Louis Baum talks to London-born Philip Joseph, who set up a South African bookselling success story, sold it, then started all over back in London, and repeated the success
When Philip Joseph, with his son Richard, sold Books Etc to Borders in the autumn of 1997, it was the third sale of a family business Joseph the Elder had been involved in. Born in London into a family engaged in motor tyre factoring (the sale of which was his first), he joined the Royal Air Force as air crew> during the Second World War, and was sent to South Africa to be taught to fly. He spent 18 months being trained, "a ridiculously long time by today's standards".
His training took him first to Pretoria, then to various other locations before he fetched up in Kimberley, where he met his wife-to-be, Pam. He served in various theatres of war, including North Africa, before returning after VE Day to London, where he was joined by his wife. But within two years the couple were back in South Africa.
There he went first into the chemical manufacturing business. This activity came to an end when the price of copper went through the roof. Meanwhile, Pam Joseph and his mother Pauline had, in 1951, bought a small secondhand bookshop in King George Street in the heart of Johannesburg. It was called Exclusive Books.
"I thought that this was the sort of occupation I could see myself enjoying," he recalls. "But my wife and my mother made it clear to me that this was their pitch, and while I was entitled to have a look, if I wanted to go into that line of business I would have to open up on my own." That is what he did, opening another Exclusive Books in Hillbrow, Johannesburg, a business that was to become South Africa's premier retail bookseller.
The Hillbrow Exclusive started life as a secondhand business with no more than a small section of new books. This was to change, but, says Joseph, "I have always felt that working in a secondhand bookshop is wonderful training for anyone entering the new book trade. One saw the backlists and the bestsellers of yesteryear, and it gave one an amazing knowledge of 19th and 20th-century literature."
How did this small shop grow into such a successful business? "I think it started off with a profound love of literature, particularly on the part of my wife. We ran a very well-regulated secondhand bookshop, and switching over to new books was quite easy.
"We tried to run shops for Mr Everyman. There was no specialisation at all, and we abhorred the intellectual snobbery that was being practised in one or two bookshops in Johannesburg at that time. We felt that if anyone came in for a western or a romance, we should first of all thank God that a customer had crossed our threshold, and that, second, we had to treat the customer with the respect we would treat someone who came in for a novel by Anthony Powell. The intellectual snobbery of some bookshops in Johannesburg was awful. It put a lot of people off.
"We ran the bookshop on very strict business principles. There was no question of stocking a book just because any good bookshop had to stock that book. We stocked what people wanted. And, if we believed in a book, the entire staff got behind it. We beat the drum, and that is the only way to sell a book, with total conviction."
The Hillbrow shop remained a single-site business for some time. The Josephs then took a 75% interest in Exclusive Books Cape Town. (Maureen Hargraves, the widely known South African bookseller, held the balance.) Meanwhile a substantial library supply business had been developed, based in the Transvaal but also supplying libraries in the Orange Free State, Natal, and to a lesser extent the Cape, which was the rationale for opening the Cape Town retail branch. The company grew into the largest library supplier in Africa, this side of the operation becoming much larger than the two retail businesses.
A third strand to the business, wholesale distribution, was developed after Prentice-Hall approached the company to distribute for it. Other US publishers, including Addison Wesley, followed, as did the Open University Press, an appropriate arrangement since the Open University had been modelled on the University of South Africa. Joseph meanwhile became involved in the trade affairs of the South African book market, eventually serving as president of the South African Booksellers Association. In that capacity, as well as through his businesses, he developed close links and friendships with British and US publishers.
The early years of bookselling in South Africa were a time when it was possible, Joseph recalls, to sell 1,000 copies of a Nevil Shute novel from a single branch. But they were also a time of dark politics. "Censorship was one of the ugliest problems that we had to deal with. And one dealt with it morning, noon and night. It was like a dirty blanket over you that you could never get rid of.
"Because of the wide variety of books we ordered for library supply, customs officers regarded us, much to my dismay, as co-operative friends. They used us to look at what was coming in each week from the famous mail boats, and through the post; they used us as inspection depots. We were aghast at this situation. And it was quite dreadful to see books taken away and put under embargo pending investigation, some of them entirely harmless."
