The twin collapses of Borders in the US and the REDgroup in Australia, within a few hours of each other, are a graphic illustration of the intense pressure that traditional high street book retailing is now under worldwide.
Although neither chain had any direct British interests, British publishers will not be unaffected. Penguin US, for example, is Borders' largest unsecured creditor and has $41m at stake. Other worldwide publishing groups have considerable sums at risk—Hachette ($37m), Simon & Schuster ($34m) and Random House ($33m). The Chapter 11 framework is designed to give stricken companies the time and space to restructure and recover, and Borders is hoping to re-emerge as a viable business, albeit one which has closed 200 of its 650 stores.
Meanwhile, the situation in Australia is perhaps of more immediate concern to London publishers, in that it represents a lucrative market for British books, worth the best part of £150m. RED has around 20% of the Australian market, and about 70% of New Zealand's through its Whitcoulls subsidiary. Again, a smaller chain may emerge following administration.
For publishers, e-books are the great hope, with a revenue-neutral (or even positive) swapping of print for digital a possible outcome. So far, so good, in that digital is growing fast without an equal increase in piracy. For bookshops, this is of little or no use. Even Barnes & Noble, which is making great strides with the Nook, is not actually making a profit from the area, recording losses of $50m on sales of $319m in the past quarter.
British bookshops are not immune from these pressures, as the collapse of British Bookshops vividly shows, but it is worth pointing out that both Australia and the US have pursued a policy of price protection. Could the lack of that protection here during the boom years have ensured that British retailers learnt to live on slimmer margins before the recession and the digital wave struck?