A Phoenix Run by Asses

So, without fanfare or fuss, the deed is finally done. HMV now owns Ottakar's and has ensconced the usual suspects onto the board thus signaling that they intend to bring their uninteresting formula for bookselling to the home of experimentation, fun and love of books. And, indeed this weeks announcements show just that. The Ottakar's name will disappear from our high streets by the end of the year.

Ottakar's is ripe for development of course. The lack of a computerised stock control system in the chain has left it reliant on physical stock checks to maintain the quality of the stock. Even the most thorough branch will have allowed titles that sell in significant numbers to sell out and have simply not replaced them. During the period when I was a senior manager in Waterstone's I would regularly run the same report when visiting a branch, asking the system to tell me what that store had sold more than three of over the past six weeks that they were currently out of stock of and did not have on order. I never got a report with less than 100 items on it.

In Ottakar's this kind of report, which is virtually running in the background on the excellent Phoenix 9, is worth upwards of an extra ‚£10k in top-line sales every year. And because Phoenix is not reliant on booksellers regularly checking stock by hand there is a significant saving to be made on staff costs too.

So there you have Gerry Johnson's magic formula. Having bought the chain for a knock down price they will, without expending too much effort, be able to prove that their ownership of their rival is, in economic terms. "a good thing".

Crowds will cheer; tickertape parades will be held; the children of the British booktrade will walk hand-in-hand towards a golden sunset. Except, hang on. I have a question.

If Phoenix 9 is so good and Waterstone's management are so sharp at managing costs then why are Waterstone's doing so badly? If Ottakar's can easily be turned around by a computer programme and the laying off of some superfluous booksellers then why were recent results in the two chains so similar? Ottakar's sales were down 8% at their last trading update in March; Waterstone's were a little over 6% down for the full year in July.

Could it possibly be that Waterstone's, despite the excellent tools at their disposal are actually not very well run?

Hmm...