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A Whitcoulls store in Auckland - Source: Getty Images -
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Staff at Whitcoulls had to grapple with complaints from customers today annoyed they had to spend money to be able to use their pre-bought gift cards.
Robert Reid from the National Distribution Union told ONE News that workers had been told very little about the company's financial situation before stores opened today.
The chain, owned by Australia's REDGroup, was placed into voluntary administration in New Zealand yesterday.
"They have not had any meetings, not had any briefings, they have been kept in the dark and nobody really knows what is happening," Reid said.
That meant staff having to try to explain why Whitcoulls was under no obligation to honour gift cards since it was now under voluntary administration.
One customer, Kerry Vujnovich, told ONE News she wasn't happy about what she was told.
"I went in this morning to redeem my voucher that I got for my birthday for $100 and when I got to the counter I got told I'd have to spend an additional $100 to be able to use the voucher," Vujnovich said.
Whitcoulls has said customers who have gift cards, would have to spend twice the face value of the card. For example, to redeem a gift card with a $30 face value, the customer must make a total purchase of $60 or more and the $30 voucher will be taken off that purchase price.
Booksellers New Zealand chief executive Lincoln Gould warned that if the company did end up going into receivership, customers could be left empty-handed.
"If, in the sad event that Whitcoulls closed, then the outstanding vouchers, I guess, I'm no accountant, become a liability and may not be able to be redeemed."
Booksellers NZ Book Tokens, which are redeemable at all 350 member bookshops nationwide, including Whitcoulls, Borders and Bennetts, are not affected.
Australian parent company REDgroup Retail, which manages operations in both countries, yesterday called in voluntary administrators to the business. Ferrier Hodgson partners have been appointed voluntary administrators of the group.
This means their finances have been frozen while an administrator and creditors decide whether they can keep operating.
The Whitcoulls chain has 65 stores in New Zealand, 40 of which are located in Auckland, Wellington and Christchurch. REDGroup Retail has 79 bookshops in total, under three brands of Whitcoulls, Borders and Bennetts. Around 1100 staff work for Whitcoulls and Borders in New Zealand.
Digital publishing expert Martin Taylor told TVNZ News at 8 that Whitcoulls was a strong brand and had done the most to champion e-books in New Zealand.
However, he said Whitcoulls could have been more effective in selling books online.
Taylor cited Paper Plus as an example of a locally owned chain that was succeeding.
"So even in a tough climate you can do well and many independent book sellers do a great job of serving their local communities," Taylor, of Digital Strategies, said.
Impact of technology
Technology is believed to be a contributing factor to the
financial troubles of Whitcoulls and Borders, which also went into
voluntary administration.
Book retailers have been hit hard by the rise in internet based operators and the growing popularity of electronic books, as well as online purchases from overseas retailers.
Just today Amazon.co.uk offered free shipping on its books to New Zealand, making online purchasing from overseas even more attractive.
But Booksellers NZ Chairman, Hamish Wright said he believes the REDGroup Retail woes are not related to the growing use of e-readers and e-books.
"The group has led the way in this country with digitisation and thus we don't see the new formats as being causing REDGroup's problems," said Wright.
Gould said one of the major issues is that overseas retailers are not paying GST which means they can undercut local retailers.
"In New Zealand the government has always applied GST across all consumption and we're saying that there's a lot of retailing in New Zealand by retailers who are not paying GST," Gould told TV ONE's Breakfast programme.
Trade Me chief operating officer Mike O'Donnell said the problem was more in the business model Whitcoulls operates under, and that it is becoming obsolete.
"Broadly speaking, e-commerce, the way it affects commodities is pretty rigorous and pretty merciless. Effectively, margins are reduced to close to zero. So if you're selling a pure commodity and a book, especially an e-book, is the purest commodity there is, it doesn't matter if I buy it from A or B. It comes down to price."
He said a weak US dollar has also worked against traditional booksellers.
"If you look at Whitcoulls at the moment, you go to their homepage, they will sell you their e-reader, which is called a Kobo, for $NZ249. You go to Amazon and buy a Kindle, which unlike a Kobo isn't a stand-alone device ... for $US129, which currently is about $NZ160. Which would you rather buy?"
Wright agreed the issue for REDGroup Retail was the group's specific funding structure.
"We are very hopeful that the administration process will allow REDGroup Retail to restructure its financial position in order to strengthen successful stores and create better support systems within the group. Our hope is that all stores belonging to the Group will remain open in the long term," he said.
According to Nielsen Bookscan, in 2010 9.57 million books were sold in New Zealand for $243.6 million. This was a 1.2% increase in volume and slightly down in value (-0.1%).
The separate US-owned Borders chain also collapsed this week but is not linked to the Australian chain.
Where do you buy your books and why? Will you buy more books at Whitcoulls and Borders to try and help them out? Leave your thoughts on the messageboard below.
Add a Comment:
Post new commentwildthornrose said on 2011-02-20 @ 11:55 NZDT: Report abusive post
I worked on & off for Whitc'lls for 10yrs, & left the company recently. I can vouch that the staff genuinely care about the customers, are proud of the name, & have nothing to do with what happens above them. Most are paid close to minimum wage, & stay only because they are loyal to the brand & love books. It's not fair to abuse them because some fatcats overseas are now choking on their own gluttony. Have some decency, people. You might lose $100, but they face losing their jobs & incomes!
anon2010 said on 2011-02-19 @ 23:09 NZDT: Report abusive post
I'd like to remind people that it was not the choice of the staff in store to employ the new gift card policy & most staff agree it's unfair. We are just the middle men expected to enforce the decisions made by those higher up, but its the staff in store that deal with the abundance of angry customers. We understand this is a bad situation with the gift cards & in general, but please understand we may lose our jobs & would like to keep them as long as possible.
anon2010 said on 2011-02-19 @ 23:06 NZDT: Report abusive post
I've worked for Whitcoulls for 7 years, & this is the first time I've learnt we have a union. I'd also like to remind people that it was not the choice of the staff in store to employ the new gift card policy & most staff agree it's unfair. We are just the middle men expected to enforce the decisions made by those higher up. We understand this is a bad situation with the gift cards & in general, but please understand we may lose our jobs & would like to keep them as long as possible.
Annie24 said on 2011-02-19 @ 21:36 NZDT: Report abusive post
While I was annoyed that I would have to spend $30 in order to redeem my $30 gift card I was prepared to do so. However when I went into my local branch today I was told that my gift card was one of the older type and I could not use it!!! Try back next week they said, things could change!!! The gift card was purchased on 17 September 2010 so is only 5 months old!!! I am now furious!!!!!
shan303 said on 2011-02-19 @ 15:01 NZDT: Report abusive post
It's nice to see that a company we have all supported over the years doesn't want to support its own customers.........