No Borders but we’re still Restricted

The announcement yesterday that RedGroup, owners of Borders Australia and Angus & Robertson, had gone into voluntary administration is deeply disturbing news for the Australian Book Industry. Up to 2500 jobs are now under threat as are many small franchise businesses. This is going to have wide-reaching effects on all aspects of the book industry.

This is also a prime example of the two-speed economy in Australia at the moment. Retailers have all been warning for six months that the economic outlook is not good but time and again economic data is showing something else.

One of the contributing factors to RedGroup’s problems has been the “strength” of the Australian Dollar and the inability of retailers, due to Parallel Import Restrictions (PIRs), to do anything about the local price of books. Discounting to price match the overseas price is not sustainable and RedGroup have proven this.

Our dollar has been at parity with the US dollar for almost 6 months and there has been no major shift in prices by major publishers in Australia. In the past when our dollar has made dramatic drops prices go up almost immediately but that hasn’t happened the other way around.

The problem is that there is no competition to force the price down. Australian bookshops are handcuffed by PIRs so unless a new release title is published outside 30 days or a backlist title is out of stock for 90 we cannot source books for our shelves at cheaper prices. Each publisher is in effect a monopoly. The Australian consumer used to be in the same boat as the bookseller but the internet coupled with cheaper and faster shipping has meant the consumer is now in an open market and has choice on a global scale. The bookseller has none of these things. The bookseller has no choice in where they can be supplied from and are reliant on the publisher’s own distribution channels which at times can be slower than overseas suppliers.

Is the answer opening the market? I’m not sure but the current PIRs are out-of-date, out-of-touch and are causing great damage to the Australian Book Industry rather than protecting it.

 

12 thoughts on “No Borders but we’re still Restricted

  1. New Zealand abolished PIRs back in 1998. That didn’t stop Whitcoulls going to the wall.

    PIRs are not to blame here. It’s bad management combined with a failure to keep up with shifting trends, compounded by a strong Aussie dollar. Making our bookstores dumping grounds for remaindered overseas stock will do nothing to help the cause, and it’s highly unlikely any savings would be passed on to customers anyway.

    1. I think the Australian side of RedGroup’s operations dragged Whitcoulls down with it.

      With books I am allowed to import at the moment I do pass on any exchange rate savings to my customers and will do so in the future.

      1. “I think the Australian side of RedGroup’s operations dragged Whitcoulls down with it.”

        What do you base that on? From all the reports I’ve read, the business was in trouble on both sides of the Tasman.

  2. I’m sorry but this is garbage. Cut GST from books by all means but removing PIR will help bricks and mortar booksellers not at all while damaging Aust publishers and writers. If PIR is the problem can the writer of this opinion explain why the two largest English language markets on earth, the UK and the US, retain PIR? That needs to be addressed before you can make the argument Aust should remove it. But you don’t have an answer for this do you? Because there isn’t one.

    Perhaps you’d like to respond to this point made by James Bradley in his blog? “Certainly in 2009, when the Productivity Commission released their Report into Parallel Importation, Dymocks were pretty consistently the most expensive bookstore surveyed.

    This is particularly interesting given the fact that Dymocks’ market share – like that of REDgroup – places it in a position to negotiate large discounts from publishers. In other words if Grover and Carr were genuine in their desire to liberate consumers they could already be offering discounts comparable to those you see in K-Mart and Big W.

    To my mind the fact they don’t demonstrates what the push by Dymocks has been about all along, which is a margin grab. Rather than bear the cost of discounting and competition themselves, Dymocks is seeking to pass that expense on to publishers and creators. Basically they’re saying we should be placed at a competitive disadvantage to our counterparts overseas in order to prop up their bottom line.”

    The real problem is that Book Depository is engaging in anti-competitive practices by selling below cost in an attempt to drive competitors out of business -how this is legal is beyond me. Do you really think bricks and mortar booksellers can stand up to anti-competitive practices like this? And once BD drives its competitors from the market, do you really think they’ll keep their prices low?

    1. The difference between the US & UK markets and the Australian market is a couple of hundred million people. The US and UK print the majority of their own books, we import the majority of our books because we are too small to get the print numbers up for the majoirty of titles sold here. 60% of books sold in Australia originate overseas.

      Discounting is not a sustainable business practice and for booksellers to pass on reasonable prices we need reasonable wholesale prices and at the moment with the high dollar we are not getting this.

      PIRs are not the only problem we face in this industry at the moment. They are one of many factors.

    2. The other difference between the US & UK markets compared to Australia is that they each have two wholesalers (Gardners & Bertrams in the UK and Ingram and Baker & Taylor in the US)
      In Australia booksellers only have one source of books, directly with the publisher. UK and US have three sources which means they have competition.

  3. ps you say PIR is damaging the Aust Book Industry. You are not the book industry. You are a bookseller. The industry is actually the people who create new product, that is, the writers and to a lesser extent the publishers. If you disappeared tomorrow, if all bookshops disappeared tomorrow, books would still appear and be read. You are a content delivery medium, not the content. You depend for your livelihood on the creative work of others – you are not yourself productive. Therefore industry arrangements that benefit primary producers, that is writers, are far more critical than arrangements that benefit middlemen, ie you. Writers do not owe bookshop owners a living.

    1. Booksellers a vital component of the book industry. We are not a “content delivery medium”. We provide service and knowledge to readers. Booksellers help grow authors’ profiles and sales. Yes books would still appear and be read without us but what kind of books and how many?

    2. So should every author set themselves up with a card table on a street corner to flog their book? It is ludicrous to suggest that good booksellers don’t play a role in bringing authors together with readers which results in sales. With a few exceptions writers are, in my experience, not the best salespeople around and the few exceptions tend to be the ones who produce really crappy books.

    3. Aqua, you sound as if you have an axe to grind, calling out bookshops as not a part of the book industry? Are you an author whose book was spurned by booksellers? Or are you a frustrated publisher perhaps? You made me chuckle anyhow.

      Booksellers inform people what to read. They have been doing so for years. Without bookseller recommendations I would never have read some of the books that changed my life. I have also found they are committed to promoting literacy in their communities, love of reading with their customers and championing authors they respect.

      Take note.

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