Towards tomorrow's Gardners

<p>Recession was just starting to bite when the Littles snapped up struggling book distributor and wholesaler Gardners of Bexhill in 1986. Interest rates had rocketed, consumer confidence was sliding, and thousands of small businesses were floundering. But the father and son team saw opportunities others might not have spotted, and they haven't looked back since. Today, Gardners Books is the biggest wholesale book distributor in the country with an annual turn&shy;over of &pound;135m and ambitious plans for future growth, embracing distribution of e-books, audiobooks and DVDs alongside an ever-growing range of physical books.</p>
<p>&quot;In the late 1980s book retailers were desperate to improve their stock turn, and generate cash more quickly, but book supply was notoriously slow, so we began building the business around that,&quot; recalls managing director Jonathan Little. He was just 21 and straight out of business school when he began managing Gardners with his father Alan, the chairman. &quot;My parents had pre&shy;viously owned newsagents and bookshops and knew the importance of meeting customers' needs as promptly&shy; as possible. We soon became the first in the &shy;industry to offer next-day delivery, while our competitors were still sometimes taking two or three weeks to deliver stock.&quot;<br />
<b><br />
Transforming book supply</b><br />
Dubbed &quot;the quiet heroes of book retailing&quot;, father and son were presented with The Random House Group Award for Outstanding Contribution to Bookselling in September at the Bookseller Awards, and very publicly praised for what one awards judge described as &quot;their genuinely transforming influence on book supply in this country&quot;.</p>
<p>&quot;That industry recognition for what we do was fantastic and a boost for the whole team,&quot; says Jonathan. Chatting in the Eastbourne boardroom, he's got lots to say about where Gardners is going in the next 22 years too. He's impeccably dressed and bright-eyed despite having been kept awake half the night by his two-year-old son's cot-climbing antics. <br />
&quot;A relentless focus on availability&mdash;getting the book to the retailer the next day&mdash;is still at the heart of Gardners' business today,&quot; he says. It's why 22,000 publishing com&shy;panies, and 15,000 book retailers of all sizes, have come to rely so heavily on its services over the last two decades. Little says 1986 was also the perfect time to exploit the uptake of PC technology by small businesses, and this revolution in B2B communication paved the way for the live stock-checking and ordering systems Gardners developed for its customers. Its stock control and EPoS (Electronic Point of Sale) system for retailers, Gardlink, was an industry first on its launch in 1990.</p>
<p>&quot;PCs were becoming accessible and affordable and booksellers began to benefit from the instant stock visibility Gardlink gave them,&quot; says Little. &quot;We were the first to offer this alternative to phones, post and fax and it really put us on the map.&quot;</p>
<p>Developing software inhouse, and continuing to move with the market, Gard&shy;ners set up web-fulfilment services in 1999 and now dispatches books for virtually all online booksellers including Tesco, Amazon and numerous independents. Equally, Gardners already holds more than 500,000 digital files of books and thanks to a partnership with print-on-demand specialist Antony Rowe, also based in Eastbourne, is able to manufacture these books within 24 hours. <br />
<br />
<b>Digital warehouse</b><br />
Determined to keep pace with the digital revolution, the company will activate its new digital warehouse at the end of October, enabling any retail customer to offer 50,000 e-book titles. A bookshop owner can use the website to find and order an e-book title and have it emailed direct to the customer.</p>
<p>For the bookseller, processing this e-book order will be the same as processing a regular book order through Gardners. Bookshops can be provided with a retail website ser&shy;vice through Gardners (at a charge of &pound;40 a month) which will give them access to the Digital Warehouse or, for an annual fee, they can take up a licence to receive the data to incorporate on their own website. &quot;Essentially, independent bookshops can offer this new service instore without needing to invest anything and without having to concern themselves with the technology,&quot; says Little.</p>
