The Bookseller.com

3rd December 2008

Alan Giles spent 20 years in bookselling with Waterstone’s and W H Smith. He retired as c.e.o. of HMV Group last year to take up non-executive and teaching roles.

Finding firm ground

26.08.07

Firm sale: the very words make me reach for the revolver. Fifteen years ago, I inherited a Waterstone's "experiment" to buy firm sale from six publishers. We had seized apparently attractive extra discounts, only to find that the eventual level of unsold stock was higher than anticipated. For the large publishers with diversified lists, it just about made economic sense. With one of the smaller publishers it was catastrophic: no amount of extra discount could have compensated us.

Of course, Waterstone's, and others, are now more sophisticated in how they buy and replenish stock. And while the facility to return backlist core titles is indefensible, the real debate is how publishers and booksellers best share the risks and rewards of new titles.

Currently, the whole system has a bias to over-optimism. Many speculative new titles are sold to publishers at hotly contested rights auctions that result in the successful bidder over-paying. The "winner's curse" then kicks in; groups of able publishing executives will persuade themselves, against all their instincts, that unrealistically high sales figures will be achieved. The rigour of financial control then insists that the initial print run is higher than it should be, and the sales teams come under huge pressure to force the stock into reluctant, risk-averse retailers. In turn, retail buyers will often fall back on the notion that "it's all returnable" to compromise on a subscription level much higher than is comfortable.

I know both sides of the industry today are much more professional, but I suspect that this version of "the emperor's new clothes" is still regularly played out. And I'm afraid there are no easy answers to putting in place the appropriate incentives for publishers and retailers to work to optimum mutual benefit.

Many new titles are inherently unpredictable. The publisher who believes in them will always have to throw money at persuading those further down the supply chain to share his enthusiasm. In the music business, returns caps are commonplace—a fixed proportion of annual  purchases from a record label can be returned. But it's funny how a blind eye can be turned to such limits when the label is looking for support for the next "big thing", and the retailer sees the opportunity to lose the overstock of the last "big thing".

The universal use of "see safe" now, rightly, looks unsustainable. For too long it has protected the inefficient, and fostered sloppy buying. But I doubt that firm sale will be a panacea either.