Liz Thomson and Nicholas Clee
Founders, Bookbrunch.co.uk
Many trends become apparent in the US book market before finding their way to the UK, and, unfortunately, recession is one of them. At the Frankfurt Book Fair this October, publishers in the UK aisles were reasonably sanguine (about prospects for the coming season, at least), while their American counterparts were gloomy. It did not take long for the mood on this side of the Atlantic to darken. Sales, which had been holding up well, stuttered in November and early December. It appears that not even a late onslaught by customers will restore the Nielsen BookScan figures to the level they reached in recent years.
The industry shivers as it hears the news of US redundancies, pay freezes, and acquisition cutbacks. Every significant London publisher expects to have to make similar announcements in the new year. Redundancies have been announced at illustrated publishers Octopus and Anova, and the rigorous spending edict at Pearson caused the cancellation of at least one business contract.
All this is compounded by the sinking into administration of Woolworths and of its subsidiary EUK, which supplies books and other products to supermarkets. Along with the internet, supermarkets have been the only sales channel to offer growth in recent years. But supplying them is a specialist operation, involving very tight margins—margins that can get only tighter in a recession. If EUK does not survive this crisis, it may not be replaced by anyone else. With Tesco in particular accounting for 50% or more of the sales of some mass market titles, this would be a significant blow. As we write, the future of the wholesaler Bertrams, another Woolworths subsidiary—and one of the big two UK wholesalers, along with Gardners—is also unclear. Bertrams is not in administration, but it is for sale. The price appears likely to be in the region of £25 million, less than Woolworths paid for it in January 2007 and considerably less than the price at which it was sold by the Bertram family back in 1999. Monies from the sale of the essentially sound company would be used to pay off EUK, which owns Bertrams’ share capital.
The crisis resulting from the Woolworths debacle—and there seems little likelihood of the 99-year-old chain surviving to celebrate its centenary—is by far the worst the UK trade has had to grapple with in many years, and its timing in the busy Christmas season has added to industry woes and worries. Whatever happens, publishers will lose money—and that’s before the post-holiday returns start being counted. That there will be job losses is now sadly inevitable, but the extent of the cuts will depend to a large extent on what happens in the final shopping days before Christmas and over the New Year.
The book industry in the UK is undoubtedly leaner than it was during the last major economic downturn in the early nineties, but both publishing and bookselling still carry excess weight. The savings made by cutting lunches and launch parties are limited, and while only staff deemed absolutely essential will be recruited and work outsourced to save money (a trend educational and academic publishers think has already gone too far), there will nevertheless be a nasty red stain on P&Ls. Lists will be trimmed, and one hopes the six- and seven-figure advances paid to wannabes and has-beens for dubious memoirs cluttering up front tables in retailers across the UK will go out of fashion.
Surely a crisis the like of which no one in the industry can remember will force both publishers and retailers to work creatively and imaginatively toward the solution of age-old problems. There have been attempts, successfully rebuffed so far, to sell backlist titles firm sale. Now there’s talk in some quarters of ending the wasteful returns system altogether—a system that is anyway out of kilter with British publishing’s green agenda—by increasing discounts to around 70%. We’ll see whether the seemingly unthinkable is quite so unthinkable in 2009.
Thomson and Clee are the former editors of Publishing News and The Bookseller, respectively.
