News

Australia's largest bookselling chains fall into administration

The Australian book trade has been hit by the surprise collapse of REDgroup, which owns the country's largest bookshop chain Angus & Robertson, as well as Borders and the Whitcoulls chain of newsagencies in New Zealand.

It comes just hours after Borders US, no longer associated with Borders Australia, finally filed for Chapter 11 after weeks of uncertainty.

The Sydney Morning Herald described it as a "voluntary administration", and said that REDgroup was forced to call in administrators to the businesses following a board meeting. Although its flagship Borders franchise is expected to remain open in the short term, its future in Australia and the jobs of its staff are now in doubt.

The outlook is similarly grim for Angus & Robertson, which has a corporate history in Australia that dates back to 1886 when David Angus and George Robertson opened a bookshop in Sydney. New Zealand-based Whitcoulls is even older. It was originally named Whitcombe & Tombs after its founders joined their businesses in 1882, according to the company's website.

According to SMH, Ferrier Hodgson Partners were appointed voluntary administrators of REDgroup Retail Pty Ltd. Bookseller + Publisher reports the administrator indicated that the company's stores would continue to trade while administrators conduct an urgent assessment of the business's financial status and prepare for the first meeting of creditors, expected to be held in March.

Analysts blamed the development on internet competition, and a return to thrift after Australia caught the tail-end of the global recession. Christmas was understood to have been particularly poor for Australian booksellers. The bricks and mortar retailers have also been hit by the demand for cheap imports from websites such as The Book Depository and Amazon. Separately Amazon.co.uk announced overnight that it was to extend its free shipping offer into Australia and New Zealand.

It is also another troubling development for Kobo, the e-bookseller which partnered with Borders US and the REDGroup in Australia. The SMH reported that  Malcolm Neil of the Australian division of e-book retailer Kobo assured customers their electronic versions of books would not be affected by the collapse of REDgroup. It had earlier assured its US customers following the Chapter 11 filing at Borders.

In October REDgroup unveiled a full-year loss of $43m, and warned it was likely to breach two of its three banking covenants due to increasingly tough trading conditions.

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Very sad indeed.

Sad

These people have not owned it that long.

Whitcoulls used have two shops in London in 70s at
Addle Hill and in the Arcade at back of New Zealand House
at the Haymarket.

Whitcombe and tombs used published a lot of glossy
picture books of New Zealand.

Angus and Robertson also was publisher mostly of
Austtaliana/Pacific titles in the UK
but never a retail outlet,then part l think of the
Gordon and Gotch Empire

Hopefully some one will buy some elements of it

This is a major blow for New Zealand. Our readership is strong and growing in both adult and children's books. Sales from bricks and mortar shops far outstrip online sales. E-readers are not taking off in NZ, most readers still prefer hard copy.

The loss of Whitcoulls will badly affect the NZ publishing industry. This is a big surprise as our economy has not been as badly affected by the global crisis as many others have.

Tragic news for AN/Z .The particular worry is the trend overall and internationally which is becoming dramatically negative ,particularly for large chain bookshops with head office costs and large stocks probably turning only 2.5 times if the real figs were exposed.
The trade appears to be moving toward Internet selling with a major move to E books,supermarkets picking up impulse bestseller sales, and niche indies [and charity shops] serving smaller communities and residential areas within conurbations.
Interestingly in the UK , I think the market is better for multi product ,-WHSmith who are getting stronger in terms of books, but weaker for Waterstones who need to re-invent a viable model.

It is a shame to see the demise of two of Australasia’s largest and longest standing book chains.

Yes, Red Group Retail has been affected by aggressive growth strategies by both Amazon and The Book Depository but this is an issue for bricks and mortar stores worldwide.

I feel the Australian Government, supported by Australian publishers have also contributed to the demise of these chains with age old parallel importation laws.

Currently Australian retailers are prohibited from sourcing books abroad; unless the local publisher/distributor is given sufficient time to import the books. The result is that Australian consumers are forced to either wait for several weeks/months before they receive the book or they can go online and source the book from Amazon/Bookdepository in less than a week at 30% less than the Australian price. The option they choose is fairly obvious.

