Whitcoulls

Written By: - Date published: 8:19 am, February 20th, 2011 - 30 comments
Categories: books, business, unemployment - Tags: ,

Whitcoulls (or its earlier incarnation Whitcombe & Tombs) has been here since forever. I don’t know how many hours I spent browsing books in their shops as a youngster, or how many Christmas and birthday presents I brought there – not to mention the school stationary, art supplies, and all the rest. There’s lots of competition these days, maybe there always was, but from way back I remember Whitcoulls / W&T as the only game in town.

So it’s particularly sad for me, and I’m guessing for others of my generation, to watch the current wreck of “one of New Zealand’s most famous and enduring retail chains”. Administrators have been called in to take over management, there is to be an “urgent assessment” of the company’s financial status, closures (and of course staff losses) are likely. Holders of Whitcoulls vouchers are being advised to redeem them quickly – but with extra conditions that are causing a lot of ill feeling.

What went wrong? I don’t know the details, but I note that a staff union claims that this is “yet another example of an iconic New Zealand company being bought out and loaded up with debt”. Obviously there has been increased competition in general, but in particular the emergence of Amazon and the whole new category of e-books is changing the way that we buy, distribute and consume the written word. Finally, our currently stalled, possibly in recession economy, was probably the straw that broke the camel’s back.

Let’s hope that Whitcoulls can still be saved. If not it will be a sorry end. Not good news for National, it will be hard to convince the punters that all is well in election year if an institution like Whitcoulls can go under. Not good news for workers and families in NZ, if hundreds more of them lose their livelhood.

30 comments on “Whitcoulls”

  1. Pilgrim 1

    Whitcoulls fall started when the Brierly group bought them.
    We had to make shelf space available for a range of v.poor quality toys at the expense of books.
    That’s when the accountants started runing the fir rather than book people.

    • andy (the other one) 1.1

      Whitcoulls has a few issues, the first and most major was too much debt and falling revenues in a recession and very competitive market. Red group made the classic error of buying an overvalued asset that they thought was ‘Cheap’ and then levering up the debt and taking the cash for other ventures. Saddling the company with high cost debt repayments in which a small drop in revenue (recession) does not give them enough wiggle room to keep heads above water. So they have to cut, cut, cut which makes the experience worse and revenues fall further.

      Second, the purchase of Borders in a falling market. They started to compete with themselves in certain areas and sometimes on the same street. At the Same time trying to compete with all others in market.

      Thirdly, Whitcoulls was neither a book store or stationary store. They sucked at both. I think the online book stores did take a chunk of revenue, but most people I know like the tactile experience of books and nooks, kindles and ipads suck to read in bed as they really hurt your head when you fall asleep and it hits you on the nose.

      But if your not delivering a coherent message to customers they will go elsewhere. Me for instance i go to Borders because they do books only and warehouse stationery because they do stationery well (post restructure). My example is the Whitcoulls at St Lukes Westfield, narrow opening very busy, cramped magazine rack, higgledy piggledy book shelf layout with lots of books but nothing to read. The stationary section looks a collision of a barbie doll collection and art supplies. Then you have to try and pay in a sheep drafting type operation (down the chute, left or right, pay here), while not getting your ankles smashed by Pushchair SUV’s navigating the narrow isles and bargain bins.

      Its painful to say but going to Whitcoulls in St Lukes makes going supermarket shopping almost a pleasant experience.

      • just saying 1.1.1

        I agree the extreme commercialisation, for want of a better term, of the layout of the shops, was an issue (amongst others). Not being able to get out of the store until you have completed a maze designed to expose you to more merchandise, may work for supermarkets (you’re less likely to be trying to buy one just one or two items anyway). But it doesn’t seem to have occured to these marketing boffins that the extra and unnecesary 5-10 minutes is spent by most feeling pissed off and frustrated. And even if you do happen to pick up something else during the search to find what you went in for, or the tills, or how to get out, you’re still likely to be vowing to avoid the place in the future, for wasting your time and pissing you off.

      • NickS 1.1.2

        Yeah, I pretty much only go to the university book store, Borders and Scorpio books when I’m after a book I can’t find on trademe. Whitcoull’s selection is pretty much pulp and nothing else and their non-fiction section is utter crud, even compared to Paper Plus’s.

      • Angus & Roberston and Borders in Australia are both in precisely the same position (owned by Red Group and in receivership. Even down to the deal on vouchers) so I doubt the NZ economy played much of a role, if any.

        And there’s a lot said here and elsewhere about e-books, the changing market etc. But I think the factors andy has identified above are perhaps more relevant, at least at this stage of the evolution of printed matter. I use iPads (though I refuse to buy one till they have a USB port into which I can plug my wireless modem, and thus use it truly anywhere) and have looked at Kindle and other e-book readers. But I simply don’t like them, despite being a geek for every other gadget.

