David Prosser: The Waterstone's story may not have a happy ending

Outlook James Daunt is a brave man. Having been appointed managing director of Waterstone's just three months ago – after the book chain'spurchase by the Russian billionaire Alexander Mamut – he is dumping the central plank of the sales pitch it has been making for the past decade.

One can see what he's thinking. Mr Daunt was hired for his track record at Daunt Books, a small independent chain that prides itself on a stylish, upmarket approach to retail – and which has been very successful. The idea that books are just another commodity, to be shifted with aggressive pricing, is the antithesis of what Daunt Books is all about. In axing Waterstone's three-for-two offers, Mr Daunt is steering the bookshops towards the sort of philosophy that has worked for him in the past.

The big question is whether that philosophy is scaleable. It is one thing to set out your stall as an upmarket, intelligent book seller in six stores in affluent parts ofLondon – Belsize Park is as down-at-heel as Daunt Books gets – and quite another to do it across 300 stores nationwide. What works for a specialist retailer may not do so in a mass-market offering.

Like it or not, price is a consideration for book buyers. Every potential Waterstone's customer knows there is a good chance they will be able to find exactly the same products more cheaply on Amazon – or even in Tesco. And that's not even mentioning e-readers. The three-for-two offer may be a blunt marketing instrument, but it at least gives the impression that Waterstone's recognises the pricing threat from such quarters.

Waterstone's may run into another problem too with this move – one that will really upset book lovers such as Mr Daunt. The three-for-two deal is an effective way to shift the work of lesser-known authors, to expand their audiences and to turn them into the best-sellers of tomorrow. Without the support of being thrown into promotions featuring today's star names, those authors may find the going tougher.

For all that, Mr Daunt's gamble has something going for it. The reaction of many Waterstone'scustomers yesterday was that the three-for-two promotion had always annoyed them – often because they couldn't find the right books to make the deal work for them.

Also, the commoditisation of the Waterstone's product has undermined its appeal as an informed retailer of a wide range of books – rather than a bucket shop for best sellers – which is a better image to cultivate as it battles the online retailers and the supermarkets.

And it's also worth pointing out that the existing Waterstone's strategy is not exactly a runaway success. A profit of £9.5m on turnover of £500m, the most recent figures we have for its trading, is not the sort of case history you'll read about in the books on the business studies aisle.