The end of Whitcoulls and Borders in New Zealand


If you have a Borders or Whitcoulls voucher, even if you hate the idea of spending double to be allowed to spend your voucher, I recommend you do it quickly, because within a couple of weeks it will be worthless. It was interesting to see that there is no mention of the current situation on the Borders website which talks about eBooks coming soon, although Whitcoulls have been a bit more responsible with a home page announcement.

The demise of these companies isn’t about eBooks, it is largely around debt as pointed out by Liam Dann in this morning’s Business Section of the NZ Herald.  and the business models. I’m not going to discuss the debt because that doesn’t reflect on the industry itself, it reflects on higher level financial decisions and the economy, not on the book trade.

Book stores and music stores are in industries that are steeped in history of “this is how we’ve done it for the last 50 years and why change it if it aint broke”.

As was mentioned in today’s NZ Herald story by Isaac Davison, “In 2010, 9.67 million books were sold, an increase of 1.2 per cent in volume but 0.1 per cent down in value against 2009. This was despite the mark-up on books in New Zealand, which saw paperbacks sold for as much as $20 more than online, even after shipping costs.”

So much for Amazon (of course there were a huge number of Kiwis including myself who purchased from Amazon as well) being the cause of the demise of our local stores.

I also appreciated the comment in the same story from Jo McColl of Unity Books that many people bought hard copy books as a consequence of having purchased eBooks. I’ve done that too. I read eBooks, listen to Audio Books and still have a personal library of around 2,000 print books. The same with music, I listen to lots of music online but have still purchased at least 10 CD’s so far this year.

I might have to go to a separate blog about how Whitcoulls and Borders business model needed to change in order to stay viable and vibrant (ignoring REDGroup‘s debt which doesn’t reflect on the book trade business model itself) because for these guys its too late unless they get a savvy new owner (who will not purchase the chains’ debt) who is ready to adopt a new business model.

REDGroup have called in Administrators. I don’t care who the administrators are. Their role is a short term one and it isn’t about changing the business model or trading back into profit. It is about the creditors.

They will try to negotiate with the book publishers and wholesalers and other suppliers who are desperate to get paid for their product and worried about their future viability in NZ. Inland Revenue want their taxes and will be first in the queue.

They will need to negotiate with the 1,000 staff who will have to have new short term contracts and will be justifiably worried about whether they will get paid at all, let alone have a future with the chain, but at the same time, will be essential should they find a new buyer for the chains.

Based on the outcome of their negotiations a decision will need to be made on whether to go into receivership which is next most likely step. If that happens, enjoy the book sale, because there will be many bargains up for grabs.

The shame of it is that (outside of the decisions that got REDGroup into this financial position) the problem in the trade is that the business model needed to change and like the music industry and other industries, the people running them don’t get it. They should have learned from the music industry, which still doesn’t get it. Other industries who don’t get it include banking, telecommunications and consumer electronics to name a few.

What should they have done and what can other retail businesses do in order to not follow Borders and Whitcoulls into the mire? Subscribe to my blog and I’ll give you a few pointers for free. It isn’t rocket science, but it is a fundamental shift in thinking, whilst also remembering the fundamental simple principles of retail and distributon.

We live in a new world, its exciting and there is a lot of money to be made, but the fatal flaw is thinking that if you do the same thing you have always done, that you will get a different result.

There is an RSS feed to this blog. Come back and read some of my ideas on how companies like Whitcoulls and Borders can thrive and prosper.

Here are a few things I would look at:

  • Understanding your business
  • Communication with customers
  • Communication with staff
  • Distribution methods
  • Stock turn and inventory management
  • Engagement
  • In Store Events
  • Proximity based marketing
  • Shelf Management
  • Relationships with community
  • Relationships with education
  • Location Based Business Analytics
  • The Internet
  • Gift Registry

I could and probably will go on. The answers are a mixture of the old and the new, neither of which these chains have effectively managed. Borders started in the right direction in the US, but didn’t continue the evolution. International chains like Borders and WH Smith focussed more on the  era of globalization than evolution of the business model. Something that would have made short term heroes who have probably made their money and moved on, but was only ever going to be short term.

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I want Super HiVision TV


One of the things I have always wanted, ever since I was little, was a TV screen that covers the whole wall. I’m pretty sure I’ve blogged about this before. I believe Bill Gates has something like that, but it’s probably a video stack, like a Pioneer Video Wall.

I want something that covers the whole wall and when I’m not watching one or multiple channels, it can be a screensaver that can take me from a beautiful beach or underwater scene in winter or a ski scene in Canada or France in summer. Something that doesn’t give me eye strain from being in the room.

Then I also want real surround sound, so I can immerse myself in the environment.

This week I was listening to the Digital Planet podcast from the BBC and they were talking about exactly this. They were talking about the demonstration of Super Hi Video at the Interneational Broadcasting Conference in Amsterdam and the demonstration of this technology being streamed live from London.

The technology is Super Hivision which offers “a video format with 7680 x 4320 pixels (16 times higher than standard Hi-vision, NHK’s HDTV system) . This world’s first video system with 4000 scanning lines delivers ultra-clear, realistic three-dimensional images that can be achieved only by ultrahigh-definition technology.
– The individual scanning lines are not visually noticeable even when relatively close to the screen, reflecting the high resolution of the system. What’s more, a wider viewing angle conveys a stronger sense of a reality.
– The new 3-D audio system with 24 loudspeakers dramatically enhances presence.”

According to the people who were watching it, it is very similar to what you can see and hear in real life. It’s taking the gloss off my HD TV (through which I am not yet watching HD)

So if anyone is wondering what to get me for Christmas, give me a call and I’ll give you the dimensions of my lounge wall. I suspect the price will be much more than the value of my home right now, but that’s ok.