A few years ago the Australian Government did an investigation into whether the parallel importation law should be abolished. Following fierce opposition from local publishers, the government kept the law in place and has given the publishers a 5+ year notice period should this change.

I can understand and respect the Australian Government trying to protect local industry with these laws but they have been very short sighted in not seeing the staggering growth of unrestricted foreign sellers eroding their own market.

Australian publishers will be left with hefty losses from this and it may be retribution for booksellers who are forced to source very high priced books locally.

I suspect some of this business will be brought and most likely by its former owner WHS, who have just re-entered the Australian market. The parts that are most likely still profitable are the Whitcoulls and Bennets campus bookstore chains in New Zealand and the A&R airport stores in Australia. May be also Borders Singapore

A&R as a group has had too many owners over the past 10 years including Whitcoulls (when it was owned by the New Zealander Graham Hart), Blue star office products from the US, WHS, and then PEP. All have tried to change its format into their own formats. A&R as a group has struggled to make money for years with the New Zealand Whitcoulls operation providing most of the profit to support the rest. Adding Borders Australia and NZ to the mix would not have helped matters.

@Peter, yes it is sad, but unfortunately books in NZ are way overpriced. Even if the chains can justify the cost (shipping, GST etc) readers look for the best deal.

I have not bought a book in Whitcoulls for ages - I cannot justify spending $40 on a paperback I will read once when I could source that book for at least a third less via Book Depository (free shipping), or in ebook format for far less.

And ereading IS taking off in NZ. Probably not via Whitcoulls as once again, the ebooks are overpriced. However, you just have to visit the trademe community "book" bulletin board to see the myriad of questions about kobos, kindles, sonys etc. And most people do not source their ebooks via NZ due to the price. Sad for the publishing industry here as well.

The biggest problem I see with Whitcoulls in NZ, is that my understanding is that there is no local buying capability by any of the stores. They have to source all there stock via the national distribution centre.

This may work for a large market such as Australia, but in NZ there is a lot of locally published books, that regional Whitcoulls do not stock because they have no ability to purchase at the local level.

It will be a shame to lose Whitcoulls if it gets to that stage, however I believe that Whitcoulls in NZ is a viable business and should be able to be sold as a going concern, as long as the regional stores do not have to continue getting there stock from a central NZ warehouse

I have to disagree with Peter a little here. As a small bookshop owner I've ound that times have been particularly tough so it no surpise at all that Whotcoulls/Borders are having troubles. The economy has been very hard on all booksellers of all shapes and sizes.

E-readers are widely being taken up by new genre fiction readers, books are instant, there's no freight and they are considerably cheaper.

Friday, February 18, 2011
Press Release from Booksellers NZ on Whitcoulls situation

Voluntary Administration not reflective of any fundamental problems with NZ book industry

Booksellers NZ is concerned at the announcement that REDGroup Retail has gone into voluntary administration but is confident that this action does not reflect a fundamental problem with the book industry in New Zealand.

Chairman, Hamish Wright said the issue for REDGroup Retail appeared to relate to their specific funding structure.
“We are very hopeful that the Administration process will allow REDGroup Retail to restructure its financial position in order to strengthen successful stores and create better support systems within the group. Our hope is that all stores belonging to the Group will remain open in the long term,” Wright said.

REDGroup Retail has 79 bookshops in New Zealand under three brands of Whitcoulls, Borders and Bennetts. There are 350 bookshop members of Booksellers NZ, made up of groups and independently owned stores.

“On an international basis there is a high density of bookshops to population in New Zealand (1 bookshop to 12, 857 people), which provides a very comprehensive service to book lovers. This is also supported by a strong publishing sector. We are confident that the challenges facing REDGroup Retail will be met and that the industry as a whole will continue to serve readers of New Zealand as well as ever.

We are sure that the REDGroup Retail woes are not related to the growing use of e-readers and e-books. The group has led the way in this country with digitisation and thus we don’t see the new formats as being causing REDGroup’s problems,” said Wright.

Wright also reaffirmed the financial security of Booksellers NZ Book Tokens, which are redeemable at all 350 member bookshops nationwide, including Whitcoulls, Borders and Bennetts.

