The big business news here in New Zealand right now is that the owner of the Whitcoulls and Borders chains of bookshops is in serious trouble. The focus of many seems to be on what can be done to save the stores and preserve the jobs that they provide. Unfortunately, any kind of bailout would be a wasted effort without seriously looking at why the stores are underperforming to create such a situation.
If you consider that Whitcoulls has been around for coming up on 130 years under one name or another, your first thought might be that they are clearly stable and should be able to exist for a lot longer. While this is true, it is important to realise that the world outside Whitcoulls was quite consistent, at least in the ways that affect people buying and reading books, up until the turn of the century. What we have seen since then is a complete shift in the way people expect to buy and consume content.
Lets take a quick look at some of the challenges Whitcoulls faced:
1. Cut-Price online retailers.
Online stores have far less costs than running a full retail store. As people shifted to shopping online Whitcoulls found that at best, it had to sell the same items for less to compete (while still paying for the upkeep of it's many stores), and at worst losing sales entirely to competitors.
2. Online Content
People used to have no choice but to read books to learn new things, but the internet now provides a wealth of information on almost every subject at no cost. Selling a book on a subject is now a very difficult proposition when we can fire up a computer and find exactly what nine times out of ten, and for free.
3. Shift to E-Books
The rise of tablets and e-book readers in the last few years created a new market for electronic book content. The very nature of electronic content means that it makes no difference to consumers where they buy it - there are no delays and no shipping costs. This means that Whitcoulls is competing directly with sites such as www.amazon.com and loses out when it's trying to charge something like twice the price.
The purpose of this is not to bash Whitcoulls and say they should have done more. Sure, they probably could have, and we don't know everything that happened along the way, but what we do know is that the world changed and the Whitcoulls business model came undone after more than a hundred years of success and survival through war, recession and depression - clearly, tacking some modern concepts such as websites and e-books without changing the underlying business was not enough of an adaptation to survive.