INTERESTING, THOUGHTFUL PIECE FROM THE PRESS, CHRISTCHURCH REGARDING THE UNEASE BEING FELT BY SOME ABOUT THE LIKELIHOOD OF WHITCOULLS TAKING OVER BORDERS.

The prospect of a union between the two mammoths of New Zealand book selling is causing widespread unease in the industry. PHILIP MATTHEWS reports.

Bring together two of the biggest names in New Zealand book retailing, and what do you get? Well, according to any of the smaller names in that same scene, the result is almost universal gloom.
There is precious little rejoicing going on at news that Whitcoulls is seeking to take over the Borders chain in this country, after Borders' United States parent decided to cut free various of its international operations to concentrate on its home market.
Whitcoulls may be the biggest, the best-known, the most dominant brand in New Zealand bookshops, but within its own industry, it is far from the best- loved.

Its critics point variously to its inflexible buying policies, its use of its bulk to squeeze small suppliers' margins, its growing focus on competing at the bottom end of the book market with The Warehouse – even supermarkets – and its growing emphasis on DVD sales.
Most complain about it privately, refusing to let their names be publicly linked with their concerns. Such is the might of Whitcoulls. The company itself isn't interested in engaging on the questions of its merits. It bats away such criticisms and questions to an Australian PR agency, which in turn declines any comment, citing the processes the company is now involved in with its bid for Borders.

Whitcoulls itself is part of the A & R Whitcoulls group, owners of more than 60 Whitcoulls stores here, and more than 100 Angus & Robertson stores across the Tasman. Last week, A & R Whitcoulls got clearance from the New Zealand Commerce Commission to buy the five New Zealand Borders stores (three in Auckland, one each in Wellington and Christchurch), although the other part of the deal, buying the 22 Australian stores, still has to get past the Australian Consumer and Competition Commission.

So what exactly is wrong with Whitcoulls? One of the few who isn't worried about pulling his punches, nor keeping his opinions private, is Wellington historian and writer Gavin McLean. In his mind, Whitcoulls is the world's second-worst bookselling chain. The worst? The British W H Smith chain – coincidentally, a former owner of Whitcoulls.

"If you walk into one of the flagship branches, like Lambton Quay in Wellington, what you encounter is container loads of remaindered rubbish imported by Whitcoulls, sitting in piles in prime retail space," McLean says. "If you go into most intelligently-run independent bookstores, you find the new books greet you when you come in the door – normally new New Zealand books. But in Lambton Quay, you have to search to find New Zealand books."

By and large, McLean's view applies to Whitcoulls' other flagship stores. The New Zealand section is slightly easier to find at the Cashel Street store in central Christchurch, but close to impossible to locate in their four-level mega-store in Queen Street, Auckland, which adopts the same retail principle as Lambton Quay: tempt consumers with groaning tables of discounted garbage and hide the good stuff away.

Don't get McLean wrong – he isn't a snob who dislikes chain stores on principle. He thinks that Borders and fellow US chain Barnes & Noble are both very good at what they do – "they don't compete for the bottom dollar and sell rubbish and remainders. It's usually full price and spine out."

"I think that Borders has done good things for the book trade," agrees Roger Steele, of Wellington independent publisher Steele Roberts. "We did a book recently about Lao Tzu and the art of peace, and the author gratefully reported that there it was in Borders. And they have friendly staff willing to help."
Steele is actually optimistic about the idea of Borders being bought by Whitcoulls.
"Whitcoulls could only be improved. It's like Kiwis leaving and increasing the IQ of Australia. They must surely learn something from Borders. And Whitcoulls took a huge order of Glenn Colquhoun (a Northland poet and Steele Roberts' bestselling author) so they're not totally hopeless. But they're often bloody difficult to deal with."

Steele's optimism is unusual.

While the pessimists are typically unwilling to go public, it is hardly surprising when you consider that Whitcoulls can make or break a local book depending on whether or not it chooses to stock it – most estimate that Whitcoulls has between 30 and 40 per cent of the New Zealand book market (it also has between 15 and 20% of the DVD market).
The Book Publishers Association, which represents 95 New Zealand publishers, also opposes the sale. In its submission to the Commerce Commission, the association said that New Zealand publishers welcomed Borders' arrival in 1999 as it lessened Whitcoulls' dominance. It added that recent changes to Whitcoulls' purchasing policies have had "a significant impact" on local publishers, reducing both the range and the volume of books that the chain is willing to buy. As one insider says, "Borders seem to actually be interested in books. And Whitcoulls is going at 1000 knots in the opposite direction. Its enthusiasm for bookbuying seems to be at a low ebb."
"To get in the door, it has to be a very populist book," another publishing insider says.

Whitcoulls has promised to keep Borders stores open and maintain their identity, but how realistic is this? The Book Publishers Association didn't buy it. Look at London Bookshops, Bennetts, and Philip King Booksellers, it said: these brands were purchased by Whitcoulls and disappeared. It's easy to assume that Borders will also be swallowed up.

