Editorial: It's the story, not the book that's gone awry

Whitcoulls retail shop on the corners of Queen and Victoria Street. Photo / Greg Bowker

Booksellers around the world are feeling the pinch. A recession, competition from on-line suppliers and innovations such as the e-book have heaped pressure on a product that is a discretionary item for many shoppers.

In the United States, this has manifested itself in Borders' parlous state. Locally, Whitcoulls, one of our most famous chains, is in voluntary administration. The plight of the pair paints a dire picture. Yet it is too early to start writing obituaries for the bookshop.

A closer look at Borders and Whitcoulls suggests extraneous factors, rather than intrinsic problems related to the sale of books, are responsible for most of their difficulties. Borders over-invested in the sale of music, a strategy that foundered when sales plummeted, and also paid too little heed to e-books. Whitcoulls has been very much a victim of inept management and the debt of its parent company, REDgroup, which is owned by private equity giant Pacific Equity Partners.

It bought the Australian and New Zealand businesses of British bookseller WH Smith, including Angus & Robertson and Whitcoulls, seven years ago. Later, it added 32 Borders stores in New Zealand, Australia and Singapore, burdening itself with that brand's problematic strategy.

Its operational difficulties relate also to the performance of Angus & Robertson across the Tasman, which has been inferior to that of Whitcoulls.

It is this, added to the debt situation and management misjudgments, that appear to have dragged down Whitcoulls.

REDgroup's administrators have virtually confirmed that Whitcoulls is not a train wreck. "We are confident the New Zealand business will sell as a going concern, much more so than the Australian assets, because it performs much better," John Melhuish said this week.

Whitcoulls' structure does not find universal favour, not least with local writers, many of whom say the business pays them scant attention. Yet its concentration on popular books and stationery, while not suitable for people wanting something less mainstream, seems rational enough for a high street chain. It makes some sense to leave minority tastes to independent booksellers, many of which continue to flourish. Cost-cutting, however, has undoubtedly been excessive.

Whitcoulls' structure is similar to that of America's biggest bookseller, Barnes & Noble. It has large outlets, places much emphasis on competitive discounting of best-sellers, and has recognised the importance of on-line buying and the e-book. Barnes & Noble may have had better times, but the comparison between it and Borders tells its own story.

Those eager to read the last rites for booksellers are also apt to overlook another development. Two years ago, PaperPlus, a name previously associated with cards and novelty items, started placing much more emphasis on books as it embarked on a $22 million expansion of its store numbers. That competition may have added to Whitcoulls' problems. Yet it was also a vote of confidence in growth opportunities for books.

The ideal scenario would be for Whitcoulls to be acquired by an owner with a greater understanding and appreciation of the book trade. The brand has been tarnished, but has accumulated enough goodwill over its long history to recover quickly.

Its presence and the future of page-turners are being written off too quickly.