The Bookseller.com

1st December 2008

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Borders loss is Waterstone's gain

06.03.08 Graeme Neill

Waterstone's could be best placed to capitalise from a loss in market share by Borders, according to an influential retail analyst.

In a wide-ranging note on entertainment retail, Paul Smiddy at HSBC said this week that between space re-allocation and store closures, Borders would lose market share over the next year, with Waterstone's in the best position to gain from this.

The report also said that the current retail supply chain was "more akin to the 19th century than the 21st". Smiddy said that Waterstone's distribution centre, due to go live later this year, could lead to other parties trying to simplify their supply chains. He told The Bookseller: "Waterstone's is in the vanguard of what could be a change that impacts the whole retail industry."

Smiddy said that Amazon continues to dominate the online market in the UK. However, he warned that "its diversification into other product categories reduces its appeal to heavy book buyers".

According to HSBC estimates, Tesco now has a 5% market share in books, with a further 5% shared between the other supermarket book retailers.

* Borders last week arranged a £23m leveraged finance inventory facility with Landsbanki Commercial Finance. The debt is secured against book inventory in its stores and distribution centre, and will be used to pay off some of the original investment made by private equity owners Risk Capital Partners. Borders said that it planned to consolidate its position in the retail market this year and "concentrate on its core market". 

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