Bookstores beef up security in face of fury

Administrators have been called in to take over the company and try to save the 560 stores from going under. Photo / Dean Purcell.

Extra security has been hired for Borders and Whitcoulls stores as staff face aggressive customers angry about conditions placed on redeeming gift vouchers.

Shoppers are being allowed to redeem their gift cards only if they spend twice the value of the voucher in the store. To redeem a $100 card, they have to spend another $100.

The Herald has learned one Whitcoulls staffer was threatened yesterday with a steel pipe.

It is also understood that a staff member from a publishing house was caught at one outlet trying to steal from the shelves books their company had published.

The owner of the book-selling chains, REDgroup Retail, put them into voluntary administration on Thursday, leaving 2000 workers in 260 outlets fearing for their jobs.

The company says it is under no obligation to honour the gift cards.

No one from Ferrier Hodgson, the voluntary administrators, could be reached for comment last night.

However, the Herald has been told staff at the stores are nervous about the increasing volatility of customers.

Whitcoulls and Borders customers have been told they should quickly cash in their vouchers in case the parent company crashes.

Consumer NZ says the redemption deal might be the best on offer. Deputy chief executive David Naulls said while the policy was not ideal for customers, the "smart bet" would be to get in now and use the vouchers.

"If the business keeps trading in the future, you might be able to redeem your vouchers in full. On the other hand, if it goes into receivership or liquidation, then you are classified as an unsecured creditor which does not see very much very often."

Mr Naulls said the company's move "is probably quite legal".

If the chain stores changed hands, it could also mean unused vouchers were worthless. The new owners would be bound to honour them only if they had purchased the current owner's liabilities, which Consumer NZ said does not happen often.

A Ministry of Consumer Affairs spokesman confirmed the company was going beyond its legal obligation in letting the vouchers be redeemed.

The Commerce Commission said it had received several complaints, but it would be waiting until REDgroup's financial situation was clarified before considering an investigation. A spokeswoman said the redemption conditions did not appear to be a breach of the Fair Trading Act.

Booksellers said REDgroup's problems were not a sign of a larger rot in the industry.

REDgroup's struggle may, however, indicate the difficulty of running book stores in malls, where rental costs are usually greater than on the high street. Closure would also hurt publishers, who rely heavily on the big chains.

Booksellers NZ chief Lincoln Gould said the potential closure of the REDgroup chain was due to its business model, not a widespread slump in book sales. His organisation had gained 13 new members in the past year, and was buoyed by robust Christmas sales.

NZ still had at least one bookstore per 12,000 people, which is a high ratio on an international scale.

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.

The demand for books was reflected in waiting lists at Auckland's libraries. While wait times have been reduced since libraries streamlined their service in November, one librarian said Lloyd Jones' recent novel Hand Me Down World had a queue of 260 people soon after its release.

While booksellers faced similar challenges to the rest of the retail sector, Mr Gould said bookstores were showing a lot of resilience despite digital competition.

"Books are relatively affordable, and they offer remarkably good value when it comes to wisdom. It's not a luxury thing, it's a part of people's growing and education."

Jo McColl, owner of Unity Books in downtown Auckland, said the introduction of e-readers in NZ might have increased interest in book purchases.

"Someone came in the other day to get two copies of a book she'd read as an e-book. She liked it so much she wanted to give copies to friends."

Ms McColl said bookselling, at least at the high end, was thriving. Since the recession she had taken on more staff and ordered more copies of books.

Unity Books had loyal customers, many of whom were purists who distrusted online shopping and preferred a book to a screen.