Blackwell's takes a leaf out of John Lewis's book

The venerable bookseller is switching to an employee-owned model. Is this the start of a trend?

by James Taylor
Last Updated: 19 Aug 2013

A new chapter for Blackwell's, the Oxford-based bookseller familiar to university students up and down the country: its owner says he plans to copy the likes of John Lewis by handing over the company to its staff, in a bid to preserve its independent status. Cynics might see this as little more than a desperate PR stunt by a struggling company. And arguably Blackwell's has to do something to stop Amazon eating its breakfast. But all the evidence suggests that employee ownership models work - so whatever the reasons behind it, we suspect other business leaders will be watching this little experiment with interest...

Blackwell's has been a fixture on the UK high street for 130 years; but like most independent booksellers, it's struggled in the face of online competition lately. Hence the rather radical step planned by its 81-year-old owner, Toby Blackwell: he intends to put all the wealth-generating shares into a trust that will pay out a proportion of profits to staff every year. If that sounds familiar, it's because he's basing it on the John Lewis model - in fact, the latter has even been helping him draw up his new constitution. 

The theory is that this will energise his staff to become more engaged, innovative, and efficient, allowing the chain to get more out of their 'unrivalled specialist knowledge'. And since his staff are presumably his key competitive advantage over online retail, that makes sense.

Now it's worth pointing out that Blackwell's isn't acting entirely out of noble principle here. It's been losing money for years, and given that online retail isn't going away, it needs to find some way of carving out a niche. Plus the new model will have at least one very practical advantage: it will allow Blackwell's to close down its head office in Oxford, with some (though not all) of its senior staff moved into stores - part of a cost-cutting strategy that will hopefully see it swing back into the black this year. So there's a degree of pragmatism about it.

On the other hand, there is evidence to suggest that employee-owned businesses actually perform better: a recent report from Cass Business School suggested that they enjoyed faster decision-making, sales growth and job creation. Cass also argued the model would be more resilient in tough times, largely because employees were more engaged - a theory that the performance of John Lewis and Waitrose in the last couple of years certainly supports.

Blackwell's has always been more innovative than its fusty image suggests (it was actually one of the first UK book shops to sell its wares online). And its strategy of focusing on its strengths as a specialist and attempting to improve staff engagement sounds like a good one. If it produces results, we wouldn't be surprised to see a few others follow in its footsteps.

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