Smith's defends books cut as 'populism'

Reducing the number of titles on display is a commercial necessity, it tells Michael Leapman

THE high-street bookselling chain W H Smith is mounting a counter- attack against accusations that it is stifling choice by slashing the range of books and magazines in its shops. While small publishers accuse it of high-handed action that could put them out of business, the firm insists that it is only bowing to commercial imperatives.

"Our customers are looking for mainstream products," says Jo Howard, the chain's newly-appointed Head of Books. "It would be no good Smith's having lots of interesting esoteric books and not the bestsellers ... Maybe the press doesn't like that populist approach."

Ms Howard, 34, took up her post at Smith's only two weeks ago, after maternity leave, and has been plunged into instant controversy. Her brief is to galvanise the bookselling part of the business in the face of sharpened competition caused by the ending of the Net Book Agreement, under which publishers used to control prices.

One of her first executive acts sparked last week's row. She sent a memo to branch managers urging them to stop doing individual deals with small local publishers and to order books instead through head office. If they continued to deal locally they should demand better terms - a profit margin of 48 per cent with two months' credit - and insist on full credit for unsold copies.

The memo was leaked and on Friday the Independent Publishers Guild, at its annual meeting in Cheltenham, issued an angry response through its chairman, Paul Chapman.

"We feel that the sudden imposition of terms like these does little to encourage co-operative relations between W H Smith and its smaller publisher suppliers," he said.

The Guild, representing 300 small and medium-sized publishers, is considering a complaint to the Office of Fair Trading.

The leak came only a day after Mark Seddon, editor of the tiny left- wing weekly, Tribune, wrote to the Times expressing outrage that Smith's would be taking his and some 300 other titles off their shelves from next month.

The implication of the two incidents was plain: here was our largest chain of bookshops and newsagents using its muscle to limit our choice of reading.

Ms Howard - whose brief covers only books, not journals - does not see it like that. When she joined Smith's last month from the bookseller Waterstone's (owned by the same parent company), she was shocked to discover that 15 per cent of all books bought by Smith's were being purchased direct by local branches, bypassing the central warehouse at Swindon, Wiltshire.

Individual branches have the power to deal direct with publishers for books of local interest, such as regional guidebooks, but Ms Howard says she found that the system was being abused.

"A lot of publishers with whom we have centrally agreed terms and a central supply channel have been going into our branches and selling direct at often quite low margins," she says. "And some were books that we had already turned down at the centre."

Publishers resent what they call the "Swindonisation" of Smith's operation. There was an outcry last autumn when Waterstone's, which has formerly done all its buying at branch level, asked large publishers to supply books to Swindon instead.

Ten years ago, standard trade terms allowed booksellers a margin of 35 per cent on a hardback. Large chains such as Smith's did better, going to 40 per cent and more. Since the ending of the NBA, the big booksellers have forced margins higher still, to give them room to discount, and are paying bills more slowly.

Clive Bradley, chief executive of the Publishers' Association, the main trade body, says: "I suspect that all publishers are now giving 60 days' credit as part of the very febrile situation following the ending of the NBA.

"We are very concerned to ensure the viability of small publishers. We want an efficient Smith's because they're important book distributors, but obviously we want to maintain the plurality of publishing."

Ms Howard says she has the same aim: "We want to stock and sell the best of local books, but obviously any product is competing for shelf space. We don't want to do anything here that will prevent local activity happening, but we have to make sure it's happening in a cost-effective way."

She adds that customers can always order titles that are not on the shelves - the same argument used by the company to defend its decision not to keep stocks of magazines for which there is a low demand. Smith's is refusing to say what titles are under threat, commenting that the matter is still under review.

"We're not de-listing, simply removing the titles from the shelves," said a spokeswoman for the magazine side of the business.

She added that any branch that sold more than 10 copies of a title would be allowed to keep it on display, and in other shops customers could order it.

"A part of this drive is to make the shopping experience easier for customers to browse and select magazines, and to provide space for new titles," she explained.

Mr Seddon is clutching at the hope that Tribune, whose weekly sale is fewer than 8,000 copies, may be reprieved. Since his letter was published he has been invited to meet Smith's chairman, Jeremy Hardie, this week. "They may be having second thoughts," he says.

W H Smith has never been popular with small magazine publishers. The satirical fortnightly Private Eye was banned from its shelves for years in the Seventies, ostensibly because it attracted libel actions, and it dubbed the chain "W H Smug". Editor Ian Hislop says he does not believe his magazine, which sells about 190,000, is on the hit-list this time.