Discount book chain turning over $21 million goes under after director's death
Two years after the local book industry was rocked by the collapse of Borders and Angus & Robertson, another chain has collapsed into administration.
The fall comes despite the industry having shifted into a holding pattern during the past few years, with smaller independent stores living off the residual demand from the collapsed businesses.
Back in 2011, former federal small business minister Nick Sherry fuelled speculation, and earned some scorn, by saying bookstores could disappear within five years.
Allbooks4less.com.au, a chain of discount bookstores, has now been placed in administration with HLB Mann Judd partner Todd Gammel appointed.
While the business was turning over about $21 million a year with a substantial retail network of 30 stores in four states, Gammel says a variety of factors influenced the decision to enter administration – including the death of company director Paul Alford just two weeks ago.
"It's not a usual sort of appointment," he told SmartCompany this morning. "It's an unfortunate situation."
Gammel says several stores are unprofitable, with the review to determine which, if any, can be sold.
A major contributing factor was the chain's expansion. Gammel notes it began as a type of pop-up operation which then expanded into new territory. In some cities, the chain entered retail spaces once populated by Angus & Robertson stores.
"This is a traditional pop-up and moving away from that model is where they've gone into trouble."
"They're obviously being affected by normal retail issues."
Martin Shaw, the books division manager at Readings, told SmartCompany the industry has largely shifted into a period of quiet survival. With the two giants gone, there are smaller companies which have benefited.
And due to the dominance of online sellers, the most successful stores are managing to survive – they just aren't recording massive growth rates.
"We've been tracking very consistently over the last five years. We're not breaking records, but we're growing at a steady pace," he says. "I think that reflects the strength of our brand."
The problem, Shaw explains, is that books have become "increasingly worthless".
"As more publishers have let go of stock, there is a huge oversupply and that value proposition has disappeared.
"You have to know what you're doing and curate the stock."
David Gordon, partner at Advantage Advisors, says the industry is mostly profitable during the holiday months. As a result, large chains hoping to expand are under pressure.
"I did a lot of work with Angus & Robertson in its healthy days. Pretty much most of its profit happened in December through April."
"With Allbooks4less, you could probably assume some landlord deals have ended.
HLB Mann Judd is accepting expressions of interest through Monday, July 15.