The weakest link

The music and video industry is in tatters after the collapse of Woolworths, EUK, Fopp and Windsong, and in recent years MVC and Music Zone, leaving only one major specialist high street retailer and no wholesalers: this is a strong forewarning of what may happen to the book trade.

Maybe it is not unrealistic to see Waterstone's being the only surviving specialist chain by 2010. Indeed, many of the surviving larger booksellers only continue to trade due to the patronage of their book-loving owners. Wholesalers and distributors working on knife-edge margins continually watching cash are hardly safe either. You really have to reflect on the Competition Commission's decision on the mergers of EUK, THE and Bertrams, and even the Waterstone's and Ottakars merger. It is clear that these decisions lacked foresight and were not in the interest of customers, the trade or the wider economy.

Will the book industry follow the other entertainment sectors with one clearly dominant high street specialist retailer like HMV or Game? Perhaps not as fast, but it has been a strange old 12 months, so nothing would surprise me.

We have learnt in the last few weeks that big ticket retailers are seeing a 20% reduction in sales. As the recession deepens surely this will knock into smaller ticket items: could your business survive a 20% drop in sales? I warrant even successful businesses couldn't survive such for very long. Redundancies may be the way forward for some, but for a retailer reducing rent, stock and debt isn't so easy.

The knock-on effect of retailers going into administration could be catastrophic to publishers and distributors which is why they are rightly cautious over supply. How­ever, disruption to supply chain is equally painful. This can be seen with pro-forma supply from Bertrams. Waterstones.com, which primarily uses Bertrams, shows only 30 out of 50 bestselling titles with 24-hour availability (at time of writing in mid-January).

If Britain's largest bookseller can't get hold of stock surely this means a proportion of independents are struggling to get stock too. It's a Catch-22: supply and you're damned, don't supply and you're damned! Which is why the PA-brokered deal for Bertrams was so important to keep the wheels oiled.

Publishers should now be re-evaluating their distribution models. It seems strange that some distributors and publishers are unable to supply books next day to the trade and that handfuls prefer not to supply independents, only supplying larger retailers and wholesalers. Surely this needs to change if we are to have a resilient supply chain that is efficiently supplying all sales channels.