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Industry figures are braced for the possibility of a no-deal Brexit as Boris Johnson marks the end of his first week in office.
The new prime minister has triggered fears that Britain will leave the European Union without a deal on 31st October as he let it be known that he has no intention of engaging in talks with the bloc ahead of the deadline unless they agree to negotiate a new withdrawal agreement.
As the waiting game continues, publishers, distributors and booksellers are dependent on contingency plans, with concerns over supply delays, over-ordering and delays at the border as the trade enters peak gifting season, as well as over a loss of consumer confidence at a crucial time of the year.
The timing of no-deal Brexit is a cause for concern, Hachette UK c.e.o. David Shelley warned in an email to staff yesterday (1st August). He said: “There will almost certainly be effects on the supply chain in the event of a no-deal Brexit and we are working closely with suppliers and retailers on this to minimise any impact. We are especially focused on the timing, as of course it comes slap-bang in the middle of peak gifting season for books when sales are roughly double what they would have been back in March.”
Shelley said Hachette is planning for a wide variety of scenarios and is engaged with government departments such as the Department for International Trade and the Department for Digital, Culture, Media and Sport, but he said that he remained cautiously optimistic about the resilience of books. “In terms of consumer demand for books, we have seen in similar crisis situations in the past that consumer appetite both for escapism through books, as well as information and opinion about the current situation, is likely to remain very strong. Books are remarkably resilient in situations like this and can be a real force for good," said Shelley. "However, the big challenge for the whole publishing and bookselling ecosystem will be ensuring that consumers here and in all our export markets are able to easily access the books we publish in the event of a no-deal Brexit.”
Echoing Shelley's concerns over timing, Booksellers Association m.d. Meryl Halls said in the run-up to Christmas "business is braced for an extremely negative impact from crashing out of the EU on 1st November" with the retail sector "even more jittery".
She said: "The prospect of supply chain disruption and a killer blow to consumer confidence in the lead up to Christmas peak selling is a horrible prospect. Booksellers will no doubt turn their minds to practical planning once the summer is over and the reality is clearer – and the BA will be helping with advice and guidance and working with the British Retail Consortium and other trade bodies to mitigate the impact of a No Deal Brexit on our members, in whatever ways we can. Impacts on the supply of books from publishers and distributors will depend on the contingency planning within publishing, and we would urge caution in over-ordering by booksellers for fear of tying up cash in stock too early, albeit that booksellers will naturally want to ensure the supply of the best books for their customers."
HarperCollins emphasised the need for flexibility and preparation in regards to Brexit. A spokesperson for the company told The Bookseller: “Continued uncertainty around Brexit and the likelihood of a no-deal Brexit is hugely challenging for business and the industry. At HarperCollins we aim to minimise potential disruption by increasing our paper stocks and other materials, early printing, flexing publication schedules and moving books into key markets at an early stage.”
The potential of a no-deal Brexit has also sparked concern for the Irish trade with worries over the weak pound and uncertainty around the Irish border.
Halls added: “Our most immediate apprehension is probably for our Irish members, who are worried about ruinous currency fluctuations, about supply disruption from UK publishers into Ireland, to increased costs, and to the political uncertainty around the Irish border. Our Irish members are extremely important to the BA, a crucial part of the bookselling community and we have a firm commitment to support their continued involvement with the BA whatever happens with Brexit. We stand ready to support all our members in the challenging times ahead and would urge the Government to work night and day towards a negotiated settlement rather than a No Deal situation, which would be catastrophic for business.”
After the threat of no-deal Brexit in March, some parts of the trade are simply extending their initial plans. Faber c.e.o. Stephen Page said: “To be honest we put all this in place for March, so are simply reiterating those practices, keeping supply chain open and stock available.”
PRH says, as it did in March, that it has done extensive planning for a number of different Brexit scenarios across its supply chain, distribution and publishing schedules. It has also brought forward backlist printing and has secured several months of paper stocks to print
“Like all UK businesses with European exports, there is still a great deal of uncertainty, and we’re still no clearer on what the outcome of the government’s discussions will be, or the wider impact on our industry. However, we are confident that our preparations have put us in the best position to minimise and manage any possible disruption, including in the event of a ‘no deal’ Brexit,” said a PRH spokesman. “Through our contingency planning we have fully assessed our paper stock levels, printing options and schedules in various scenarios. We have secured several months of paper stocks to facilitate monochrome printing within the UK, and have a monochrome printer in place in Europe to provide local prints for titles with high European sales should we require this. We have also brought forward backlist printings – for stock printing outside the UK and due to deliver from November to January – to earlier in the year. We will continue to be in very close dialogue with all our printers over the coming months to ensure we remain ahead of any unforeseen challenges. Additionally, we have worked closely with our retail partners to manage stock-ups where we might expect supply chain delays. From a wider business perspective, we have rigorously stress-tested the impact of different tax changes, and the various processes involved in their implementation.”
Simon & Schuster UK's Brexit strategy also remains the same with discussions are ongoing with printers to avoid problems at the border and schedules adjusted to allow the firm to deliver early. Staff who are EU citizens are also being supported.
An S&S UK spokesperson said: “One of the most important elements has been to ensure that our staff feel supported, particularly as the situation is in flux. We have provided presentations to all staff on the potential impact for EU citizens living in the UK. We have also provided one-to-one legal support for all those requiring advice on Brexit in relation to their immigration status.
“Schedules have been adjusted to allow us to deliver in early, we are working with a warehouse to ensure the goods go out to our customers with plenty of time to reach stores. We will be sending stock direct where possible – although this is a normal practice. We have allowed extra time for any European printings, we are in continual talks with our printers and those acting on our behalf in terms of shipping our goods, they have our EORI number (Economic Operator Registration and Identification) and Transitional Simplified Procedures number – these are needed for businesses who undertake the import or export of goods into or out of the EU. This enables our printers and freight forwarders to clear customs on our behalf.”
Wholesaler Bertrams says it is working with its key suppliers to prepare for no-deal. “We are mindful of disruption and uncertainty that could arise as a result of a ‘no deal’ Brexit, and we are working with our key suppliers to make sure we have the best possible strategy in place when October arrives,” said Bertrams c.e.o. Raj Patel. “We are well poised to adapt to a rapidly changing environment and will continue to meet the needs of our customers. While Brexit will have an immediate impact on some routes to market our ambition to become the global bookseller of choice means we are already looking at the broader books economy beyond the UK and EU markets.”
Meanwhile Gardners is looking into paperless trade and holding deeper quantities of stock to limit disruption. Gardners head of business development Nigel Wyman said: “Gardners are in regular talks with key distributors and publishers to make sure our stock and range is impacted as little as possible by the various possible outcomes of Brexit. The biggest single action we take is holding deeper quantities of stock across our extensive range to offer our customers high availability and limited disruption. We have also been investing in IT solutions for paperless trade through the borders to ease any potential congestion that may be caused by a no deal.”
The Publishers Association is urging Johnson's government to avoid no-deal Brexit and has issued advice to members on "data-transfer" in the last week.
PA c.e.o. Stephen Lotinga said: “The Publishers Association will continue to communicate the concerns that the publishing industry has to Ministers and support our members in their business planning, this week issuing further advice relating to data-transfer in the event of no deal.”