The battle of the books is increasingly ferocious. While anxious commentators have been focusing on the fortunes of Sainsbury's, Tesco and Safeway, the enormous upheavals in the book-selling trade have gone largely unnoticed. This may be due to many publishers' and booksellers' tremulous cries of "Wolf!" before the Net Book Agreement collapsed in the mid-1990s. In the event, a system of price-fixing - which had lasted, one way or another, since 1890 - ended with absolutely no visible disaster at all. (You could compare it to the ferries' and airlines' public nervous breakdown about losing duty-free.) So attention moved on elsewhere.
But it's becoming the battle of the book superstores. Next month, Waterstone's opens the biggest bookshop in Europe - 54,000 square feet - in Simpson's old Piccadilly clothes store (the store Are You Being Served? was based on). It is bang opposite a large Books Etc shop - which now belongs to the American firm Borders - and just along the road from the smart frontage of Hatchard's, with its battery of "By appointment" badges.
Borders and Waterstone's are now headbutting one another in more and more cities. This autumn, a new 40,000-square-foot Borders store will open in Charing Cross Road, London. If the workmen finish in time, it may even unveil its charms on the same day - 14 September - as the new Waterstone's in Piccadilly. Meanwhile, the rumour is that Waterstone's may yet be taken over by Barnes & Noble. This would give American firms control of much of British bookselling.
What is happening isn't just a business question. If any one person deserves credit for cheering up city centres it is Tim Waterstone. The bookshop battle matters. The Waterstonisation of Britain has been one of the most civilising influences of the last years of the 20th century. Cities that lacked any decent bookshop suddenly got one; sometimes, with the competition, even two or three. Culturally it matches Allen Lane's invention of the cheap, good paperback when he launched Penguin Books in 1935. It is hard, now, to remember that you used to be told that "you can't have a good bookshop without a catchment area of at least two million people". You thought you were lucky if there was a dreary branch of W H Smith. Little local bookshops mostly sold greetings cards and fountain pens, and never had the book you wanted, though "we can order it for you if you like: it takes about six weeks".
In the United States it had always been an amazing pleasure, on finding yourself with a spare evening hour in a strange city, to wander into a late-night bookstore. From his experience as W H Smith's American manager, Tim Waterstone brought that pleasure here.
But bookselling has never been about only the higher cultural life. Waterstone's and Borders offer a "a complete leisure experience" (in the words of Bookseller Publications' authoritative new round-up, Book Retailing in Britain). At a Borders store, you can relax over coffee in the "spacious, comfortable seating area" and "enjoy one of the regular live music performances". At Waterstone's Piccadilly, you will be able to slurp a fresh orange juice in a lounge bar that has "impressive views across to the Houses of Parliament". (Plans for an in-store art cinema were turned down by the planners.) The jargon phrase is "lifestyle bookselling". But don't cringe. Allen Lane sparked Penguin into life by making a deal with Woolworth's to stock the first titles. Woolworth's was then, still, the classic "nothing more than sixpence" working-class store.
Business is business, even in the books trade. And perhaps now even more than ever. The collapse of price-fixing sharpened the knife-edge of competition. Waterstone's merged with Dillons (a shop name that will now vanish). For the first time ever, W H Smith was knocked off its dominant perch. Smith's - which now includes John Menzies - still has the most shops: 730, compared to Waterstone's-Dillons' 202. But Waterstone's has the highest turnover.
No one was a more ferocious competitor in his day than William Henry Smith II, the founder of the bookshop chain. He combined business with being a moral crusader. Today, on mainline stations, you can buy everything from exotic knickers to skin magazines; even the Smith's shop has its special "Erotica" shelves, with The Schooling of Stella or Pleasure's Daughter. But in the early days of steam, moralists fretted about "cheap French novels of the shadiest kind" being sold on station stalls, among a muddle of bottled beer and sweet jars. In October 1848 that changed. A bookstall owner called Gibbs, who'd been licensed by the London & North-Western Railway, was physically thrown off Euston station, after a back-room deal with the rail boss. New men moved in. This was the first W H Smith railway shop.
