Iain Dale comments on Waterstone's taking Ottakars's and believes that "The End of British Bookselling is Nigh". As many commenting on his blog have been quick to point out, this is not an unusual occurrence in the free market, and this raises the Conservative dilemma of whether to support the free market or the small business when the two conflict.
I have to be perfectly honest - I think the small business should be supported. There are times when the free market isn't always right. Often it fails to deliver real diversity and specialty, instead pushing everything towards an identikit approach (look at the way Waterstone's branches have gone from being highly specialised and localised to a crude chain) and denying the consumer the opportunity to discover exciting new products. Looking at the books on my shelf, many would never be there if I'd only been buying from the big national chains and the internet. Similarly my DVD collection would not be as diverse as it is without stores with large stock selections allowing me to browse - there's only so much the internet can do to tempt me to buy a product.
Small businesses are the backbone of our society and their loss is everyone's loss. When all the shops for a particular product become identical there is no real choice at all. That market is not truly free. Sometimes government intervention is necessary for the benefit of consumer choice.