How has Chapters affected your business?
To gather information about how business has changed for Canadian independent
booksellers since the introduction of Chapters/Pegasus, CBA distributed a survey to its members
questioning them about the chain’s impact on six areas: discounts, finance terms, freight/shipping,
co-op funding, title availability and author availability. The results, which will be provided to
the Standing Committee on Canadian Heritage and the Competition Bureau, reveal anger and frustration
on the pat of independents:
Discounts:
The consensus here is that publishers give deeper discounts to Chapters than they
give to independents, allowing Chapters to pass along extraordinary discounts to their customers.
Customers then hold the heavily discounted price up to independent booksellers and demand that they
match it. Independents must match it—and lose money—or refuse—and lose a customer. It’s a no-win situation.
Think Chapters is only a threat if they’re right across the street from you? Think again. Said one
respondent, "The nearest Chapters is 3 ½ hours away and customers still ask if I’ll match their discounted
price, which is often my cost."
Finance Terms
Many booksellers were surprised to learn from comments Chapters’ spokeswoman Helena
Aalto made to the Globe and Mail that the standard industry payment period is up to 120 days—in some
cases longer.
Independents realise that Chapters is favoured with a payment period twice that of the 60-day terms offered
to them. In addition, the general perception is that Chapters is never cut off when they fail to meet their
extended deadline. So, while indies get calls ‘reminding’ them about an outstanding $100 and are placed on
"hold", losing their ability to purchase stock for their stores, Chapters is allowed to continue owing amounts
in the thousands and still order more books. Most independents polled don’t object to the payment terms they
receive from publishers, however they do resent the fact that they’re hearing from credit departments more
frequently, as publishers attempt to compensate for Chapters unwillingness to pay.
Freight Shipping
Most booksellers polled hadn’t noticed a difference in their freight charges. Most mentioned
that Chapters qualifies for free-freight, whereas they do not, but respondents were divided in terms of those who
felt that this was just like any other business where larger volumes warrant better freight rates, and those who
felt this amounted to an unfair competitive advantage. One bookseller noted, "We are treated as one business, one
store, i.e. one shipping location. Chapters is also treated as one business, even though shipping might go to many
locations." Of great concern to many booksellers was the fact that Chapters orders appear to take precedence, and
hence independents have to wait longer for their books. Stock for new titles is often gobbled up by Chapters, leaving
independents awaiting shipments indefinitely.
Co-op Funding
Few respondents noticed an impact on co-op funds awarded. Those who did primarily mentioned
the fact that, as funds were distributed by publishers based on sales volume, many independents just didn’t qualify.
Questioned one bookseller, "Why do Chapters get special co-op dollars and the small bookstore does not?"
Title Availability
Pent up frustration, on the part of the booksellers, swells to the surface in response to this
line of questioning. Reports of Chapters buying entire Canadian print-runs of certain titles emerge, as do tales
of titles taking so long to arrive, they just barely manage to beat the paperback release. They expressed anger
that desirable stock often sits in a warehouse, but they can’t touch because it has Chapters’ name on it. In some
cases, orders arrive but have been cut back without explanation. A bookseller laments recently having to order from
the US and incur additional duty and shipping costs, because the Canadian publisher had shipped all of its copies
of a particular title to Chapters. Says one repsondent, "Several times over the last two years, the availability of
our best-selling titles has been limited or shut down." He makes mention of a particular title of which Chapters
bought the remaining print-run just before Christmas 1998, making it unavailable to many independent booksellers
until May 1999. He notes "The lost revenue to us, on only one title, was substantial." The relationship with
customers also suffers when, as one bookseller reported, "customers have reported seeing stacks of titles [in Chapters]
that publishers reported to us as out of stock." The independent bookseller’s credibility is damaged and booksellers
are left waiting for a second printing. Meanwhile, their customer is forced to go to Chapters if they want the book,
because, even if they are willing to wait, a second printing might not even take place.
Author Availability
Responses to the issue of author availability were mixed, depending on the location of the store
and the types of books it specializes in. Some booksellers experienced little impact in this area, as their stores
are situated in such remote parts, they had never received many visiting authors. Some expressed the view that
authors enjoy the indie environment, and are consequently happy to participate in events in their stores. One noted
that the independent wasn’t losing authors only because Chapters "hasn’t yet figured out how to do author events."
Several noted, however, that when it comes to big-name authors, Chapters gets the first, sometimes only, crack. One
respondent remarked, "Chapters is usurping celebrity authors. At the same time, they are doing little to promote
literary author events."
Additional Bones of Contention
Some final comments on areas of concern to CBA members questioned:
- On returns:
"They [Chapters] can send anything back in any condition and get credit,
but the independent bookstores cannot."
"Chapters’ abuse of returns is putting extreme pressure on Canadian
publishers and [the] agency system."
"Since the opening of Chapters we’re frequently shipped books stickered
by other stores in unsaleable condition, necessitating time wasted in returns,
extra postage for returns, extraordinary book work."
- On the web:
"Chapters.ca is discounting heavily. [We] can’t compete. Pegasus is really
a website warehouse."
"I know when I look on the books in print I can’t always find a listing,
but I can find it on Chapters’ website." (Clearly provided to Chapters as a priority).
- On sales rep attention:
"Trade reps may be fewer in the future or visit only A accounts. That has a
dire effect on all independent booksellers—it means we are given less information
to help us sell our books."
"One tradeshow for all independents, the other for Chapters. Are the publishers
treating things equal?"
The Bottom Line
The prevailing opinion is that Chapters has taken advantage of special treatment,
and thrown its weight around enough to place independent booksellers in an untenable situation—unable
to compete on this uneven ground. How can independent bookstores hope to survive in such an unhealthy,
unbalanced marketplace?
For more information, please contact:editor@cbabook.org
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