Kobo calls for calm over bookstore bankruptcy

By Neerav Bhatt on Feb 18, 2011 9:38 AM
Filed under Finance

Borders Australia, Angus & Robertson and Whitcoulls in voluntary administration.

Users of the Kobo eBook reader should not be worried by the voluntary administration of Borders Australia, Angus & Robertson and Whitcoulls NZ bookstores, parent company RedGroup Retail has claimed.

Private equity-backed RedGroup appointed administrators Ferrier Hodgson yesterday for more than 250 bookstores, which collectively employed some 2,500 staff.

A spokesman for RedGroup’s ebook store and hardware partner Kobo told iTnews that the more than 50,000 Australians who bought a Kobo eBook reader have no cause to worry because Borders Australia and Angus and Robertson are only retail distributors.

Any ebooks bought were unaffected, he said.

Canada-based Kobo said it controls the ebook ecosystem - including firmware updates, helpdesk and deals with Australian and international publishers - regardless of the state of local retail partners.

The move by RedGroup’s board to put their bookstore chains into voluntary administration came 24 hours after US based bookselling chain Borders filed for Chapter 11 bankruptcy protection in order to restructure.

The two chains of bookstores share the common problems of being saddled with large debts at a time when retail spending in both countries is weak and online competitors such as Amazon.com and Book Depository are rapidly increasing their market share.

Although Borders Australia shares its name with the US bookchain, the company stressed that "Borders stores in Australia, New Zealand and Singapore are 100 per cent owned by RedGroup, a local Australian private company" and "our stores have no relationship or link with Borders stores in the US".

RedGroup chairman Steven Cain reportedly blamed import restrictions and GST-free online shopping for making it impossible for local retailers to compete with foreign internet sites such as Amazon.com.

Last month, Borders and Angus & Robertson joined other large Australian retailers like Myer in calling on the Federal Government to amend its taxation laws.

The group of 2,211 retail stores complained that foreign etailers enjoyed GST-free sales on goods and services sold for less than $1000, whilst local bricks and mortar outlets were taxed for a purchase of the same value.

Ferrier Hodgson partner Steve Sherman said in a statement to the media that “as far as possible it would be business as usual while the administrators conduct an urgent assessment of the business’s financial status and prepare for the first meeting of creditors.”

It is likely that Borders Australia, Angus and Robertson and Whitcoulls will follow in the footsteps of the US Borders that is expected to attempt to pay down debts by shutting unprofitable shops and slashing its workforce.

Liz Tay contributed to this report.

Kobo calls for calm over bookstore bankruptcy

7 comments in this discussion

"How to protect the bookstore bankruptcy? http://pureacaiflush.net/"

By Sandozsmith

Tags

borders, retail, gst, bookstore, ebook, kobo

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Comments: 7

Tom Feb 18, 2011 6:55 PM	Halo Encyclopedia: Borders online AUD: $64.95 Book Depository AUD (delivered): $40.82 Borders price minus GST (10%) = $59. $59 - $40.82 = $18.22. This is 44% more expensive than Book Depository. Its not the GST.
Ace Feb 18, 2011 10:32 PM	Yes, I guess it's just another service the kids of today will remember fondly when they're older - book stores.
johnpro2 Feb 22, 2011 12:30 PM	I walk passed by A&R local store her in outer northern Brisbane and rarely see enough customers to pay for rent and salaries... Like sailing ships and horse farriers, they are victims of new technology.
DougM Feb 22, 2011 2:12 PM	Not victims of new technology, victims of a rapacious business model that jacked prices up with a 10% hike over other Bricks & Mortar stores like Dymocks, employed staff who would be more comfortable selling ski gear at Uluru, and had nothing that people wanted to read. This is a result of some very poor decisions by RED Group, plus the parallel importation legislation. The GST has virtually nothing to do with it, so don't be conned by the likes of Gerry Norman. Most people I know would pay the 10% premium up to a $1000 for the convenience of getting ot today, and being able to physically see and touch the merchandise. If I could buy my books from borders or A & R for online price + 10% GST, I would. But I can't. They are often online price + postage + 50 - 75%, and many of the books I want aren't even stocked, and I can get them quicker posted form an online store than it takes a B&M store to 'order them in'.
midspace Feb 22, 2011 4:35 PM	"RedGroup chairman Steven Cain reportedly blamed import restrictions and GST-free online shopping..." Look, why don't we stop circling around the issue, and point it out. It's not the GST. The local overpricing is worse than the 10% that the GST would imply. It's not the Aussie dollar reaching parity. This issue is much older than that. It was around when we were still at 60US cents. The problem is the protectionism of local publishers and restrictions on the parallel importation of books. http://www.apo.org.au/research/restrictions-parallel-importation-books http://bobcarrblog.wordpress.com/2010/12/20/protectionism-means-you-pay-more-for-books/ "...at a time when retail spending in both countries is weak and online competitors such as Amazon.com and Book Depository are rapidly increasing their market share" The only reason why Amazon.com and Book Depository are increasing their market share, is because more people aren't buying local anymore, because they now know it's cheaper to buy overseas, and it's often easier.
ChristineSutherland Mar 2, 2011 4:58 PM	So as predicted the book stores continue to roll over, but it's not just gst and it's not just technology. It's a combination of those issues plus social changes where people perceive their rights, and perceive the value of information or entertainment, differently. So it's not just that people are downloading electronic books. It's not just that people are using the social proof of amateur literary reviews online prior to selection. It's not just that people are using bookstores to check out books, but leaving without buying in order to go online and make their purchase more cheaply. Economics, technology, and social change have combined to ring in the death knell of bookstores. The question is, what are the hundreds of thousands of people around the world whose work depends on hard copy books (stores, libraries, publishers, printers, distributors, etc etc) going to do about this. Are they going to hang in there until their own personal disaster strikes, or are they actively looking for career or business alternatives that are not vulnerable to technological change or economic ups and downs. See my video "After the Book Store" at http://www.youtube.com/watch?v=CbnCj-5PChQ
Sandozsmith Mar 3, 2011 9:39 PM	How to protect the bookstore bankruptcy? http://pureacaiflush.net/