Book retailing

I have heard of plans to supply books and book-like product to newsagents through traditional supply channels.  From what I understand the offer (in its present form) is unlikely to be as competitive as that put to traditional bookshops.  Current release books need to be provided on a sale or return basis at 45% margin.  Without this we are not able to be competitive on price against book retailers often located near newsagencies. 

Dr John Tickell is a nice bloke. I appreciate his knowledge and enjoy listening to him. His new book, how to put $3,000 in your pocket guaranteed, has been sent to newsagents on terms which will not help us profit even close to the promise of the title. The margin is not a fair book margin. The size makes it challenging to display with magazines. The title does not easily fit with other categories we sell. There is no supporting material to promote the title. The only way I can see this book working is at the counter – but the margin is way to slim to justify that position. But the counter is where we have it. We will give the book a couple of weeks before making a decision on returning.

What I would have preferred if I got a say in how this title was to be distributed to newsagents is:

• A margin of 40%.
• A unit we could easily place next to newspapers or on the counter.
• Marketing collateral.
• A promotion among newsagents with reward based the best early sales.

Just sending product is not enough. In is not fair to small business newsagents.

The announcement yesterday to the NZSX by A&R Whitcoulls about their takeover of the Borders assets sheds some light on their plan:

A&R Whitcoulls Group Managing Director, Ian Draper, said that the Borders business is complementary to the Company’s existing assets, offering a different format from Angus & Robertson in Australia and Whitcoulls in NewZealand.

“Borders’ experience-based model invites customers to browse books,magazines, music and DVDs, with cafes in most stores. It’s a model which has proven popular in the local market, and targets a different demographic with its premium format and wide range of products.”

The transaction is valued at up to A$110 million and is expected to be finalised early next week.

“The acquisition creates a strategic footprint for the group which comprises different formats and provides a foundation for growth and innovation. We are pleased to bring these businesses together and excited about the opportunities presented by this transaction,” said Mr Draper.

“The combined experience, skills and scale of the enlarged Group will create a platform for an expanded and more diverse customer offering across a number of strong brands. The Borders management team have a demonstrated track record of innovation and will be able to make a valuable contribution to the development of the broader group”

Had newsagents established a newsagent owned public company commercial platform years ago as they had planned to do and had this been run on strict commercial terms, it could be newsagents making announcements of strategic expansion plans.  Smart businesses operate multiple formats which seemingly compete yet cleverly support each other.

The A&R Whitcoulls acquisition of Borders means newsagents must revisit their business plans.  I certainly am.

If CNN Money (and a bunch of other news services) is right, A&R Whitcoulls, the business owned by Pacific Equity Partners and which owns Supanews, is set to acquire the the Borders Australian, New Zealand and Singaporean businesses.  The implications of this move for newsagents is significant and I am sure will be felt for years to come.