Insurer cuts off Borders and The Book People
19.12.08 | Catherine Neilan
Credit insurer Euler Hermes is withdrawing its cover for publishers supplying books to Borders UK and The Book People from 31st December. The action has prompted at least one distributor to advise its clients to reconsider their trading limits. Hachette-owned LBS has emailed its publisher clients warning them that it wants to be told of the new limits by 23rd December or the supply of books will be placed on hold.
According to an email seen by The Bookseller, Euler Hermes UK said that "the information we currently hold does not justify maintaining the historic levels of cover being provided on this company” in light of the "challenging” economic conditions in the UK. Aside from The Book People, the withdrawal affects Borders Eire, Books Etc, as well as Borders UK.
Seni Glaister, chief executive of The Book People, said she felt it was "more a reflection of the market as a whole" than an indication of any problems within the company. She stressed the company's strong performance so far this year, growing sales and turning a profit "in a difficult market". Glaister added: "We are all aware that the outlook for 2009 is grim in the wider retail market but it is our intention to work hard to continue our pattern of growth and we have plenty of exciting new ventures to look forward to that will demonstrate our proactive response to the downturn."
Earlier this autumn, US-based Euler Hermes ACI withdrew its cover for companies trading with Borders Group as a result of the company’s continued losses. At the time, a spokeswoman said it had "absolutely no implications" for Borders in the UK.
All other companies involved declined to comment.
Comments on this article
By Susan Hill
It was the withdrawal of insurance cover that alerted everyone in the wider world to the real situation of Woolworths. Mark this well.19 Dec 08 12:34
By John Evans
I don't think the comparisons are fair or your statement correct Susan. Woolies was on its knees long before the credit insurers got wind; neither Borders nor The Book People are remotely in the same situation, though I can see that there is a deal of nervousness about the high street at the moment. At first I was perplexed by the inclusion of The Book People, but the more I think about it, the more I've decided that it just highlights was a bunch of ill-formed scaredy cats the insurers really are.19 Dec 08 14:34
By JULIAN RIVERS
Insurance in the book trade is particularly unhelpful . It will certainly be as a result of the Woolies hit that Euler has run scared and decided to withdraw cover elsewhere. Frankly, it is difficult, impossible or at least ridiculously costly to insure anything that actually needs insuring . If it were not for third party distribution I would not insure book supply at all . I would bank the premiums and rely on two supports . 1. The unit cost of much general trade supply is low in relation to the retail price , pence in the case of some long run paperbacks. This is the real loss in cash terms to the publisher. . 2 The retention of title clause seems to be enforceable in the book trade , and thus being self insured must be better ,considering insurers' costs and restrictions .19 Dec 08 15:26
By Gary Lawson
...And if the Book People can't make much moey given the outrageous prices they get their stock for, I fear for the trade next year. I'm rather glad I didn't struggle on bookselling through the whole of the past year; I'd be terrified of the outlook for 2009 as an independent retailer.19 Dec 08 17:51
By JULIAN RIVERS
I think that unfortunately you are right Gary . The dynamics of Supermarket supply supported by publishers , the internet which is on a roll, and the future growth of E books which I believe will explode over the next 5 years , leaves little for the indie . Berts AND Gardners are essential for their survival . With only one wholesaler- price will increase to the indie and efficiency will reduce . So pray for Berts salvation .19 Dec 08 18:26
By Gary Lawson
If Berts don't survive then the independent trade is sadly dying if not dead. Margins would make indies unsustainable. Julian, do I not recall your absolute confidence that Berts would be sold - indeed, that this was the 'deal of the decade'? You seem not to be so sure about their survival now.....Unless publishers have the collective courage to stop Amazon and supermarkets wrecking the book trade there's only one end possible to this story, and sadly there are so many other trades; petrol, greengrocers, butchers etc. that have been decimated by supermarkets. And Amazon just exacerbate the whole thing for booksellers. Publishers will end up with very limited outlets for their product; perhaps they'll have the bookselling world they deserve.19 Dec 08 20:34
By JULIAN RIVERS
Firstly Gary , I am certain that Berts will be sold , the publishers may need to support that sale . Hence my call for their survival . . Secondly, I have much more tolerance for Amazon and Play.com etc than I do for the Supermarkets who are playing with our trade. Here the publishers have total responsibility . Not one publisher has EVER responded to this point on any blog or any piece I have written . They know that they have cocked it up , and actually some authors have driven them, because of their demand to be on the bestseller lists which is very difficult without supermarket support . Here we have a buyer with about 12% of the retail book market but representing less than 0.5% of their turnovers . Less than soaps and shampoo. The imbalance identifies the problem . My own solution would be to bring supermarkets in line with Chains on new books discounts and give them better terms on backlist and bargains . Never going to happen - I know. .19 Dec 08 20:54
By Ray Hollingsworth
Borders, Bertrams, The Book People...don't see a future beyond 2 years for any of them. The economic downturn is set to spiral downwards faster and faster...check the climate around June 2009. Season's Greetings to all.19 Dec 08 23:22
By Clive Keeble
Euler Hermes, themselves, issued a profit warning at the beginning of this month : so many businesses across all trades have had their credit insurance withdrawn - often this action has only been taken because of perceived minor accounting failures or mistakes. At the present time industry and commerce in this country is having a terrible time due to the withdrawal of credit across all sectors. Not that it is anyway relevant to the above news report, but I personally believe that it is only the shortage of *immediate funding* which has delayed the sale of Berts. As for prospects of survival by indies, I am very confident that "we" will not only survive but also prosper. Indies will have to make shrewd business decisions and our stocking regime must reflect our eccentric nature : we must control their own trading environment...yes, it is possible, but it requires application and dedication way beyond the norm for running a basic high street shop. Furthermore, because most indies are sole traders we don't have to worry about credit insurance, because our businesses are not eligible !!20 Dec 08 07:20