“REDGroup Retail have their own gift vouchers, but the Booksellers NZ Tokens are not be affected by REDGroup’s difficulties as they are guaranteed by Booksellers NZ.”

Booksellers NZ also do not see any detrimental effect to next month’s massive $20 million book promotion being staged as part of New Zealand Book Month, according to Chief Executive Lincoln Gould.

“An industry-wide promotion, New Zealand Book Month, will take place this March, and will see an unprecedented partnership between New Zealand publishers and booksellers. Four million $5 Book Vouchers will be distributed nationwide throughout the month of March. The New Zealand Book Month promotion is a bid to get both booklovers and lapsed readers, off the couch and in to their local bookshop to buy a book.” says Gould.

According to Nielsen Bookscan, in 2010 9.57 million books were sold in New Zealand for $243.6 million. This was a 1.2% increase in volume and slightly down in value (-0.1%)

If these fees are typical, what chance for Whitcoulls? NZ$830 an hour for administration company partners:

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10707900

Presumably the same sort of money is being paid out in Australia too.

Very sad indeed.

Sad

These people have not owned it that long.

Whitcoulls used have two shops in London in 70s at
Addle Hill and in the Arcade at back of New Zealand House
at the Haymarket.

Whitcombe and tombs used published a lot of glossy
picture books of New Zealand.

Angus and Robertson also was publisher mostly of
Austtaliana/Pacific titles in the UK
but never a retail outlet,then part l think of the
Gordon and Gotch Empire

Hopefully some one will buy some elements of it

This is a major blow for New Zealand. Our readership is strong and growing in both adult and children's books. Sales from bricks and mortar shops far outstrip online sales. E-readers are not taking off in NZ, most readers still prefer hard copy.

The loss of Whitcoulls will badly affect the NZ publishing industry. This is a big surprise as our economy has not been as badly affected by the global crisis as many others have.

I have to disagree with Peter a little here. As a small bookshop owner I've ound that times have been particularly tough so it no surpise at all that Whotcoulls/Borders are having troubles. The economy has been very hard on all booksellers of all shapes and sizes.

E-readers are widely being taken up by new genre fiction readers, books are instant, there's no freight and they are considerably cheaper.

Tragic news for AN/Z .The particular worry is the trend overall and internationally which is becoming dramatically negative ,particularly for large chain bookshops with head office costs and large stocks probably turning only 2.5 times if the real figs were exposed.
The trade appears to be moving toward Internet selling with a major move to E books,supermarkets picking up impulse bestseller sales, and niche indies [and charity shops] serving smaller communities and residential areas within conurbations.
Interestingly in the UK , I think the market is better for multi product ,-WHSmith who are getting stronger in terms of books, but weaker for Waterstones who need to re-invent a viable model.

It is a shame to see the demise of two of Australasia’s largest and longest standing book chains.

Yes, Red Group Retail has been affected by aggressive growth strategies by both Amazon and The Book Depository but this is an issue for bricks and mortar stores worldwide.

I feel the Australian Government, supported by Australian publishers have also contributed to the demise of these chains with age old parallel importation laws.

Currently Australian retailers are prohibited from sourcing books abroad; unless the local publisher/distributor is given sufficient time to import the books. The result is that Australian consumers are forced to either wait for several weeks/months before they receive the book or they can go online and source the book from Amazon/Bookdepository in less than a week at 30% less than the Australian price. The option they choose is fairly obvious.

A few years ago the Australian Government did an investigation into whether the parallel importation law should be abolished. Following fierce opposition from local publishers, the government kept the law in place and has given the publishers a 5+ year notice period should this change.

I can understand and respect the Australian Government trying to protect local industry with these laws but they have been very short sighted in not seeing the staggering growth of unrestricted foreign sellers eroding their own market.

Australian publishers will be left with hefty losses from this and it may be retribution for booksellers who are forced to source very high priced books locally.