        I’m staying with a professor friend at present who has an iPad, a Mac with a huge screen, a laptop… and a library. And it’s to his beloved books he turns for relaxation and pleasure. I can see the non-fiction market taking a hammering solely due to technology, but fiction, I’m not so sure.

        I think it’s more due to the factors andy has identified… the dilution of book stores into books / stationery / DVDs / CDs, when there are perfectly good specialists in those other things. The consequent dimunition of shelf space and the marketer’s insistence that it be devoted to “best sellers”. And (warning: I’m about to sound snobbish and elitist) the fact that these changes flooded the stores with people whose interest wasn’t quality fiction but getting a colouring in book to keep junior in the pram busy (the same pram you get absent-mindedly rammed into your ankles).

        I frequent a few second hand bookshops. One (Elizabeth’s) is even a mini-chain, with three stores in Perth and some in NSW (and online ordering, so bookmark it folks!). Others are stand-alones. One is miles from the city, in a small village surrounded by craft shops and coffee lounges, so hardly an ideal retailing site.

        But, if the number of customers inside when I visit is any indicator, they’re doing well. Of course they have lower overheads etc. And lower prices.

        But fundamentally I think they’ll survive because they’re offering what a small but loyal section of the market wants – a good selection of (mainly) quality literature, in a form that’s durable, portable, tactile and, above all, familiar.

        At least until some markets a flexible screen device that fits in your pocket… and even then…

  2. ianmac 2

    Witcombe & Tombs Christchurch had a second hand book table and my Dad would often bring me home a book from that table. Magic. Now a bit sad but……………………

  3. higherstandard 3

    Hmmmmmm buy a book from Whitcoulls at $65 or from the book depository at $30 delivered to my door.

    Dying business model.

  4. Lanthanide 4

    They simply can’t compete with online bookstores, that even delivering from around the world are often 1/2 the price. I guess the high NZ $ has a lot to do with that, though.

    I needed some technical books for work – $200 from Amazon including shipping, or $450 from fishpond.

    captcha: lesson

    • lprent 4.1

      Yeah I had noticed that as well. Never anything in the book stores I wanted. Online was much better. It was a lot cheaper and almost as fast to get books from the US or UK.

      Now I have stopped all of that. If I cannot get a book as a ePub (screw the DRM crap – my tech library has to be accessible from all of my machines and without trying those horrible movement potocols) then I keep looking for the next best until I find it on ePub format. ePub is a standard long life format that runs on all systems and delivers the book within seconds of purchase. Drop into calibre on the server and then pull to whatever device I am using.

  5. Lanthanide 5

    lprent – it looks like the auto numbering is screwed up here. My post above and Pilgrims are both #3, and my one has appeared above his. Maybe his was moved over from open mic or something? I’m expecting this post to be #4.

    Edit: Yep, this one become #4 and Pilgrim’s dropped down and became #4 also.
    Edit2: Yep, rob posted in open mic saying he moved Pilgrim’s post.

    • lprent 5.1

      I will have a peek at it..

      Updated: Ok – fixed at the database by removing its parent comment.

      Ummm….. Rather than fixing the move system to correct this type of issue, maybe I can fix the presentation in the theme.

  6. Ed 6

    Consensus seems to be that the position in New Zealand was not as dire as in Australia. The problem is largely one of debt – arising from repeated sales and management by ‘financial experts’ looking for short term gain. Yes there is a problem with low sales levels, but they are thought to arise mainly from our recession (yes Bill English confirmed on radio recently that we are in the middle of a recession – and for once I believe him) than to sales of ebooks, although that is a factor for all booksellers.

    Hopefully some of the stores will be sold to New Zealand operators, but in Wellington for example I suspect that there is not a large enough market for both Whitcoulls and Borders to survive.

    • Colonial Viper 6.1

      Peeps are spending more time reading online material rather than books.

      • There’s still a lot of debate round that CV.

        [Link is to a NY Times set of articles debating e-books and related topics by an English professor, an author, a professor of child development, a computer scientist and a professor of informatics. Well worth a read].

        While they’re talking more of quality than quantity, my first inclination upon reading your comment was to agree. I love books, yet I spend far more time in front of a computer. But then I wondered how much of that time replaced the time I give (or gave) to books. The answer: none.

        I read online what I would once have read in printed form, certainly. But that material would have been research reports, policy papers, letters, faxes, even (in the mists of time somwhere) telexes. Not books.

        So while I agree with the first half of your sentence, I wonder whether the “rather than books” part is true?

        • Colonial Viper 6.1.1.1

          I agree with your point that there is doubt. People may indeed be stealing time from a lot of different activities to spend it online. I suppose that everything from time in the gym to time watching TV might be curtailed.

