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Dollar Dilemma
For stores in Canada, although R. G. Mitchell is no longer with us, their approach to the Canadian dollar’s “reverse crisis” in 2008 is well-remembered.
Recognizing that lower prices could prove chaotic for retailers, while at the same time wanting to deal with the media’s influence on consumers, RGM tempered price adjustments with expanded margins until, at one point, 50% became the normative trade discount for the lines they carried, which represented about 90% of the best-selling Christian books.
While I was not a fan of everything that happened on Gordon Baker Road, I did agree that this was the best approach. Furthermore, it wasn’t our industry’s handling of the currency issue that brought on the demise of RGM, but rather the availability of online purchasing that existed as a consumer alternative when the U.S. dollar got affordable.
Canadian customers were already paying conversion rates of 1.650 in the earlier part of that decade, and ironically, our stores were in much better financial health. The industry couldn’t deal with declining prices fast enough, and suddenly, a whole consumer segment discovered the ease of purchasing from U.S. online vendors.
Here’s how our most recent dollar adventure tracks — these are the monthly closing numbers from the Bank of Canada:
March 2010 1.0158 February 2010 1.0525 January 2010 1.0693 December 2009 1.0510 November 2009 1.0556 October 2009 1.0819 September 2009 1.0707 August 2009 1.0950 July 2009 1.0775 June 2009 1.1630 May 2009 1.0917 April 2009 1.1930 March 2009 1.2613
The last six months have not been nearly as exciting as the first six, but anytime the dollar creeps toward parity our Canadian industry “blinks.” In some ways, it’s a blessing that we aren’t dealing with fixed pricing here. Our ties to the U.S. pricing and royalty structure certainly work to advantage here provided our dollar is going up against the U.S. dollar.
I also again want to go on record as saying that I don’t think our Canadian market will ever again survive conversions as high as 1.600 or 1.650. In fact, I believe that if we ever back to anything over 1.400 consumers will gravitate to other media to provide them with spiritual input. We would have to negotiate a separate arrangement at that point, no matter what they U.S. literary agents have to say about it.
All this to say…
I’m not sure yesterday’s announcement by David C. Cook that they are moving toward a conversion factor of 1.100 is the greatest news we could have heard, especially from a company that does so little discounting to begin with.
Frankly, when RGM changed the rules all those months ago, my own business decided we weren’t going back to 40%. Pricing from DCC is already adjusted in our store, and will continue to be moving forward. We need “real dollars” to pay heat, insurance, telephone, security, wages, and especially rent. Customers are not nearly so price conscious as we think they are, nor are they as price aware as we are on the other side of the counter.
Dealers need to regard the announcement as a change in discount as much as a change in retail pricing, and find the balance point that works for your business.
Your future is hanging on your decision.
Related: These days, this is a recurring theme at this blog, check out posts on April 7 and March 4.
Amazon Becomes First Foreign Owned Book Distributor in Canada
Back on March 9th, we reported here that Amazon was wanting to hire its first ever Canadian employee and ship its first book from a distribution base located on Canadian soil. Last week, that desire became reality.
The Globe and Mail reports who capably handled the earlier story — Omar El Akkad and Marina Strauss — continued with it on April 12th; choosing a quotation or two wasn’t easy; these are highlighted paragraphs only, you should click here to read the entire article:
Ottawa said it will allow U.S. on-line bookseller Amazon.com Inc. to set up its own distribution centre in Canada, a second major move in recent months by the federal government to effectively override foreign-ownership rules.
The ruling allows the Seattle-based firm to cut its costs significantly, prompting heavy criticism by local booksellers who say it will allow Amazon to price Canadian businesses out of the market…
…“This signals a government of Canada policy change confirming that a company no longer needs to be Canadian-owned to sell books in Canada,” said Heather Reisman, chief executive officer of Indigo Books & Music Inc.
The government’s approval of Amazon’s plans follows a surprise December decision that opened the door for Globalive Wireless Management Corp. to begin operating a wireless network in Canada, overturning a ruling by the Canadian Radio-television and Telecommunications Commission that deemed Globalive to be a foreign company because of its Egyptian financial backing…
…Amazon.ca is a website that has no physical presence in Canada. Had Ottawa rejected Amazon’s shipping centre application, the government would have found itself in the untenable position of saying the company’s business runs afoul of Canadian rules, while at the same time allowing Amazon.ca to operate outside those rules.
Instead, the Conservative government secured a number of “commitments” from Amazon in exchange for approving the distribution centre.
According to Heritage Minister James Moore, those “commitments” include a $20-million investment in Canada…
…However it’s unclear how much of the $20-million investment is new money. In addition, many of Amazon’s commitments are vaguely stated, such as “increased visibility for Canadian books on the Amazon.ca Web page,” “increased availability of French-language Canadian cultural products” and “making more Canadian content available on the Kindle e-reader.” Neither the government nor Amazon supplemented these promises with hard numbers, or indicated when they would begin to take effect…
…Again, you’re encouraged to check out the entire story.