In the 1960s Private Eye began calling the firm "W H Smug", because it refused to distribute the magazine. (Sales doubled when it relented.) But Smith began as he meant to go on. He was nicknamed "the North-Western Missionary". He was also in on the ground floor of an expanding trade. In 1840 Britain had 1,331 miles of track. Thirty years later it was 15,310. Railways strengthened national uniformity. When Smith started a subscription library, to compete with Mudie's - both of them devoted censors - Wilkie Collins called the pair of them "the twin tyrants of literature".
We owe the shamelessness of the Sunday press to W H Smith. Censorship had unexpected side-effects. Smith was a strict Sabbatarian. On the distribution side of his business - built up by his father, W H Smith I - he refused to handle Sunday papers. Result: they could press ahead with their own agenda of sex and crime, untrammelled. The best-selling News of the World grew rich on a formula first concocted by the Illustrated Police Gazette, a lurid Victorian magazine (sales 100,000 a week) also not handled by Smith's.
The firm trundled on. Smith himself turned to politics. He rose to become First Lord of the Admiralty and to be parodied by W S Gilbert as Sir Joseph Porter in The Pirates of Penzance: "Stick to your desks and never go to sea,/And you all may be rulers of the Queen's Navee." Smith's was forced off railway stations for a while because the railway companies floundered and demanded higher rents. They branched out into the high street. Then, like most family firms (did anyone mention Sainsbury's?), Smith's also floundered. Only in the past few years have all the in-laws and cousins of the Smiths and their chums left the board. Their advertising jingle says: "Whatever you're into, get into W H Smith." The non-family chairman announced that the firm would "re-structure" (dread word) as "a popular specialist". Having bought Waterstone's in 1989 and hugely expanded it, Smith's last year sold it to HMV Media.
I doubt if anyone now ever makes a special trip to W H Smith. You look in because it is there. Waterstone's is an actual pleasure. But, for all the outward confidence, there are inner worries. EMI shares the ownership of HMV Media with an American venture capitalist. To bring Waterstone's and Dillons together has meant a current debt of more than £500 million, with annual interest payments of £60 million. The Piccadilly superstore will cost £17 million a year for a 15-year lease; £5 million for the refit; and £7 million for the initial stock. Dillons was brought low by opening too many shops too fast, at too high rents. Now Waterstone's has to run very fast, like the Red Queen, in order to stand still. A new managing director has come in from Boots. A stock market flotation has been deferred.
Fortunately for the customers, bookselling is not only business. Another pleasure Tim Waterstone brought to British cities, after he opened his first shop in 1982, was to have shop assistants who knew and cared about books. His only rival in this was Books Etc, founded a year earlier by a South African father and son, Philip and Richard Joseph, with the arm-chancing offer to give you your money back if a book didn't completely satisfy. Waterstone's branch managers were given great autonomy in placing orders. But for this, a literary maverick like Captain Corelli's Mandolin might never have made it to the best-seller lists. Under the new pressures, this local autonomy may diminish.
"Borders" sounds like a name invented by an image-maker: frontiers of knowledge, perhaps. In fact it was founded in 1971 in Ann Arbor, Michigan, by Tom and Louis Borders. Like McDonald's (launched at Des Plaines, outside Chicago, 1954) and the first air-conditioned shopping mall (Southdale, outside Minneapolis, 1956), Borders was an Edge City vision from the Midwest. The first stores targeted suburbia. Their slogan was "accessible sophistication". With 245 superstores across America, plus 1,100 other stores under the Waldenbrooks name, Borders is the biggest bookseller in the United States after Barnes & Noble. The decision to buy Books Etc in 1997 was the first time a foreign firm had come into the British bookshop business in a big way. If price discounting had still been banned, Borders wouldn't have come. For the British stores under Borders' own name (four so far: Oxford Street, Brighton, Glasgow, Leeds), the Books Etc staff gave some unexpected advice: stronger lighting than in America, bigger direction signs, brighter paintwork (yellow and red). Zap the stores up, not tone them down.