<p>Serious investment in the physical warehouse operation has also underpinned the company's steady growth as a traditional wholesaler and distributor. The move from Bexhill to Eastbourne in 1993 brought with it the chance to increase stockholding from 50,000 to 400,000 titles. In January this year a &pound;5m update of a high-bay warehouse building was completed. Today, inside this cavernous shed the latest automated picking technology, complete with 17 mini-loader cranes and a Japanese &quot;pick-by-light&quot; system, works its quiet magic, mechanically filling hundreds of plastic totes by the hour. Phase two of the extension will be complete in 2010, when a second high-bay building will provide room for a further 500,000 titles, bringing Gardners' physical book range up to 900,000.</p>
<p>This suggests the Littles aren't expecting physical books to disappear any time soon despite the current hype around uptake of e-book devices like the Sony Reader, and Waterstone's reportedly selling 1,000 e-books a day. &quot;We're investing very heavily to bring e-books to our customers because not everyone can follow Waterstone's lead and set up their own service. But we do think books and e-books will lie alongside each other for many years to come,&quot; says Little. &quot;There will be a small market for e-books in the next couple of years, but of course we are in the very early stages of that product development, and the industry has a lot to learn. In the meantime, we know we have to be in there as a provider. We want to be an aggregator, and at this stage it's about making the product available.&quot;</p>
<p>Rather more pressing is the demand for DVDs from its retail customers, says Little. Since Walthamstow-based DVD distributor S Gold &amp; Sons went into administration in August, many retailers that stock DVDs are struggling to find product. &quot;From the end of October we will be stocking a full range of DVDs,&quot; says Little. &quot;We're launching in a very controlled way and will build up the range throughout 2009, offering the same core principles of a strong basic service that we do with the rest of the business.&quot;</p>
<p>Gardners is proud of the staff loyalty it engenders, and Jonathan says moving from Eastbourne isn't an option with so much expertise embedded here. &quot;We're also ideally placed for the M25, the Channel Tunnel, Gatwick and routes into Europe, which is vital now that 20% of our business is international,&quot; he says. The board is largely made up of the Little family, with Jonathan's wife Nicky as finance director, brother Andrew as technical director, and his wife Cathy the training manager.</p>
<p>Investment is driving growth. Gardners reported a 35.2% drop in after-tax profit to &pound;3.4m for the year to end-February 2007, while turnover fell 2.4% to &pound;136.8m. The drop in profit reflected an increased investment in the business, Little explains&mdash;notably the acquisition of two library supply companies&mdash;and turnover should exceed &pound;150m for the current <br />
financial year.</p>
<p>As the business world heads towards recession the Littles are secure in the knowledge that they are debt-free, family-owned and able to continue self-financing growth at their chosen pace, as has been the strategy from day one. &quot;If we want to spend &pound;5m on a new high bay, we can,&quot; says Little. &quot;When it's your own money it's even more important to succeed.&quot; Immediate competitor Bertrams, owned by struggling Woolworths, is far more exposed to the financial crisis, and suppliers are already visibly nervous.</p>
<p>Recession between now and 2011 will test book retailing, with quieter high streets impacting on book sales, says Little. But he's on familiar ground. &quot;Once again book retailers will be hungry for cash-generating stock turn, and we'll be encouraging them to use us as a stockroom for that,&quot; he says. &quot;When times are tough all businesses are forced to raise their game, make better decisions and get smarter about what they do. They'll need us to be working even harder for them, and we're primed for that.&quot;</p>
<p><b>Eastbourne: The Facts</b></p>
<li>Gardners Books' stockholding of physical books today stands at 400,000 different titles plus 500,000 digital files.</li>
<li>A second high-bay warehouse will be finished by 2010, allowing for the storage and handling of another 500,000 physical books.</li>
<li>Gardners employs more than 750 staff at its Eastbourne site, peaking at around 1,000 during the busy pre-Christmas period.</li>
<li>Gardners began its internet fulfilment service in 1999 and in 2007 shipped more than 3 million parcels to readers world-wide on behalf of thousands of internet retailers.</li>
<li>On a typical working day around 250,000 individual books are received and distributed.</li>
<li>In 2007 The Little Group, parent company of Gardners Books, purchased two public library supply companies in northern England&mdash;Askews and Holt Jackson. The group now supplies around 40% of public libraries, largely through Eastbourne.</li>