TMD’s announcement this week of its imminent withdrawal from wholesaling for UK publishers came as no surprise. The surprise to me is that it’s been able to carry on as long as it has.
Even at the height of STL Distribution’s involvement with wholesaling, it was incredibly cash, stock and shelf-space intensive. The breakthrough for STL in those early days came when it moved into trade distribution (starting with Kingsway) and began to develop its own extensive retail infrastructure. Without those two elements, in my view STL may not have survived beyond the 1990′s.
In the late 19980′s, STL tried to emulate the likes of Gardners and Hammicks. Now the competition is even fiercer with Amazon taking on a quasi-wholesale supply role within the book trade. It seems crazy that it makes sense for shops to buy from Amazon and receive better terms than from publishers!
The retail sector has to take its own share of responsibility for the difficulties experienced by suppliers in recent years. Too often shops use their distributors as bankers – by not sticking to agreed payment terms and by often paying late. This has had a rolling, detrimental and destabilising effect across the whole trade putting a lot of pressure on companies’ cash flow.
For TMD to concentrate on its American lists makes a lot of financial sense. These are usually high margin transactions, with stock often placed on consignment and a much healthier impact on cash management. USA Publishers can afford to throw greater margin and to slightly increase their already high print runs for sale to the UK market. One negative effect may be to further accentuate the already disproportionate USA / UK title balance on display within UK bookshops.
The ‘Elephant in the Room’ behind the TMD decision is the hugely shrinking pool of retail outlets for suppliers to sell into. The UK market has lost a very large number of shops in a relatively short period of time. There is simply much less shelf space to go around. There is just not as much business to be had. Everyone involved is ‘competing’ for less space on shelves and seemingly for fewer customers. TMD do not own their own outlets as STL did and so the vertical integration model does not work for them.
I’ve said elsewhere that I wish CLC Wholesale well. However, I remain unconvinced that they can pick up the slack due to two reasons; (1) their remuneration policy which mitigates against being able to attract enough competent and professional staff (no slight whatsoever intended to existing CLC’ers, all of whom do an amazing job in often difficult circumstances) and (2) the need to significantly widen their stock holding policy at the wholesale warehouse level. If these points are courageously and urgently addressed, then the chance still exists for CLC to fill the current vacuum and grow their own market share considerably.
This is now such a seriously changed landscape; one in which specialist Christian trade wholesaling may possibly have had its day. Like so often in life, we’ve gone full circle from a viable wholesale model – brilliantly pioneered for this market by the likes of Raymond Stanbury, Daan van Belzen and Keith Danby– to again buying direct from Publishers with all of the built-in inefficiencies and additional costs. C’est la vie!
I completely understand the current strength of feeling across the Christian retail trade regarding the perceived inequity of Kingsway offering allegedly differing terms to its varying distribution channels.
I admit to feeling uneasy earlier this week with their seeming triumphalism, displayed in the social media, as the new Worship Central album began to sell strongly through the newer channels, then the announcement of its availability through branches of HMV and the unspoken sense that a better job was now being done than by just having to rely on their traditional Christian retail outlets.
The concerns centre around HMV, Amazon and iTunes apparently receiving better margins in order to reach a ‘broader’ market. I have to say that whilst Kingsway are high profile in this and have an aptitude for drawing ‘flack’ fairly regularly, they are not alone in so doing. Doing business with the big secular players is costly, frustrating and was often seen by suppliers simply as an add-on to the traditional market – nice to have if you can get it but not the end of the world if you can’t.
However, that view is rapidly changing as the realities of market share begin to bite. For Christian suppliers, the old retail chain model is ‘holed below the water line’, Indy’s are flat-lining and any growth is elsewhere, not in retail. The truth is, that for most suppliers, our niche retail trade no longer provides the geographic coverage required to get a new product to market. Shops are dwindling and with them, a suppliers ability to reach its market and, more importantly, to sell enough of its initial print-run (in the case of publishers). No wonder suppliers are casting around looking for new, more viable alternatives. I say this, not to excuse such behaviour but to try to help to explain it. Sadly, these are now the rules of the marketplace. It may seem unfair to a small well-run Christian outlet but this is how it is in the real world. It’s not just our trade that affected – it’s happening right across UK retail.
One of our issues is that the retail book world still lives with the ghost of the Net Book Agreement. Yes, it’s long gone but some of us still operate (and think) as though it remains in force. I believe strongly that pricing should be left to retailers and that prices will always remain fluid. In order to compete on the basis of price, then retailers do need to have adequate margin in their armoury. Some suppliers are better than others in this respect. I’m led to believe that IVP and Lion Publishing remain the retailers’ favourites and sadly, it seems, Kingsway continues to draw their indignation!
My experience of dealing with Amazon as a supplier is that they have their own very strict pricing policies which it’s impossible for suppliers to influence – plus they take a far lower margin on a sale in order to attract the customer. It’s very much ‘take it or leave it’ but it would be a brave supplier who opted not to deal with them due to the volumes they are capable of generating. None of us may like this but that’s the truth of it. The same goes for music digital downloads over physical product sales – and who knows where eBooks are heading?
If suppliers are guilty of anything, it’s that they can sometimes seem to take their small retail customers for granted and to put all of their energies into building relationships with new outlets – often secular, mostly larger. They assume the Christian shops will always be there or worse, they assume that most of these shops are on the way out anyway! Recent history has not helped this particular impression! Either attitude is damaging in these difficult economic times.
This issue is a major point of deep contention for both suppliers and retailers. Our brave new digital world is not helping. Everyone in the supply chain is feeling squeezed; small retailers feel unappreciated and powerless in the face of such huge change, suppliers are fighting for volume as they see their product runs ever diminishing and all of us are seeing the rampant switch to digital from print. Is it any wonder we can seem worried and anxious; emotions which are then expressed in a form of protectionism.
Of course, you could argue that we should neither be worried or anxious; indeed we are so commanded in the New Testament. However, reality is often a little different and invades our thinking in more negative ways particularly when it comes down to matters of money and business. Would that it did not – but it does and we need to recognise this fact more than perhaps we do. When suppliers have large payrolls and report to even larger owners, it takes a special kind of courage to manage these often huge and contradictory tensions in trying to make ends meet in the present climate.
I do understand what’s going on because I’ve been on both sides of the argument. Still am. Neither side is fully right, neither side seems comfortable with the other and both feel misunderstood by the other. Not a great place to start when certain emotive ‘triggers’ occur and begin to inflame the understandable indignation. Somehow we have to deal with this or we will be torn apart by it. Our trade, made up as it is of several parties with a common goal of mission – but with very different economic drivers – could so easily degenerate into hostile and divided camps. Some would say these camps are already antagonistic to each other – I pray not.
If we truly believe we are about the Father’s business we should all do better – for the sake of the Kingdom.
Mark 8: ‘What shall it profit a man if he gains the whole world but loses his own soul’?