But the feel remains very American. If you ring, a taped American voice tells you that you're through to "Borders books, music and cafe". It is much more like shopping in a department store than in a bookshop. Borders has also re-introduced the ignorant shop assistant. When I asked at the Oxford Street store this month for a Michelin green guide, I had to explain what the series was, and how to spell Michelin. But the assistant still couldn't get the information out of his terminal, and I gave up.
Still, when I was in Cambridge this spring and asked at the Heffers paperback bookshop for Vikram Seth's early travel book about Tibet - which is still in print - I was asked to spell both Seth and Vikram, even though his latest novel, An Equal Music, had just been reviewed everywhere. Heffers, in yet another recent merger, now belongs to Blackwells. It's gearing itself up to combat the arrival of a Borders store in Cambridge next year. May the least ignorant win.
The competition continues to shift. Barnes & Noble is the world's biggest bookseller, with the world's biggest bookstore - almost 70,000 square feet - in Union Square, New York. Takeover rumours have been strengthened by the news that Waterstone's sales are slackening. Big mergers can create big headaches. In both Hatchard's classy Piccadilly shop (now part of Waterstone's) and the big, academic Dillons store in Bloomsbury, I've recently heard staff talking crossly in corners about "terms and conditions", rather than serve customers. This is usually a very bad sign.
Internet selling is growing. The biggest American dealer, Amazon.com (founded 1995), last year branched out into Amazon.co.uk.The main advantage, according to Tim Godfray, chief executive of the Booksellers' Association, is that price comparison is even easier. No one knows how this will end. At the end of 1998, Amazon.com's sales were up 387 per cent on the same quarter of 1997. But such growth never continues. Internet selling is still only 2 per cent of the American book trade. The British trade magazine The Bookseller has written, wisely, that to predict the impact, you might almost as well use crystal balls and tea leaves. Some think that Amazon.com may even move into what are now called - by analogy with TV stations - "terrestrial" bookshops. Amazon.co.uk's main rival is W H Smith's Internet Bookshop (IBS). It is said that Smith's sold Waterstone's partly because it was frightened by the arrival of Borders and partly because it thought that IBS would bring bigger long-term profits.
Meanwhile, the numbers of small shops opening and closing remain about the same. To dodge the big boys, many are starting to specialise. Some are even trying the wild experiment of being nicer to their customers. A market research report last year by the Henley Centre found that people were spending more time reading books, while newspaper sales were falling, radio listening was about level, and extra television channels meant only that viewers switched over more often: they did not watch more TV. But any extra books sold were mostly bought at a discount.
The one thing that miraculously escapes all business planning is the book itself. As John Mitchinson, of the publisher Orion, told a conference this year, some best-sellers can be planned for - a new Maeve Binchy or a new John Grisham. (Binchy, he said, "sends hundreds of postcards each year to her friends in the book trade all over the world; booksellers of all persuasions feel an attachment to Maeve".) But who foresaw that, in one week in July, customers would buy almost £1 million-worth of the three Harry Potter books? This was more than 6 per cent of the sale of books in the whole of Britain that week. At King's Cross station even the railway staff eventually realised why so many schoolchildren were wandering around between platforms 9 and 10. They were looking for Harry Potter's usual departure point for his wonder world: platform 9f.
The future of the book trade is almost as much of a mystery. But anyone like myself, brought up in an almost bookless household, will continue to watch it with the passion of a fanatic. We don't want to go back to the way things were in 1980. Being an optimist, I don't think we will. The bigger, better bookshop is here to stay.
Paul Barker is a senior fellow of the Institute of Community Studies