After 129 years, New Zealand's best-known bookseller is in jeopardy. What went wrong, asks Karyn Scherer.
In case you haven't noticed - and you could certainly be forgiven if that's the case - this is New Zealand Book Month.
If you happen to live in Christchurch, then getting hold of the latest bestseller is probably the last thing on your mind. But Book Month is a big deal for the publishing industry, and for the retail stores which stock its wares.
Around $20 million has already been committed to a campaign aimed at boosting sales, and booksellers hope many New Zealanders will still heed its message that "books change lives".
But some acknowledge the timing is rather unfortunate, given last week's quake. Not only are many Christchurch bookstores seriously damaged, but there was that other tremor, too - the fact that the entire future of the Whitcoulls and Borders chains, which account for around one-third of all book sales in New Zealand, is also up in the air.
It is probably crass to compare the shaky future of one of New Zealand's oldest companies and best-known brands to the shaky future of our second-largest city.
However, even the most optimistic observers admit to some doubts about whether both Whitcoulls and Borders can survive.
They also claim that unlike the tragedy in Christchurch, the company's current problems were entirely predictable.
"We've all known for a very long time that they were in trouble," says one local publisher. 'It's been incredibly frustrating to watch."
The business, which can trace its roots to a bookstore founded in 1882 on Christchurch's Cashel St, has had a string of high-profile owners in recent decades, including Ron Brierley, Graeme Hart and Eric Watson.
It was Hart who added Australian book chain Angus & Robertson to the group in the mid-90s. In 2001 the company was bought by British retailer WH Smith, but was flicked on three years later to Australian private equity firm Pacific Equity Partners. PEP further expanded the group, adding 32 Borders stores in New Zealand, Australia and Singapore, as well as some other businesses.
PEP renamed the group REDgroup Retail. According to some in the book industry the name is apt, because when PEP surrendered the running of the business to the Australian branch of accounting firm Ferrier Hodgson last month, the group was bleeding red ink.
PEP declined to comment on its stewardship of the business, saying it would be "distasteful and unhelpful" for the 1200 or so staff who are still employed by both chains in New Zealand.
But behind the scenes, the company has made it clear it believes it has been a victim of international turmoil in the book industry, of a slump in consumer spending due to recessionary pressures, and of the record strength of the Australian dollar which has prompted Australians to embrace online shopping from American websites in unprecedented numbers.
The New Zealand book trade is a particularly small world, and its inhabitants are also unwilling to speak out, for fear of repercussions. But few buy PEP's line that it has been forced to address circumstances beyond its control.
Instead, they claim, the company's current predicament is an all-too-familiar tale of mismanagement: of shiny new executives rubbishing the opinions of experienced staff; of a bizarre attitude to discounting which saw popular books slashed in price and less popular ones quietly hiked; of cash being bled from the business in the form of management fees and interest payments on debt; of relentless cost-cutting that left many of its staff and suppliers utterly demoralised; and of short-term business decisions which proved a huge millstone around the owners' necks.
PEP's willingness to pay more than A$100 million for the struggling Borders stores at the height of the private equity boom in 2007 is a case in point, they believe.
"We couldn't believe it. But it was a typical private equity thing to do - just fatten the company up, regardless of whether it made sense, in the hope that you could flick it off as soon as possible," says one observer.
One former staff member says her heart sank when the sale to PEP was announced in 2004. Although Whitcoulls had been through some "interesting" owners, most of them actually listened to what managers had to say, she says. "With PEP, it was a case of: 'We know better'."
Like many local writers, Gordon McLauchlan has been saddened by what he sees as the decline of Whitcoulls over the past few years.
"If they ran the shop properly, they could kill every independent bookshop in New Zealand," he says. "But the problem seems to have been that the people running it seem to think that books are just like bread and butter, and treat them accordingly. It got to the stage where I used to go and make speeches there, if I couldn't avoid it, and I'd get a Whitcoulls token from them. But because there was nothing in the shop that really interested me, I used to take it around the corner and spend it at Unity."
Former staff have been quick to reminisce about the days when Whitcombe and Tombs, as Whitcoulls used to be known, was able to boast that it was the largest educational publisher in the southern hemisphere. As one former employee, John Bentley, noted in a recent letter to the Herald: "Bertie Whitcombe must be spinning in his grave."
But those familiar with PEP's strategy also note that grumbling about the lack of cerebral fiction in Whitcoulls these days is like lamenting the paucity of documentaries on prime-time TV.
"Whitcoulls is like reality TV," notes one industry stalwart. "It's all about the latest bestsellers, and cookbooks - it's not a specialist bookstore. And it's not really even a bookstore. It's a stationery store which happens to sell books. What they hope is that you'll pop in for some Sellotape and a greeting card, and pick up a paperback on your way out."
Nevertheless, many believe one of PEP's biggest mistakes was shifting the book-buying team to Melbourne.
Karyn Scherer's full report can be read at the Herald online.If you are in the book business in any way then you should read this story.
1 comment:
The most interesting paragraphs in the original article are these ones:
"Macmillan boss David Joel also claims to be somewhat more sanguine than some of his colleagues about what he agrees is a fascinating period in publishing. But Joel is far less optimistic about the local implications, and doubts that any local publishers are ultimately making money from local books. The New Zealand market is simply too small and too fragmented, he believes.
"With the REDgroup situation, I just cannot believe that local publishing will survive. University presses will, I guess - or maybe they won't."
This is probably true of most titles that rely on sales through high street bookshops; the smart publishers are those who sell their books through other channels.
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