The attraction of emigrating grew stronger for the Josephs and their three sons. "We saw it as pointless to continue building the business when there was no likelihood of any of our children entering it. One day I met Tony Bloom of Premier Milling, and he said to me, 'If you ever consider selling, remember us.' And I phoned him and said, 'Apropos of that conversation, I could be interested.'" (Premier Milling was already involved in medical bookselling, and was later also to buy Central News Agency, South Africa's equivalent of W H Smith.)
A year later the Josephs arrived back in London, with solid experience of bookselling and a trolley-load of contacts and friendships with UK publishers. "When I came back they were very kind to me, they invited me for lunches, for dinners, for teas and everything else. And then I think it was the ubiquitous Alewyn Birch who said, 'There's a set-up in Charing Cross Road called Words & Music', and I'd noticed that a piece had appeared in The Bookseller, and we contacted the liquidator and had a look at it.
"I'd never seen such a mess in my life. It was the most extraordinary collection of books I'd ever come across. We decided to buy it. A number of publishers wanted to invest in it, but we told them we could not cope with a large number of shareholders. The only outside shareholder, for old times' sake, was Alewyn Birch."
Thus, in 1981, Books Etc was born. It was a classic family business, involving wife Pam and son Richard, a chartered accountant who had recently been released from the South African Army after 18 months' conscription. Philip Joseph's youngest son Jeremy, a medical student, also insisted on investing in the company, and his eldest, Jonathan, an established property developer who had arrived in the UK some years previously, helped the new company navigate the property jungle.
"When we made an offer to the liquidator it was very low. We acquired only four of the leases. We would not buy Words & Music itself; we were advised not to. We bought these leases and the stock in those shops and the stock in the basement of Charing Cross Road, it was chock-a-block with books.
"The whole idea was merely to try to clean up these shops. Staff morale was appalling: I'd never met such demotivated staff.
"The redesign came later. We started with Brompton Road, where we opened up a basement. In Fleet Street there was a basement which we opened up for bargain bookselling. Charing Cross Road was a very slow development in that we were hindered by this extraordinary mess of stock. It took months to sort out. In the end it proved to be an astonishingly good buy. No one had had any idea what the stock was worth. Looking back I think it was one of the most profitable business decisions we ever took. After that the design of the shops slowly emerged.
Digging in over discounts
"We were learning the extent of the book trade, and found ourselves faced with an extraordinary situation. When I came into the British book trade I found that it was modelled on the 35% discount pattern, I think if you were a charter bookseller you got a little extra, and paperbacks possibly enjoyed a bit more. I saw my various publishing friends and said to them, 'I don't know how people can operate in this climate of 35%. But I cannot do it. And I won't do it.' We had some pretty valuable sites, some of these leases actually turned out to be worth quite a lot of money; I had no idea at the time, and I told them that if we couldn't improve on discount we were simply going to liquidate the stock and sell these leases, because we couldn't operate on that field.
"I wasn't the most popular person at the time because of this, but I was determined that we would break this mould, and indeed the co-operation I received from the larger publishers then was good. I had no complaints. The smaller publishers were very, very difficult to break down. We did not do business with some of them until three or four years ago."
The success of Books Etc can, Joseph believes, be ascribed to the same factors that had led to success in South Africa, "plus the extraordinary energy, enthusiasm and vision of Richard and subsequently John Monk's wonderful input. With our co-directors and staff we made a really happy team. I always enjoyed going to work."
But he adds, "Sound business principles are the basis of any business. I am primarily a businessman. I'm not a literary person; I wish I was. But if a bookshop, or any shop, is not run on sound business principles it is doomed to fail.
"I became knowledgeable about books and the whole process of publishing and bookselling because I had to. It's not all that difficult to pick up. But just because someone comes to you with a profound knowledge of 19th-century literature, that does not make them a good bookseller. I had a children's bookseller who when I, years ago, said to her, 'We don't appear to have any Noddy books in stock', replied, 'No, you won't.' She more or less told me to choose between her and Enid Blyton. I told her there was no choice."
It may be that Joseph is being unfairly modest about his literary interests. He declines to mention, for example, that publisher Michael Joseph was a cousin. He also declines to recall that when, in 1993, Books Etc began offering full refunds on any books it sold that customers did not enjoy (gaining many column inches of priceless coverage in London and national newspapers), that publicity coup had a precedent: a few years earlier, in 1988, Joseph was so impressed by Gabriel García Márquez's Love in the Time of Cholera that he offered personally to reimburse Books Etc customers who bought but did not enjoy the novel. Books Etc sold more than 3,000 copies in hardback, said to have been around half the UK print-run, and only seven copies were returned.