  7. Kevin Welsh 7

    We have recently had the Dymocks book store close in Napier and now it looks like Whitcoulls will be gone too. Dymocks was great because it was almost entirely books and not all the other crap you find in book stores today. It had a great New Zealand section.

    I see that once again the parent company was backed by an equity group. These equity groups (in actuality, someone else’s retirement savings), have been front and center at a number of retail and manufacturing debacles in the last few years.

    Another one which is just hanging on by the skin of its teeth is Gresham Private Equity (Australian) who stumped up the cash to buy Pacific Print Group, which was a group of New Zealand printing companies put together in the min 2000’s, and turned into GEON. The plan was to amalgamate, rationalise an flick off in an IPO. Unfortunately the GFC happened and then Gresham had to start running a printing group which it has clearly not ben equipped to do. The red ink has been flowing like a river and I suspect March 31st will be a day of reckoning. There are thousands of jobs at stake in New Zealand and Australia and a mountain of debt.

    GEON group, along with Bluestar and PMP (all backed by private equity), through their own greed have raped and pillaged their way through the New Zealand and Australian printing industry in the last few years and completely destroyed what was a vibrant, innovative and profitable business for hundreds of companies.

    If you went to a bank today and said you were starting a printing company, you would probably still hear them laughing when you got home.

    I know this has diverged from the original Whitcoulls post, but it just shows that they are not an isolated example. It would be interesting to know just how many national chains are backed by private equity.

    captcha: reasons – yes indeed.

    • Colonial Viper 7.1

      I’m aware that you can get stuff printed in China (and Hong Kong) at ridiculously cheap prices. Including freight. Just send them the proof from your graphic artist and your other specifications. And there’s every chance you’ll receive the job faster than from your local printers.

      • Kevin Welsh 7.1.1

        If it was small enough to FedEx, maybe. But then you would only go to China for economies of scale and when you are talking pallet sized print runs, NZ will still be a quicker turnaround time. The Chinese have really got their shit sorted these days with quality though.

        I used a Chinese printer around 5 years ago for a niche project when I was production manager at an advertising agency and it was a bloody nightmare. It had to be printed three times before it was right. These days, the quality is the same as you would get in New Zealand.

  8. Anthony C 8

    I think it has more to do that the recession than online sellers.

    People have less money and books are one of the first things to go.

  9. Sookie 9

    Whitcoulls range is crap, and their books cost double the price of Mighty Ape and Fishpond, the local net-based outlets, which are getting better and better these days. And I don’t believe the overheads justify charging 40 bucks for a new book, instead of 20 something. Unless they can offer a broad range, slightly cheaper prices and a pleasant browsing experience, like say University Bookshop in Dunedin, booksellers are doomed. Which is sad, because we don’t need more empty space on the High St.

    • QoT 9.1

      Don’t forget Goodbooks! Consistently cheaper, no delivery fee, and you get a warm middle-class-charity buzz along with your purchase.

  10. infused 10

    Because there stuff is so expensive. Why shop there when Warehouse stationary is like 1/2 the price? Books from Amazon.com. NZ hardly has any of the books I want and/or take ages to actually get them…

    They just didn’t change with the times. Simple as that.

  11. kultur 11

    So – was it the natural outcome of the market and its intelligent benevolent energies and drivers that caused this – or was it that the new type of acquisition and Management model (under the new neo liberal thinking) is just too darned limited to really adapt to the requirements of living, breathing human beings? After all Theresa Gattung singlehandedly with a little help from Rod Deane, set Telecom up to fail (now – is that this highly intelligent set of incredible market forces at play again – or just bad management – again – who dont understand what really drives human beings etc?). Maybe – just maybe – the left wing / socialist / holistic approach might have some business and bottom line benefits? Or are we doomed to get blakes horror vision of “dark satanic mills” – guess not much chance of that in NZ – we got rid of our potential to manufacture real physical valuable things – its all ex-china now boys and girls. The “dark satanic mills” here in this country – will be metaphorical – but still destructive to people, families and our kiwi culture and future.

    Whitcoulls went from being a no-barriers interesting destination – to being a cattle pen with poor merchandising and promotion and staff training and development – and very poor identification of what it actually did (in the end). And it wont be the last – the new type of John Key style ride into dodge – do the deal pardners – get it “cheap” create “efficiencies” – take out what isnt nailed down – is sort of perhaps/maybe going to be seen in such other biggies like the Warehouse for instance. Remember Qantas NZ – some of NZs greatest neo-liberal freemarketeers and captains of industry were involved in running that …. result … titsup bigtime.