Meanwhile on Saturday, also at The Globe and Mail, columnist James Adams suggests much more is afoot:
…Still, the decision, announced Monday, is important, momentous even. It may be the case that the Conservatives were bowing to the reality that Amazon was already in Canada as an e-tailer (albeit working through a subsidiary of Canada Post, a Crown agency, rather than a retailer with hundreds of physical locations). But some are arguing the decision is nothing less than a reversal of the cultural protection policy that’s been in place since the Trudeau era. For Heather Reisman, CEO of Indigo Books & Music, the situation is pretty clear. This week’s decision “signals . . . a policy change,” she said in an e-mail. “[It confirms] that a company no longer need to be Canadian-owned to sell books in Canada.”
A change in culture policy?
…Heritage Minister James Moore would allow, during Question Period in the House of Commons… “We will create new Canadian jobs in Mississauga.” The same went for Paul Misener, Amazon’s vice-president for global public policy: “We believe that a local fulfilment center will enable us to even better serve our customers in Canada as well as our customers in other countries who seek Canadian books and other cultural products,” he told The Globe and Mail in a statement.
Could there even be more than one facility? In the United States, books are only a small part of Amazon’s retail offerings (a low-margin one at that) – and you don’t earn gross annual revenues of $25.3-billion, as Amazon did last year, by selling Dan Brown’s The Lost Symbol at a 42 per cent discount.
Over the years, Amazon has steadily increased its choice of wares to American consumers to the point that there’s pretty much nothing they can’t order – baby food, toilets, musical instruments, faucets, beauty aids, power drills and, of course, the Kindle e-reader. Asked about future plans to expand their offerings in Canada, an Amazon spokesperson would only say: “We don’t have anything to add at the moment – I’ll let you know should that change.”
Changes might not be too long in coming. Last December, when The New York Times asked Amazon.com chief executive Jeffrey Bezos, “What is your goal, exactly?”, he replied: “We want to have Earth’s biggest selection.”
For our industry, Heather Reisman’s concerns are representative. This is a selling out of Canadian sovereignty over a “cultural industry” and opens the floodgates for Borders, Books-a-Million and Barnes & Noble to look north for expansion; stores which carry a much, much larger percentage of Christian book bestsellers than our own Chapters; not to mention chains like Family Christian Bookstores.
Don’t assume that won’t happen.
Cook Gives Canadian Dayspring Customers Three Options
With the Canadian dollar trading at or near parity over the last week, Dayspring Card’s Canadian distributor, David C. Cook, is giving stores three options:
- a 20% off program
- a 15% off program
- continue selling at CDN pricing as marked
If other card shops in your area are selling their greeting cards at reduced prices, it’s hard to be the lone holdout at higher pricing.
But the deal is only worthwhile if you are approaching the need to make a significant inventory purchase.
For example, in our larger store, we have 4.5 racks of Dayspring product. At 116 pockets per rack that works out to 522 pockets. Today I place an order for 48 pockets at an extra 10% discount, in exchange for signing up for the 20% program. I maintain margin on this new purchase at the discounted rate, but it touches less than 10% of the number of card pockets in my store.
That means nine out of ten cards sold — in the short term until I place subsequent orders — will involve selling cards for 20% off for which I did not pay the higher price.
The variable is not knowing what the future holds for the dollar and how long the program will last. A store like ours also needs to assume there will come a time when the situation reverses, so that I can catch this “early stage” loss on 90% of my Dayspring card sales when the market moves the other way.
Not knowing also puts pressure on us to buy new inventory while we can to try to shift the “balance of discounted product” more toward at least 50%. For example, I purchased 48 pockets today, but as soon as that order arrives, I intend to ask staff to provide reorder information for pockets containing only a single card.
That may produce some anomalies as new designs have replaced older ones, but at this point it becomes a race to buy the product in case the dollar happens to move back, although economists are predicting this stretch or parity or near-parity to last much longer than in 2008.
BTW (or is that FYI), this particular store has a total of 13 card racks. There has been no indication from Leanin’ Tree cards’ Canadian distributor that a similar program is in the works. This line does well for us, but is also the most contentious among customers because of the pricing: 2.50 US / 3.75 CDN. That’s a rather glaring conversion of 50%. We’ve asked repeatedly for adjustments from them on this, but to date, but Don Fowler Distributors have shown little interest in capitulating.
The rest of the racks there include an assortment of various lines we’ve purchased directly from the U.S. including Dear Cards, Marianne Richmond, and some handpainted custom cards commissioned directly from a local artist.
Also on the topic of cards, our greatest need right now is for birthday cards which honor specific years, especially 70th, 75th, 80th, 90th, 100th, etc.) The revised “Through the Ages” line from Life is rather devoid of scripture content — or any content for that matter — and our repeated appeals to Dayspring either don’t produce responses, or they simply maintain there is no need for this in the U.S. Christian market.
