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Borders without customers

Steph Moriarty was a flat-mate and fellow Clarion South attendee in 2009. With a razor-sharp critiquing knife and a look that can freeze you in place in terror, she's also worked for years at the coal-face in the book-selling business. She knows her stuff.

In two parts, below is her response to the many opinion pieces and speculation about the Borders / Angus&Robertson debacle in Australia.

I’m pretty deeply vested in every facet of the book industries, so it’s particularly frustrating to see so many people hypothesising about why things are the way they are, and how Borders and Angus & Robertson had it coming, etc. with only a speculative understanding and no insight into how things actually are.

I have worked as a bookseller for seven years, with experience in chain stores as well as independents. I am a professional writer who reads not nearly as much as some people I know, but I would venture a reasonable amount. Which means I buy a reasonable amount of books from wherever I can get them: big bookstores, franchises, indies, second-hand bookstores, and yes, because I’m frequently poor, online. This is my explanation (and occasional angry digression) on a few popular misconceptions on recent book industry events.

Myth number 1: REDgroup went bankrupt because of rising ebook sales/internet book sales.

Rising internet book sales may have been a contributing factor – I’m less convinced that ebook sales are making much of a dent, yet. The ebook model is still problematised by fundamental things, like the relatively high base cost of ereaders, and petty DRM laws, and the lack of an industry-wide standard format. The Apple ebook store has only recently opened up to Australia at all, doing much to resolve the awkwardness that was coming from individual publishers selling ebooks on their websites – I think I speak for most book-buyers when I say I don’t generally think of books by publisher, as in “I feel like reading a Voyager book today; I’ll see what they’ve got available”. Ebook sales are rising, but in many cases it’s a different market, or a parallel market, and we are yet to see anything near the full weight of what this is going to do to brick-and-mortar bookshops.

So why did REDgroup, the conglomeration of Angus & Robertson and the Australian arm of the infamous Borders bookstore chain, go into voluntary administration? Funny story. About two years ago, the Borders Australia was bought over by a company called Pacific Equity, who were also the owners of Angus & Robertson. They had a grand vision:

1)      “Fix up” the ailing Borders stores (sold by their US parent company because of massive company-wide losses)

2)       Float the whole thing on the sharemarket in a few years time.

3)      ???

4)      Profit

A fine plan in generalisations. In reality, it involved a series of disconnected but increasingly bizarre business stunts, like trying to charge publishers and suppliers the difference between the amount that they were selling and the amount that Borders thought they should be selling, and arbitrarily selling backlist titles above the RRP and trying to get away with it, because customers will pay the premium of being able to buy a book on the spot instead of having to order it/will pay for the privilege of being able to step inside a Borders store/are not price savvy (in this day and age, competing with Those Online Booksellers Who Shall Not Be Named)/not enough people are complaining about high Australian book prices as it is/some shit. Then there’s the inherent problem of what is termed “loss prevention” (I love that phrase. It’s so oblique) in the larger store model where staff, who in my experience were almost never on the shop floor as it was, could not possibly keep track of people stealing books or leaving them in funny places, etc. Hell, I would have paid the premium for that last copy of the Into the Woods Broadway revival soundtrack because nowhere in Perth seemed to have it, but every time I went into Borders, it was never in the rack and none of the staff members I spoke to seemed to have any idea where it could be, except for the rack that I’d already scoured myself. I could rant a bit about the staff in general – I know three people who have been employed at various times by Borders Perth; one is absolutely lovely and probably does an excellent job; one told me which genres of books get security tags put in them and which one’s don’t (in case, you know, I was ever really desperate for a book and, err, didn’t have the money for it); the third was fired from his previous bookselling position for spending his days looking up lolcatz on the front counter till computer (hilariously, I took his old job. Bookselling is a small industry, but in Perth it’s not even six degrees. It’s more like one and a half). My issue is not so much with the people themselves, but rather with the model, with this intense commoditisation of bookselling – when you try to be big, especially in what is a deceptively service-oriented model (‘cause those books will never alphabetise themselves), your gaps get bigger too, and more people fall through them. Ain’t that poetic.

So, the moral of the story here, kids, is: if you want to run a big bookstore chain, have someone look over your business model before you put it into practice. Trying to be popular with the masses by selling all your big new releases below your cost price, and then trying to make it all up on your quasi-obscure over-priced backlist titles, and basically getting on the nerves of everyone in your related industries, is not cool. I think there was something in the Evil Overlord handbook about that.

Myth number 2: Book prices are expensive in Australia because bookstores are evil, money-grabbing, capitalist corporations.

Because bookstore managers have nothing better to do in the morning than come to work and point at different books on the shelf and say, “I’ma price this one at $85 today, just because I feel like it”.

True, Australia has done away with the regulated pricing model wherein retailers must sell at the RRP, meaning that in theory, they could try to sell something at a higher price and make a bigger profit (and get away with it), but so far the  only people who have tried to do that have been Borders, and look how well it worked out for them.

Also, I’m going to point out because I’m not sure how many people know this, but the profit margin in bookselling is significantly lower than in a lot of the other major retail sectors, like jewellery and beauty and fashion. By significantly, I mean less than half.  


Part two to come.

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Reader Comments (1)

Thanks Ben and Steph. It's nice to put this into real perspective. Going to share it on my facebook.

March 10, 2011 | Unregistered Commenteramanda

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