If You Think Chapters-Indigo Is Bad …

Posted 14 August, 2007 in Book News, Unbelievable |

… take solace: you could live in Australia.

According to an article on the Sydney Morning Herald’s blog, Aussie chain bookstore Angus & Robertson is demanding that certain small to medium-sized distributors actually pay for the privilege of having their books stocked in A&R’s stores.

According to a letter from Charlie Rimmer, ARW Group Commercial Manager, to Michael Rakusin, the director of Tower Books Pty. Ltd., dated July 30, 2007, “over 40%” of A&R’s contracts with their suppliers “fall below requirements in terms of profit earned,” and therefore the bookstore “will be rationalizing [its] supplier numbers [i.e. dumping books and ordering less stock] and setting a minimum earnings ratio of income to trade purchases that we expect to achieve from our suppliers.”

The letter had an invoice attached, which “represents the gap for your business” between the purchases made by A&R and their expected profit margin. In other words, the distributor is now expected to cover the gap between what A&R ordered as stock and their anticipated profits.

And it gets better. Rimmer’s letter goes on to state that as of September 1, 2007, the start of A&R’s fiscal year,

• “All [supplier] agreements contain a standard rebate, a growth rebate and a minimum co-op commitment”
• “Growth rebates activate as soon as our purchases with you increase by $1 on the previous year”
• All rebates are to be paid quarterly, and must be received by the 7th of the month following the end of the fiscal quarter or they “will attract a daily 5% interest charge”

In other words, Tower (and all A&R’s other suppliers) will be expected to pay for any growth in business that occurs during the period covered by the agreement — they are actually penalized for doing more business with the bookstore — and will be expected to pay for co-op advertising, which to this point has always been discretionary on the part of publishers and suppliers.

It’s hard to see how A&R is not committing corporate hara kiri with these unreasonable demands. They are a bookstore chain and, presumably, need to stock their shelves with something to sell. Tower Books may be a smaller supplier in the chain’s eyes, but its website indicates that it handles Australian distribution for, among others, DC Comics, the Hachette Book Group (which includes Disney Editions and Mirimax Books), Overlook Press, and TASCHEN. Not exactly marginal publishers.

On its own website, A&R claims that their “vision is to be ‘Australia’s first choice for books,’ ” which phrase is actually in quotation marks, presumably because it is meant ironically. The site continues: “Bookselling involves an interesting and diverse product range,” though apparently diversity will take a back seat to profits at a moment’s notice.

This entire situation is highly troublesome. If the major retailer in a given market feels it can start dictating draconian measures to its suppliers — including the almost inconceivable notion that suppliers should pay the bookstores to have their books on the shelves — it’s not too difficult to see how smaller and less financially secure publishers could start disappearing from the market altogether.

The Sydney Morning Herald site contains a lengthy response to Rimmer’s letter from Michael Rakusin, the gist of which is basically to suggest that A&R’s requirements are unacceptable. Hopefully other publishers in Australia will respond similarly. And I hope against hope that Heather Reisman doesn’t get wind of any of this.

2 comments to “If You Think Chapters-Indigo Is Bad …”

Panic, August 14th, 2007 at 12:11 pm:

• Erm, how much do you know about Indigo’s business practices, in regards to suppliers?
  I know… a lot. I am unwilling to talk publicly about it (since I kinda work in the industry), but I’ll just say that these measures aren’t all that surprising, given some of the things Indigo fines/charges for.

Steven W. Beattie, August 14th, 2007 at 12:15 pm:

• I know, and I admit to a certain amount of willful naïveté and disingenuousness here, but I was trying to make a point … Think of me as the Michael Moore of the Canadian book world.

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