business, partly through predatory activities and partly because many of the independents were poorly run businesses which simply could not compete with much larger and more professionally run bookstores, just as in the US.
The rivalry between Waterstone’s and Dillons was brought to an end in the course of the 1990s, when the UK book retail sector underwent a process of consolidation. In 1993 Tim Waterstone sold the company to his former employer, WH Smith, for £49 million and the business was integrated with 48 Sherratt & Hughes stores, which were converted into the Waterstone’s brand. As an autonomous business within the WH Smith Group, Waterstone’s expanded rapidly and became the leading specialist bookseller in the UK. In 1998 Waterstone’s was sold to the HMV Media Group, which had been set up, under the chairmanship of Tim Waterstone, by the music corporation EMI and an American venture capital group called Advent, in order to acquire Waterstone’s and merge it with Dillons. HMV had bought Dillons in 1995 when the Pentos Group, which owned Dillons at the time, was declared bankrupt. The HMV Media Group paid £300 million for 115 Waterstone’s stores and £500 million for EMI’s two chains – 78 Dillons stores and 271 HMV music stores. For a year the two rival bookselling brands were maintained, but in 1999 the Dillons name was dropped and the stores were rebranded as Waterstone’s. In 2002, the HMV Group operated 197 Waterstone’s stores, mostly in the UK and Ireland, as well as 328 HMV stores selling music, videos and games. WH Smith also expanded its holdings in the 1990s, using the proceeds from its sale of Waterstone’s to acquire the 232 stores of the Scottish-based John Menzies chain in 1998, bringing the total number of branches in WH Smith’s high-street and travel chains to 741.
By the end of the 1990s, the absorption of Dillons into Waterstone’s had put the newly expanded Waterstone’s in a dominant position in the UK book retail market, but it also marked the beginning of a period of change for the retail giant. HMV’s music stores were very successful at the time, and the management at HMV decided to apply to Waterstone’s some of the retailing principles that had worked so well for the music stores – including a greater emphasis on campaigns and front-of-store promotions, higher stock turn and reducing the range of inventory. It was a model that went against the grain of Tim Waterstone’s conception of bookselling: ‘HMV wanted to go into the mid-market, to reproduce in the book market what they had so brilliantly done in the music market. But it just did not work in books, and I didn’t even want to try it in books,’ he explained. ‘Waterstone’s depends on heavy inventory, it depends on heavy investment in stock, it depends on the quality of its backlist. If you start dragging the inventory out, what you’re doing is dragging out the backlist. And once you start dragging out the backlist, the whole character of the bookselling changes. You’re left with a frontlist, and if you’re left with a frontlist then you’re led into a discount war.’ In 2001 Tim Waterstone resigned as chairman.
In the late 1990s and early 2000s, Waterstone’s also faced threats from new players who entered the market. In 1997 the US-based Borders Group expanded into the UK by acquiring Books Etc.; within five years Borders was operating 37 Books Etc. stores and 21 superstores in the UK and had become one of Waterstone’s major competitors. But the overseas expansion of Borders didn’t last; Borders sold the UK business in 2007, as noted earlier, and all its stores in the UK were closed down in 2009.
The other US-based book retailer who entered the UK market proved to be more resilient. Having acquired the British online bookseller Bookpages in 1998, Amazon quickly expanded its presence in the UK and took a growing share of the market.