I suspect some of this business will be brought and most likely by its former owner WHS, who have just re-entered the Australian market. The parts that are most likely still profitable are the Whitcoulls and Bennets campus bookstore chains in New Zealand and the A&R airport stores in Australia. May be also Borders Singapore

A&R as a group has had too many owners over the past 10 years including Whitcoulls (when it was owned by the New Zealander Graham Hart), Blue star office products from the US, WHS, and then PEP. All have tried to change its format into their own formats. A&R as a group has struggled to make money for years with the New Zealand Whitcoulls operation providing most of the profit to support the rest. Adding Borders Australia and NZ to the mix would not have helped matters.

@Peter, yes it is sad, but unfortunately books in NZ are way overpriced. Even if the chains can justify the cost (shipping, GST etc) readers look for the best deal.

I have not bought a book in Whitcoulls for ages - I cannot justify spending $40 on a paperback I will read once when I could source that book for at least a third less via Book Depository (free shipping), or in ebook format for far less.

And ereading IS taking off in NZ. Probably not via Whitcoulls as once again, the ebooks are overpriced. However, you just have to visit the trademe community "book" bulletin board to see the myriad of questions about kobos, kindles, sonys etc. And most people do not source their ebooks via NZ due to the price. Sad for the publishing industry here as well.

The biggest problem I see with Whitcoulls in NZ, is that my understanding is that there is no local buying capability by any of the stores. They have to source all there stock via the national distribution centre.

This may work for a large market such as Australia, but in NZ there is a lot of locally published books, that regional Whitcoulls do not stock because they have no ability to purchase at the local level.

It will be a shame to lose Whitcoulls if it gets to that stage, however I believe that Whitcoulls in NZ is a viable business and should be able to be sold as a going concern, as long as the regional stores do not have to continue getting there stock from a central NZ warehouse

Friday, February 18, 2011
Press Release from Booksellers NZ on Whitcoulls situation

Voluntary Administration not reflective of any fundamental problems with NZ book industry

Booksellers NZ is concerned at the announcement that REDGroup Retail has gone into voluntary administration but is confident that this action does not reflect a fundamental problem with the book industry in New Zealand.

Chairman, Hamish Wright said the issue for REDGroup Retail appeared to relate to their specific funding structure.
“We are very hopeful that the Administration process will allow REDGroup Retail to restructure its financial position in order to strengthen successful stores and create better support systems within the group. Our hope is that all stores belonging to the Group will remain open in the long term,” Wright said.

REDGroup Retail has 79 bookshops in New Zealand under three brands of Whitcoulls, Borders and Bennetts. There are 350 bookshop members of Booksellers NZ, made up of groups and independently owned stores.

“On an international basis there is a high density of bookshops to population in New Zealand (1 bookshop to 12, 857 people), which provides a very comprehensive service to book lovers. This is also supported by a strong publishing sector. We are confident that the challenges facing REDGroup Retail will be met and that the industry as a whole will continue to serve readers of New Zealand as well as ever.

We are sure that the REDGroup Retail woes are not related to the growing use of e-readers and e-books. The group has led the way in this country with digitisation and thus we don’t see the new formats as being causing REDGroup’s problems,” said Wright.

Wright also reaffirmed the financial security of Booksellers NZ Book Tokens, which are redeemable at all 350 member bookshops nationwide, including Whitcoulls, Borders and Bennetts.

“REDGroup Retail have their own gift vouchers, but the Booksellers NZ Tokens are not be affected by REDGroup’s difficulties as they are guaranteed by Booksellers NZ.”

Booksellers NZ also do not see any detrimental effect to next month’s massive $20 million book promotion being staged as part of New Zealand Book Month, according to Chief Executive Lincoln Gould.

“An industry-wide promotion, New Zealand Book Month, will take place this March, and will see an unprecedented partnership between New Zealand publishers and booksellers. Four million $5 Book Vouchers will be distributed nationwide throughout the month of March. The New Zealand Book Month promotion is a bid to get both booklovers and lapsed readers, off the couch and in to their local bookshop to buy a book.” says Gould.

According to Nielsen Bookscan, in 2010 9.57 million books were sold in New Zealand for $243.6 million. This was a 1.2% increase in volume and slightly down in value (-0.1%)

If these fees are typical, what chance for Whitcoulls? NZ$830 an hour for administration company partners:

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10707900

Presumably the same sort of money is being paid out in Australia too.