The former Waterstone's boss on why the bookshop chain should survive in response to where it went wrong

Waterstone's is a most valuable brand. At its best it achieved levels of sale and profit per retail square metre that are multiples of those of its competitors. Its reputation with the reading public, publishers, authors and the literary press gave it market supremacy of an enviable degree. Yet, a whole sequence of strategic business mistakes has brought it perilously close to demise.

When HMV, who had just become multiple music store operators, bought Waterstone's in the 1990s they failed to recognise the essential different nature of retailing books and music. The English book publishing industry has the ability to provide commercial material into thousands of tiny markets of interest to all groups and ages. Books provide much more than mere entertainment. Instead of building and widening range, HMV sought to cut the stockholding and concentrate on the raucous method and promotion more associated with music charts.

Then where other retailers have developed powerful online brands, Waterstone's never did. Amazon completely outplayed them both for range and price. A succession of strategies and senior managerial appointments from outside the intellectual domain of bookselling has upset the fine balance of the staff and store management culture. Moreover, faced with the scale of the internet competition, Waterstone's failed to understand the pleasure that people get from browsing and serendipity of the book collections and tried to take on the style of precarious celebrity bookselling that is more associated with WH Smith. They made their stores less attractive to visit rather than making them places to stay and pass the time. To cap it all they decided senselessly to embark on their own internal expensive distribution.

It is time for new ownership, new management and new strategy – but quickly because, as Borders showed last year, this disease kills fast, and to lose Waterstone's really would be a waste.

Tim Coates is a former managing director of Waterstone's and now runs a campaign for better libraries