I feel for Angus & Robertson and the battle of spin being waged against their desire for a commercial relationship with publishers of books which do not pay their way. Regulars here would see the parallels between the A&R view and what I write about magazines which are cash-flow negative for newsagents. The difference between A&R and newsagents is that A&R has more control over the books they carry on their shelves.
With retail rent increasing at least 5% a year, it is natural that retailers are looking at how make every square metre of retail space perform to its optimum. Sure a good retail business has balance, light and shade, high traffic and browse space, high margin versus lower margin …
I do not see the A&R position as being anti literature or a move against Australian authors and publishers. It is about making sure their retail outlets are viable.
It is not up to A&R to prop up under performing titles just as it is not my job as a newsagent to prop under performing niche magazines. No one will prop up A&R or my newsagency.
I would like to see journalists delve deeper into this story and not just trot out spin as the story as has happened over the last two days. At least Crikey has provided balance in their coverage.
If A&R were a small business I would agree with you, they are not however. A&R are yet another Equity Group company (owned by Pacific Equity Partners) and posted a profit of $9.9 mil for the first 1/2 of the 2007 FY. They also own Supanews.
Personally I see this as on the margin. A mega company, earning significant funds purely for shareholder benefit (remember its an equity group), who cannot find room on its bottom line for a bit of development. Sounds awfully like a Coles/Woolies line to me.
How often do we all provide space for a new line in the hope of growing that category? I hope I’m wrong, but I’ll watch with interest.
Brett, I share your feelings about equity groups but I also support any retailer taking a position on stock which is grossly underperforming. It’s a tightrope to walk – one which newsagents ignore at the moment. mark
Whether it is a small business or equity group should matter very litte in this situation.
Brett you mention the number of times newsagents provide space for a new line. I think the A&R situation is more about lines that are already underperforming. Why should they be expected to act in a manner which is not commercially sound?
And i see no relevance in your point that they earn funds purely for shareholder benefit. Dont you run a business purely to earn money? Don’t think yourself so different.
Jarryd,
You assume plenty with that comment. I’m smiling as I read and write so please don’t take umbrage.
Commercially sound included public relations, I and others give some customers gifts, we donate to charities, we take on a small supplier and give them floor space. Of course we hope to make money, the real question is how much is enough? If A&R were my small business I would have it up for sale because 9 Million is plenty enough for me and mine. Commercially sound means the consumer is happy to shop there and tells their friends to do the same.
My point is, and I said this in my post, that I think that the call A&R made is on the margin. I think it will cost them more than they can make (commercial) and I think it will hurt the peception that the people have of them. I also said that I may be wrong but I feel that there were other more practical and commercial opportunities to make more for the shareholder. This was a bad call.
Best Regards
Its interesting that A&R are saying its all about margin when some of its suppliers are giving them 50% off retail.How can you not make money out of that?Easy.You have buyers working for you that do not have a clue.
Gary, I’m not with A&R. There are many reasons the 50% GP may not work – minimum buy, shelf life etc. I am not saying A&R is right, just that the spin around this story is maging it challenging for the average punter to navigate the truth. mark
PS. And that newsagents need to look at this for non performing magazines.
I just found out Ronald McDonald House doesn’t make money! They don’t sell enough chips and burgers to the families of sick kids who stay there. They should shut it down – after all businesses are only there to purely make money.
And why are lottery companies only selling tickets through small businesses? Surely they could make more money by auctioning lotto reseller rights and letting the big supermarket chains buy up the rights for a lot more money then they get now. After all, businesses should only care about making more money.
And why shouldn’t A&R try and make small Australian publishers bankrupt? Who needs critically acclaimed authors, newcomers, risk takers and other things that do not make money for businesses. Let’s reduce magazines and books to only support money making content so it can be as good and diverse as commercial tv.
Brett,
I agree that “commercially sound” includes public relations. But i seriously doubt that removing lesser performing titles is going to hurt A&R on the PR front. While i can’t speak for others on this, if i am looking for a niche publication i generally don’t look in bookstores such as A&R.
Many newsagents take on a small supplier and give them floor space, yes. And we do so only if we believe the product will be successful. I am sure A&R will act in the smae way. If a new title comes along there is no reason they won’t take a change on it .. but they are not going to do it with every new title.
Commercially sound does not mean that “the consumer is happy to shop there and tells their friends to do the same”. Commercially sound means that the action taken is likely, in theory, to be of benifit to the business. While a decision can be commercially sound because it is likely to lead to consumers wanting to shop there, the two things are not always one in the same.
It is difficult for us to comment on whether the decision will provide A&R with a better bottom line. Without the full facts and figures we are only guessing. Regardless, i dont think anyone should expect A&R to be a ‘charity’ for non-performing titles, new titles or new authors.
You ask the question “how much is enough?” – Well from a corperations law perspective, enough is never enough. People have shares in companies to get a return on those shares, and it is the responsibility of those running the company to make sure they provide the greatest return to the shareholders.
Kind Regards
Vincent,
I think your point on Ronald McDonald House is lost. They are a NFP business as far as i am aware.
The issue on the lottery tickets is an intersting one. I belive the act governing Golden Casket in QLD only allows small business to sell the products. As for the other states, maybe it will happen in time. But if it did i would suggest that at least some states are likely to bring in legislation to stop it.
Your comment on A&R trying to make Australian publishers bankrup has again missed the point. It is not A&R’s responsibility to sell “critically acclaimed authors, newcomers, risk takers”.
Let’s reduce magazines and books to only support money making content so it can be as good and diverse as commercial tv.” – You seem to be under the impression that it is A&R’s job to prop up publications that don’t make them money. You also seem to think the same thing about newsagents.
Kind Regards
Having now read the A&R letter to publishers I suspect that they wish they could approach this differently. The problem is not their intent but their execution. Poor form.
In the book space what has brought this on is nothing compared to the magazine issues newsagents face daily – hence our need to act.
Mark
The big issue is that A&R issued an invoice retrospectively on transactions that were the result of a previous commercial agreement.
unethical, no?
The execution was flawed and I’d expect even A&R management to acknowledge this.
Im thinking that we are missing the point here. A&R are supplies at somewhere between 45%-50%. These terms are SOR.(sale or return). Just like magazines. Except magazines are scaled out through G&G. Books at A&R are bought buy there BUYERS. So if A&R are saying that all these publishers/distributors are not profitable, i beoieve is because they are buying the wrong titles or the wrong quantities or a maybe a bit of both.
You are right Gary, A&R have choice on this. This is why the execution is the problem – they ought to have developed KPIs and reflected this in their buying so publishers could pay to have titles which do not meet their KPIs.
The whole issue has done enormous damage to A&R.