Waterstones would stock books created using artificial intelligence, the company’s boss has said, as long as they were clearly labelled, and if customers wanted them.

However, James Daunt, a veteran of the bookselling industry, said he personally did not expect that to happen.

“There’s a huge proliferation of AI-generated content and most of it are not books that we should be selling,” he said, but added it would be “up to the reader”.

An explosion in the use of artificial intelligence, or AI, has prompted heated debate in the publishing industry, with writers concerned about the impact on their livelihoods.

In a wide-ranging interview with the BBC’s Big Boss Interview podcast, Daunt said while Waterstones uses AI for logistics they currently try to keep AI-generated content out of the shops.

“As a bookseller, we sell what publishers publish, but I can say that instinctively that is something that we would recoil [from],” he said.

Daunt, who is heading into his 36th Christmas season in the book trade, said Waterstones’ success had been built on handing more control to individual store managers to serve their own communities.

“Head office is there to make life easier,” he said.

“Make sure the books that they order turn up on time, but do not tell [managers] where to put them.”

Daunt also said he was a bit of an outlier in welcoming last week’s Budget and he raised the prospect of a stock market flotation of the book chain.

A report published last month by the University of Cambridge found that more than half of published authors feared being replaced by AI.

Two-thirds also said their work had been used without permission or payment to train the large language models which lie behind generative AI tools.

But some writers use AI themselves, especially for research, and AI tools are being used to edit novels, and even produce full-length works.

“Do I think that our booksellers are likely to put those kind of books front and centre? I would be surprised,” Daunt says.

“Who’s to know? [Technology firms] are spending trillions and trillions on AI and maybe it’s going to produce the next War and Peace.

“And if people want to read that book, AI-generated or not, we will be selling it – as long as it doesn’t pretend to [be] something that it isn’t.

“We as booksellers would certainly naturally and instinctively disdain it,” Daunt said.

Readers value a connection with the author “that does require a real person”, he added. Any AI-generated book would always be clearly labelled as such.

The softly spoken former banker has overturned convention before.

When he took over at Waterstones in 2011, he took the bold decision to end the practice of publishers paying to have their books displayed prominently in stores. It cost him £27m in lost revenue and prompted a “nervous breakdown” among publishers, he said, but it paid off and in 2016 the company returned to profit.

Now Waterstones staff write their own book recommendations, choose books of the month, and the store manager selects what goes on the display tables.

As well as books, the chain stocks pens, reading lights, games, wrapping paper and other stationery.

The strategy has helped it defy the decline on the High Street, with around 10 new stores opening a year, and profits in 2024 of £33m against sales of £528m.

Waterstones is part of a wider stable, including Foyles and Blackwell’s, owned by hedge fund Elliott Advisers.

Daunt has also been appointed chief executive of Barnes and Noble, the large US bookstore chain also owned by Elliot Advisers.

Success on both sides of the Atlantic has led to speculation that shares in Waterstones and Barnes and Noble could be jointly floated in either New York or London.

“It feels like an inevitability and probably better than being flipped to the next private equity person,” says Daunt.

Private owners naturally aim to sell businesses on, he points out. “It’s what they do.”

But it is not clear that London, which he says has been “suffering” as a location for initial public offerings lately, would be considered suitable.

“We’re based out of London but we have a huge American business; Barnes and Noble is much larger than Waterstones.”

As for last week’s Budget, Daunt says it sometimes feels like he might be “the only person who is sympathetic” to the situation the chancellor is in.

The government has drawn the ire of the business community for raising employer National Insurance and the minimum wage and not coming up with more growth-boosting measures.

But the Budget included changes that were “very helpful” to companies like his, said Daunt.

Business rates will be lower for retailers operating out of small sites, while larger business properties, like warehouses will pay more.

Daunt said that although Waterstones does have larger premises, levelling the playing field between High Street and online retailers was something he has been calling for for a long time.

With the days of advent now ticking past, the company is well into the part of the year when Waterstones makes about 70% of its annual profit.

He says the post-pandemic rebound, with people returning to bookshops, does not seem to have gone away.

Personally he has also retained his love of reading, even after 36 years in the industry. But he does admit to having one bad book habit.

“Because I read professionally, I do a rather awful thing which is start a lot of books and then not finish them.

“I love the excitement of opening up a first novel and not knowing what’s going to come of it. But if it isn’t quite that good, I’ll just move on.”

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