Alan Giles: Music man books a place in global retailing
The Player: Alan Giles, Group Chief Executive, HMV Media
Wednesday 12 May 1999
CHALLENGE: "It is a time of unprecedented change in really all the markets we are in," says Mr Giles. HMV Media encompasses the retail brands of Waterstone's, Dillons and HMV. Mr Giles says the group's challenge is "to continue to keep the role of the book in the bookshop central in the busy lives of people as we move into the next century". HMV is one of the few British retailers to have successfully traded overseas. In future years the challenge is "to move what has been two wonderfully successful domestic brands and achieve the same degree of success and market domination in a world sense".
CORPORATE BACKGROUND: Worked at Boots and WH Smith in a variety of buying and marketing roles. In 1985, Alan Giles was asked to head-up the book- buying operation of WH Smith. In 1988, at the top of the UK housing market, he moved within WH Smith to run Do-It-All, the struggling DIY retailer. He looks back on this period as "four pretty bloody years". Towards the end of 1992 he was asked to run Waterstone's, then part of WH Smith. He was one of two joint chief executives appointed when a consortium including Waterstone's founder, Tim Waterstone, acquired the Waterstone's, Dillons and HMV businesses and established HMV Media Group. Stuart McAllister recently stepped down as joint chief executive due to ill health.
STRATEGY: "Global exploitation of the brands both in books and music," says Mr Giles. Although the businesses are separate they have similar characteristics. Mr Giles sees "fantastic opportunities" in international retailing. HMV is already the number one music retailer in Canada, Singapore, Hong Kong and Ireland, and is number three in the important Japanese market. In the short term he believes there is ample scope to invest in existing markets, notably Germany. Mr Giles says the group is "not just invading hoards of Brits", adding that the flexibility of the business and brands enables the businesses to reflect local markets in terms of product and staff.
The book business is essentially a British one. Waterstone's is opening a new generation of large superstores. Mr Giles sees Dillons and Waterstone's as complementary brands that appeal to different sections of the book- buying public.
Music and books both face competition from Internet retailers such as amazon.com. "I have a lot of respect for amazon," says Mr Giles, who views the Internet as a "complementary" distribution channel. Far from diminishing book sales, Mr Giles says each new generation of technology has "only served to increase the market". In many bookstores The Rough Guide to the Internet tops the best-seller lists. Both HMV and Waterstone's have entered into a partnership with Yahoo! in the UK to provide free access to the Internet and extensive on-line advertising for each of the businesses. Although it is early days, Mr Giles says "the level of customer take-up has been very, very pleasing". In addition, HMV has a partnership with IBM Global Services to develop HMV's Internet sites.
MANAGEMENT STYLE: He is a strong believer that "you adapt your management style to the situation". At Do-It-All, Mr Giles says he had a more directive style than he would normally feel comfortable with. "It was a question of survival," he says. However, his preferred style is "very informal, involving and listening". People say he is demanding. He advocates decentralised decision-making. "It is an incredibly effective model to run a business," he says.
MOST ADMIRES IN BUSINESS: The Gap, which he says "has absolute clarity, consistency and is executed with extraordinary passion". In terms of business leaders, Mr Giles cites Sir Geoffrey Mulcahy, chief executive of Kingfisher, who "has done a fantastic job". "He is the first person who has truly started to build a European-scale retail business", he added. Other names mentioned include Eddie Bell, chairman of publishers HarperCollins and David Simons, chief executive of Somerfield. Mr Bell is described as, "a survivor and is completely unchanged in terms of his enthusiasm and passion for the business". Of Mr Simons, Alan Giles (who is a non-executive director of Somerfield) says "he has been so clear-minded and determined in transforming the reputation of that business and has done a fantastic job for the shareholders".
CITY VERDICT: "There's a lot of potential still to roll the brand out, certainly in Japan," said one analyst, commenting on HMV Media's music business. The group's Internet developments in both books and music are expected to be very successful and serve to "totally reinforce the brand identity". City analysts are anticipating more synergy benefits from the Dillons acquisition with the possibility of multi-branding. Within the next two years HMV Media is expected to float on the London Stock Exchange. Its nearest competitor is WH Smith whose stockmarket rating has received a significant boost from its Internet developments.
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