    Its all just my opinion – i hope im not right – but we are on a repeating revolving wheel and we need to learn how to get off it – at least thats what i think anyway. What seems to happen is that this nonsense starts to accelerate in tough times – and the Key Mafia will only say _ “but its the global recession” – pull the other tit johnny boy – where are your old employers now … thought of putting your CV out again prior to November big guy.

  12. Tanz 12

    I worked for Whitcoulls back in the days when Graeme Hart owned the chain, and in the original Queen Street, Auckland, store. They were great to work for then, talk about the good old days. Lots of events were put on for the staff and the management really cared about us. Fun times, good times and a very cool shop. The books were expensive then too, but people seemed to have more money for jam, and the atmosphere in general was lighter. Funny that. Good memories to have, anyway.

  13. Jum 13

    Call me bitter if you like, but having seen the huge number of people supporting John Key who intends to sell the rest of our assets (has already legislated to do so, so there’s no delay come 2012) then those people losing their jobs may rue the day they still support Key.

    Given Brierley who was involved with Whitcouls, and is known as a corporate raider, meaning someone who stacks debt on to businesses and actively seeks to downgrade or liquidate them, is a ‘Sir’ and the people of NZ love a knighthood, no matter what damage they may have done to achieve said knighthood, I really don’t care.

    • Tanz 13.1

      It’s nice to have the Knighthoods back, but I agree, quite often they are given out far too easily and for all the wrong reasons. Perhaps the title of ‘prime minister’is somewhat overrated, with a free ride of easy credit attached to the role. Cynical perhaps, but it gives otherwise ordinary people such prestige, but is it always warranted?

      • Pilgrim 13.1.1

        To be fair knighthoods have been awarded for the “wrong” reasons ever since they stopped giving them for belting Frenchmen(or in the case of my family,Englishmen) over the head with large lengths of sharp iron.
        I do however feel nauseous every time I hear “Sir Ron” or “Sir Roger”.
        A more appropriate reward for these men would have been penal servitude.

  14. iniquity 14

    This is a failed private equity buyout.

    A few years back before the crash, everyone was looking for better returns on loans, which led people that make loans to make riskier and riskier loans. We all know this..or should.

    The part private equity pays is that there were studies/papers/whatever produced in the last couple of decades that pointed out that how your company was financed made no difference to how profitable it was.

    That is, if your company had an enormous mortgage lumped on it, or it was funded by a generous benefactor, or it simply lived off its yearly earnings, it made no difference to the likelihood said company would thrive.

    Private equity was the result of both factors, and also the (ech!) tipping point.

    Basically Private equity firms would buy companies -BankUnited, Whitcoulls, Yellow, US Department stores and various other “low hanging fruit”. These were companies that generally paid for themselves with their own earnings- “traditional” type businesses that had good cashflow.

    The idea was that the private equity frim could buy them, like a “fixer upper” house, with an enormously expensive loan.

    Loans were getting cheaper year by year, so they could refinance those loans to lower and lower interest rates, while making efficiencies in the businesses they bought.

    Debt, until the crash, was cheap, and getting cheape, while outlets for near interest-free loans were getting fewer and fewer.

    After about 5 years, they would be able to float or sell the business to pay off the loan and pocket the cash that was left over.

    For a simile try:

    It was like going around retirees with a comfortable income, and low expenses, and buying their houses at credit-card rates. The hope being that Myrtle and Bert’s house, could be made a bit more attractive to a buyer in five year’s time. You’d smarten things up the way the fuddy-duddys couldn’t and the mortgage you took out would be gone by lunchtime.

    So what went wrong?

    First, as a lot of these businesses were “traditional” they were diversifying, or gradually losing income in markets they dominated. The exisiting owners knew this, and were content to keep fighting for their piece of the pie as long as they could, but cashflow was likely to go down rather than up.

    Second, most “traditional” businesses had already made the majority of their efficiencies. They had already been corporate raided, and managed to have close to the best efficiency they could manage.

    Thirdly, as businesses (for, example Whitcoulls) were in rapidly changing markets, they often needed a lot of investment to keep their business moving with the Web, ebooks, globalisation, multiethnic customers etc. The private equity firms could not and could not afford to move these businesses to where they would need to be. Especially if it meant giving up the five-year plan.

    Finally, and most importantly, the debt got really, really expensive. No one wanted to refinance their loans. Interest rates went up as finance got trikier and trickier. The people buying “traditional” products got poorer and poorer. “Traditional” businesses had staff that were hard to replace cheaply.

    The refinancing on more favourable terms didn’t happen. Nor did the selloff or float.

    Eventually, the private equity, the banks that loaned the money to them,and the businesses they “owned” had to take a massive haircut.

    And that, folks, is what happened to Whitcoulls. For shame.

Links to post

Recent Comments

Recent Posts