Joseph is sanguine about the development of UK bookselling in the aftermath of the collapse of the Net Book Agreement. "Even before the fall of resale price maintenance we had the chains here with W H Smith and Waterstone's. We ourselves were building up a small chain but without the enormous power that people like Smiths have always had, which strangely enough they never seem to use. I think the development of the chains post-r.p.m. is natural, and it has happened in every single business.
"It is also very difficult indeed in this climate for small businesses to get any say in any of these new shopping centres. It's much easier if you go along with a large chain's covenant behind you than if you go along as a small chain like Books Etc was with 20-odd branches. We did manage to get some sites, but often when we were up against the likes of Dixons, any vendor worth its salt was going to be awfully nice and pat one on the head and say, 'I really do admire you, but if you don't mind we prefer Dixons' covenant.' "
Even so, he believes that bookselling by both small and large firms can prosper. "So much success in a business depends on the people running it. You require committed maniacs to run any business, and if there's a shortage of committed maniacs then the businesses that don't have them will suffer, whether they are large or small."
He does believe strongly that territorial market rights, which protect British publishers from an invasion of competing US editions in territories for which they hold rights, are on their way out, and that the single world English-language edition is inevitable.
"I had early views on that. In South Africa we were usually forced to wait for the British edition. And having to tell people that we could not sell them a book which they had seen in America because the British rights had not yet been sold or because the British edition was coming much later, I was sick of that argument. It is an artificial barrier and it must break down. It's not a question of whether but when. It just doesn't make sense any longer to have different prices and different editions."
There has been much debate in the trade on the depth of discounting, especially on books that are in demand anyway. Where does Joseph stand on that issue?
"I've been out of retail bookselling now for quite some time. But when I was in it I firmly believed that the cheaper the book the more it sold, and I think this applies to jolly well nearly any product.
"When I hear people arguing that if you're going to sell a book for £15 why not make it £19.99, I think they are taking leave of their senses. A £10 book sells more than a £15 book, an £8 book more than a £10. That's a simple law of economics. It must follow that the cheaper you make a book the more copies you'll sell. This will hold even for big selling titles such as Delia Smith, which will sell more at £9.99 than at the published price of £16.95.
"Of course, in an ideal world it would be far better if everyone held the price of a big bestseller for the first six months or so. But the reality is that if Sainsbury's and Tesco discount heavily, booksellers have no choice but to discount as well. It's embarrassing to have a customer whom you know or a friend come in and pay £15 for a book when you know damn well that 100 yards down the road they can buy it for £9.99. I think you've got to tell them or not stock it or meet the price."
Joseph may have retired from the second bookselling business he co-founded and nurtured, but he is far from inactive. He is on the publishing board of the British Library. He is a keen amateur bookbinder and is a director of Shepherds, the fine binder, which recently acquired Sangorski & Sutcliffe and Zaensdorf from Aspreys. "I suppose the most important activity is croquet. I'm very keen on association croquet. In summer I usually manage to play about two days a week." He also plans to begin an art course in the autumn.
And he is a firm believer in keeping an open mind. "I was brought up on a story that my late father and his brother had turned down Walt Disney, who wanted some finance, and they felt he was a dreamer producing strange cartoons about mice. I didn't know that I would make a similar wrong decision. I think it was about seven years ago: I was with Richard in the States; we went out there a great deal to try to keep abreast of things. We were visiting a particular wholesaler. They suggested when we finished our business that we walk over some fields and speak to a young man who was setting up what they called an 'Internet' business. We decided not to bother. It was only later on that I discovered the young man was Jeff Bezos."
He recalls how, as a very small bookseller in South Africa, he saved up enough for the business to send him to the Frankfurt Book Fair. "I spent two days going through the combined British and American pavilion and thinking to myself, 'My goodness me, there's a lot out there.' Then I looked around and realised I'd only done a fifth of the total fair, there was the German pavilion, the Russian pavilion, and all the rest of them.
"And I then began to realise that there is a danger that you regard the street you are trading in as the epicentre of the world. Book-wise you are just a tiny dot. And I say to people these days, 'Get out, go to Frankfurt, see what is happening around you.' You need to keep your mind open."