Staff are also in revolt over low pay and shortages caused by a recruitment freeze.
In many stores crates of new books go unloaded as fewer staff, struggling to cope with serving customers, have time to stock shelves or talk to reps and discuss ordering new titles.
Conflict has been brewing since the appointment of a new managing director, David Kneale, in May 1999 after more than 20 years working for Boots.
Staff complain that sweeping changes are destroying the company's original ethos and that Waterstone's is "dumbing down" to widen its appeal and sell more middle-market popular books, thereby increasing profits and market share.
In the process, managers and booksellers claim, branches are losing their individual identity and autonomy as the company has begun to impose centrally controlled choices of which books to stock and promote.
The chain has drawn up a core stock list of 44,000 titles of which 13,000 will be mandatory for its high street shops. In the run-up to Christmas they must also promote the centrally chosen list of 100 discounted special offers.
One manager said of Mr Kneale: "He does not understand the Waterstone's culture or the passion we booksellers have for books.
"The new corporate mantra is we must be inclusive; the implication being that Waterstone's was too exclusive. But if we dumb down too far we will lose our reputation for being discerning and the danger is we will lose our customers who are serious book buyers.
"Staff are feeling overworked, undervalued and disillusioned." The vision of the founder Tim Waterstone was being lost.
From the opening of his first bookshop in Old Brompton Road in west London in 1982, Mr Waterstone wanted to be different from W H Smith. "Unthreatening, literate, but not elitist, and slightly informal," he said.
Typically he recruited graduates who loved books and who were encouraged to be individualistic, outspoken and opinionated and given freedom to buy and promote the titles they rated highly.
Previously virtually unknown writers such as Louis de Bernieres, the author of the surprise bestseller Captain Corelli's Mandolin, and Frank McCourt, now famous for Angela's Ashes, were Waterstone's proteges.
Mr Waterstone is now chairman of HMV Media Group - the result of a merger between Waterstone's, Dillons and HMV - and holds around 5 per cent of the company, formed in an pounds 800m management buyout in March 1998.
Waterstone's, with 208 shops, is currently the top-selling book retailer, with sales of pounds 390m last year, easily beating the pounds 320m of W H Smith/Menzies.
But faced with competition from the American bookseller Borders, which is opening superstores in the UK, and from the expansion of other book chains, the new Waterstone's management has looked for major cost savings especially in staffing and pay. It has opened a new flagship store in Piccadilly, London, which with five miles of shelving over 66,000 sq ft is said to be Europe's biggest bookshop .
In September Martin Lee, Waterstone's marketing director, resigned following the choice of Marian Keyes's Last Chance Saloon, loosely classified as romantic fiction, as the company's book of the month.
The choice dismayed staff and was widely interpreted as the latest sign that Waterstone's was "dumbing down".
The Bookseller, a weekly magazine for the retail trade, has carried a series of angry letters from staff all around the country criticising the new management style and policies.
Joe Gordon from Waterstone's in Princes Street, Edinburgh, complained of poor morale, friction and stress.
Staff at the Hayes branch in Cardiff warned that "many of our most experienced and loyal colleagues are making every effort to find jobs elsewhere".
Julia Smith at the Stratford-upon-Avon store warned: "If head office continues to ignore the needs - and abilities - of its staff and the values it used to hold, it will be left with a chain of bland bookshops, devoid of imagination and individual input, run by exhausted booksellers embittered by the inability of senior management to listen to anything they say."
Mr Kneale told The Independent on Sunday cost controls were necessary because 1999 had been a flat year for the book market, but staffing levels would be reviewed in stores with acute problems.
He denied Waterstone's was dumbing down. "This company has over four million customers who have a diversity of taste," he said. "What we need to do is be inclusive and welcome all book buyers and reflect their tastes."Reuse content