There is also concern about the increased power that will come with a larger market share. Already Whitcoulls has a reputation as a tough negotiator. Where most booksellers get a 40% discount from publishers – meaning that if a book's recommended retail price is $24.95, the bookseller will buy it for $14.95 – sources say that Whitcoulls routinely expects 50%. It's the kind of pressure on suppliers that one publishing insider refers to as "a supermarket model".
Wellington independent publisher Awa Press – whose recent titles include Steve Braunias's How to Watch a Bird and John Daniell's Inside French Rugby – also made a submission opposing the sale of Borders to Whitcoulls. The reasons: range will be reduced and local publishers will struggle, as will independent booksellers.

Local publishers also see an inflexibility in the way that Whitcoulls buys and displays books. In its submission, Awa Press quoted from correspondence it received from Whitcoulls book manager Joan McKenzie, who admitted that Whitcoulls' rigid in-store categorisation worked against the publisher. Besides Braunias, the "How to" series has featured Justin Paton on painting, Harry Ricketts on cricket and John Saker on wine. But should you expect to go to Whitcoulls' sport and food and wine sections for the last two, given that the "How to" books also cross over into social history and memoir? Look for the Braunias book in the Cashel Street branch and it won't be in humour or New Zealand non-fiction – should you try ornithology?
"Because of the scale on which we operate," McKenzie wrote, "it isn't as straightforward as it can be for many of the independent owner/operator stores where they can make a decision about how they group their stock at store level. So many Awa titles have never had the kind of exposure in Whitcoulls that we would have liked to have given them."

Whitcoulls' centralised buying system can seem just as rigid. A small publisher may have a book that would be of special interest to readers in Christchurch, say, or New Plymouth – a local history, perhaps – but the local branch is unable to make a purchasing decision; all those decisions must go through Auckland.

"They lose unbelievable numbers of sales through that clumsiness," says a publishing insider. "And I'm sure that the shop managers get driven mental when there are popular local books that they can't get head office to deal with."
Roger Steele's advice is to support the little guys: stores like Unity in Auckland and Wellington, Scorpio in Christchurch. He couldn't bear to see anything happen which would compromise them.

But Whitcoulls doesn't think that this is where the real battle is being fought.
Instead, it is being fought in the discount bins and the bestseller lists. In its application to the Commerce Commission in September, when it sought permission to go after Borders, Whitcoulls identified the Paper Plus chain and The Warehouse as its main competitors. The Warehouse already has a 10% share of the market and it's growing, Whitcoulls claimed, and then there's the spectre of book sales in supermarkets – an issue for booksellers in Britain, but not New Zealand, yet.

Paper Plus is attempting to make inroads into Whitcoulls' territory. Indeed, Whitcoulls claimed in its submission that an increased advertising spend by Paper Plus is directly responsible for a recent drop in market share, although others in the industry don't take Paper Plus as seriously (only about six of its 101 stores are serious booksellers, one insider says, "the rest are stationery and teddy bears").

The Paper Plus chain is made up of locally-owned franchise stores, unlike the iconic Kiwi brand Whitcoulls, which is ultimately owned by Australian private equity group Pacific Equity Partners. But there are similarities. Paper Plus is also making a bid for Borders. And like A & R Whitcoulls' managing director, Ian Draper, Paper Plus' CEO, Rob Smith, is a former supermarket man, working for Progressive Enterprises before going on to Warehouse Stationery and then Paper Plus. Hence, the "supermarket model" that has local publishers worried.

Rob Smith probably wouldn't fill the Borders-browsing literati with much confidence, either. Asked if the New Zealand book market is growing, he replies, "The big one this year was Harry Potter. But there's a number of other authors out there: Paulina Simmons or The Da Vinci Code. There's always something happening in the book market."
Paper Plus, he says, has recently rebranded a couple of key stores as booklovers' destinations. First Sylvia Park, in Auckland, then Matamata. New colours, new logo, new look and feel, he says. And it's signed up Kerre Woodham as a frontwoman, to review books and host events, such as its "books and bubbles" evenings. Just the other day, she was in Morrinsville.
"Kerre is a prolific reader and a well-known celebrity," Smith says. "She has a lot of credibility in this market."
Maybe. But does Smith? Asked about Paper Plus's support of New Zealand writers and publishers, he replies, "We do focus on the New Zealand publisher. We actually have sections dedicated to New Zealand authors in our stores. There's the New Zealand Writers Week, which we get heavily involved with."
New Zealand Writers Week – what's that?
"That is a week that is run annually by Booksellers New Zealand. A week in which all retailers and publishers focus on New Zealand product and New Zealand writers."
There's no such event. He probably means New Zealand Book Month. Which, incidentally, isn't run by Booksellers New Zealand.
If you're not worried yet, maybe you should be.

* Philip Matthews is a senior writer on The Press. He was previously books editor for The New Zealand Listener.