Strategy for Waterstones - Essay Example

Strategy for Waterstones Strategic Plan Waterstones is a retail bookseller with high street shops all over Europe. It is the leading print book retail in Europe with approximately 300 academic and high street shops. In 2008, the company had worn the high street retailer of the year award (Waterstone, 2012). Waterstones commands a customer loyalty of 83% compared to its closest competitor at 74%...Some of the strength s of Waterstones is that it has acquired eight book stores in London and rebranded them. This has increased the company’s sales and market without incurring development costs. A weakness is in the online market (Nwagbara, 2011). The company is losing to online book retailers and it needs to strategize to fill this gap. Waterstones has ventured into a mutually benefitting agreement with Dyslexia Action. It has produced a resource guide for Dyslexic readers. Its greatest threat is loss of business to online retailers. The company needs to gain access to the online market as soon as possible before the print books become out dated in the years to come. Many users prefer online book retailers due to ease in access and speed delivery. This is slowly but surely out doing the print book stores .Before the company strategized on gaining access to the online market. it suffered a 0.4% dilution in the market share. This trend is expected to continue if a strategy is not quickly adopted to cover this market gap. Currently, the company is partnering with online book retailers like Amazon.com (Woolla, 2013).This is a short term solution to the problem. The company needs to obtain its own channel to become a multi-channel distributor so that it can be ready for the digitalized eBooks in the near future and to compete with the already established online retailers. Strategic Direction Developing the company’s own online channel in three years time is a long term solution to the company’s greatest threat which is online retail. It is aimed at maximizing revenue through healthy competition. This is the best solution compared to the current strategy of partnering with online stores to generate extra income from this new channel and continuing with print book retail and expanding its market by buying more stores. This strategy is appropriate because it will take time so as to avoid straining the business budget. In 2012 alone, the company suffered losses of 37.3 million pounds to online competitors (Ebrahimi, 2013). Other strategies include buying out competition, partnerships with dyslexia action, expanding its retail market by increasing the number of book stores and partnership with online retailers. The strategic direction will be first of all to partner with leading online retailers so as to gain insight in to the digital market. The company will continue its partnership with Amazon and other online book retailers so as to keep generating the income as it strategizes on making its own distribution channel. Strategy Year one of the strategic plan should mainly involve pointing out the best online publishers. The company will then weigh its options in terms of the capital required and the reliability of the publisher. After a thorough analysis of the publishers, the company should settle on the best. This is the publisher who will begin the first online store publications foe waterstones. After the negotiation process, contracts should be signed and publications to begin. The company’s stakeholders will be involved in this process to foresee its success. The legal experts of the company will be involved in the contract drafting and signing to avoid any misunderstandings that may occur in the future. In the second year of implementing the online market strategy, the company will capitalize in marketing its online store. This will make its esteemed consumers aware of their new channel. They will therefore not require going to other distributors to get access to eBooks. This will be through online campaigns via social media, print media like daily newspapers and magazines and visual and audio media like television advertisements and radio advertisements. The campaigns are expected to cost over 3million pounds. This will be beneficial to the company in the long run. In the third year, the company should be selling its online publications. This will be a pilot sales project for the online store. The sales are expected to cover the loss incurred in the recent years by at least 28 million pounds. At the end of the third year, the strategic plan will be evaluated. This will involve online surveys of the popularity of the online store. It will also involve checking if the project has achieved its targeted objective which is to combine the digital and print book to maximize capital for Waterstones. The evaluation process will also include comparison of other online retailers with the new Waterstone.com channel to see if it’s competing healthily. Once the evaluation is done, the findings will be analyzed and if the pilot project has achieved its goal, then the company will fully fund the online publication of its books and officially becomes a multichannel retailer. Justification for Strategy The benefits expected from this strategy are increase in revenue. This is true because in 2010, sale of eBooks went up to 318%.Amazon and other online retailers are reaping high profits (Amazon, 2005). This means that the company will reap great from exploring this new market. Another benefit will be retaining its customer loyalty. The customers whose needs keep changing will be satisfied. Their new need for online materials will be satisfied therefore they will not need to get these services elsewhere. This will increase the company’s credibility among its customers. The other major benefit will be healthy competition. The company will be able to compete both with print retailers and online retailers therefore maintaining its leadership position in the industry. The strategy is the superior of the other strategies which include buying out competition, increasing print retail market by adding more stores and partnering with online retailers. This is because this strategy caters for the company’s needs in the long run. According to BBC, it is predicted that in ten years to come, more than half of the books sold will be digital downloads(BBC, 2011). Therefore, this out rules buying out print competition and increasing print market by adding more stores in the long term. As much as these strategies are useful in the short term, there is a trend of print retail shops closing all over as they run out of business due to the online competition. Creating a new online channel is the best strategy to keep the company relevant and competitive. It is also a new way to increase revenue and to maintain the company’s credibility and high standards among its customers. References BBC News (2011) “Decline in High Street bookshops continues in 2011.” BBC News, Entertainment and Arts. 4 October. Retrieved 4 December 2013 from http://www.bbc.co.uk/news/entertainment-arts-15149546 Ebrahimi, H (2013) “Waterstones boss pledges to revive company’s fortunes after a ₤37 m loss” The Telegraph. 5 February. Retrieved 4 December 2013 from http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9851128/W aterstones-boss-pledges-to-revive-companys-fortunes-after-a-37m-loss.html Amazon(2005) ‘Amazon starts to hurt the high street Bookseller’, 5161, p. 15, Business Source Complete, EBSCOhost, viewed 9 December 2013. Woollam, J (2013) ‘Waterstones paves the way for Amazon Source, but will independent bookstores follow?’ Digital Book World. November 8. Waterstones (2012) ‘Find your local Waterstones.’ Waterstones.com Retrieved 4 December 2013 from http://www.waterstones.com/waterstonesweb/displayFindBranch.do Nwagbara, U (2011) ‘Waterstones and the Changing Bookselling Environment in the UK: the Journey so far and Prospects.’ Bulletin.Petroleum-Gas University of Ploiesti. Vol. LXIII, No. 3, Fraser, F, &Rickett, J (2004), Late, and great for some, Bookseller, 5111, p. 10, Business Source Complete, EBSCOhost, viewed 9 December 2013. Neill, G (2008), Bookshops resist high street slump, Bookseller, 5343, p. 3, Business Source Complete, EBSCOhost, viewed 9 December 2013. Portfolio According to The Booksellers Association (BSA), which represents about 95per cent of booksellers in the UK and Ireland, the number of bookshops on High Street has steadily declined since 2006 and its total membership has dropped by 20 per cent within five years; the membership of independent bookshops in the Association has also declined by more than 25 per cent within the same period. In 2006, there were some 4,495 outlets that counted themselves members in the BSA, together with 1,483 independents. Five years later, total memberships were 3683 with independents at 1,099. By 2011, membership moved even lower to 3.655, with independents falling slightly to 1,094. Waterstone is the leader in retail book sales in Europe. It specialises mostly in print books. This company has made different choices to increase its revenue so as to compete with other close competitors. It has gone a step ahead to even buy out the competitors. The company has a customer loyalty of 83% compared to the closest competitor with 74%.This company has not been spared by the new trend of online books. In 2010, it suffered a loss of 37.3 million pounds which was due to high competition from the digital retailers. It is therefore important to note that the culture of online shopping has affected book sellers who specialize on printed books only. The companies need to strategize by either partnering with online retailers in the short term or creating their own online channels for the long term benefits. Read More