Seems to me that’s an opportunity for someone in the U.S. to fill a void.
Screening Potential Staff
This was one of the first posts on this blog; it’s something we have found really useful and we’ve been asked occasionally by other stores if they can use it, which of course, they can.
During the last 14 years, we’ve employed 39 people in Lindsay, Cobourg and Brockville, Ontario. (We no longer are in Lindsay.) Almost from the beginning, we’ve employed the following questionnaire instead of a regular application form. This has worked REALLY WELL for us.
Let me know what you think, or perhaps you have something that works EVEN BETTER!
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Searchlight Pre-Interview Questionnaire
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The Trilogy: Book Zero
Still confused how a trilogy can consist of four books? Ted Dekker’s Green (Thomas Nelson) contains storyline from before the first book, and plot resolution from after the last book, so it is both prequel and sequel, a kind of “wraparound” title.
So which should customers start with? Annotation to the video below states: “This is Book Zero, the Circle Reborn, both the beginning and the end. The preferred starting point for new readers . . . and the perfect climax for the countless fans who’ve experienced Black, Red, and White.”
Canadian ITPE available from Canada Direct Group.
The Challenge of Grace-Based Business
Several months ago I hired an employee whose adjustment to our team has been a little more painful than the 40-or-so people we’ve hired previously. We’re committed to hanging in, but it gets stressful. There are some really good results that take place, and some pleasant, unexpected surprises.
But there are also some unpleasant surprises, too.
Last week it concerned a customer to whom our employee granted a discount based on a program that was no longer in place. As a result, the customer received a $17 book for free that normally would not have been given away free.
When we discussed it later, she described the circumstances, and noted the value of the other products purchased by that customer that day. I appreciate her initiative. I am not saying that under the same circumstances, I would not have done something similar. I like the idea that as a store we have flexibility; that store policies are not written in stone.
On the other hand, this employee, who has been with us only about six months, is asking me to “trust” her in such circumstances. Therefore, she’s asking me to give her discretionary powers that simply aren’t awarded to non-management employees. She’s also implying that there is the distinct possibility that it will happen again.
I responded that we’re open to helping people out, but that such decisions require authorization from myself or that location’s manager. I don’t want to be a store where the default answer is always “no.” But I can’t have my newest employee dictating policy.
At that point, I find myself at a crossroads. I’ve tried to explain that a related promotion — with which this one may have gotten confused — is also now discontinued so neither is there as a “go to” option.
Part time employees represent store owners and managers. We’re accountable to the customer for any verbal offers they make available. But we need to know what it is they are promising and make necessary corrections before we’ve lost control of our own stores. Your suggestions are welcome!
Liz Curtis Higgs Returns with a New Fiction Title
A popular author, both in fiction and non-fiction categories, Liz Curtis Higgs returns with her first title since the 2006, Grace in Thine Eyes. The new Here Burns My Candle, based on the story of Ruth and Naomi, is available from Waterbrook Press in the U.S., distributed in Canada by Augsburg-Fortress.
T. S. Eliot on Christian Books
I really appreciated getting the link to this article forwarded to me last week by Nathan Douglas, a film student at Simon Fraser University in BC. The article is by Waterbrook and Regal Books author Jeffrey Overstreet, and what really stood out for me was this quotation from classic poet, T. S. Eliot:
[T]he last thing I would wish for would be the existence of two literatures, one for Christian consumption and the other for the pagan world. What I believe to be incumbent upon all Christians is the duty of maintaining consciously certain standards and criteria of criticism over and above those applied by the rest of the world; and that by these criteria and standards everything that we read must be tested. – T. S. Eliot
The article also quotes Oscar Wilde and C. S. Lewis. Check it out.
Get Ready for 7% GST Talk
It’s already started.
In an opinion piece in The Toronto Star last Wednesday, Bruce Campbell, executive director for The Canadian Centre for Policy Alternatives suggests that “taxes appear to be coming back into fashion.”
Apparently we have different fashion consultants.
The logic is that we need to get the country “back into the black,” and that “tax cuts cost us more than we can afford.” But clearly, it would be sold on the basis of bolstering medical programs. He races to this conclusion:
Reversing the Harper GST cuts is also important. The additional $12 billion a year our federal coffers would gain from restoring the GST to 7 per cent (with an expanded tax credit to protect low-income earners) could build a national pharmacare program and a home-care program for our senior citizens. It could fund a national child-care program for the next generation of young Canadians. It could plant the seeds for a green economy.
In Ontario, that would mean a 15% HST. Most of our tourist dollars — as important in the Christian bookstore trade as it is in shoe stores and bakeries — come from Americans who don’t understand how a value-added tax works, and furthermore, don’t see the VAT on their receipts in the UK and elsewhere because it’s included in the pricing.
Not so here.
Stephen Harper’s political credentials are built squarely on the foundation of his reputation as a policy guy. It was his policy to cut the GST from 7% to 5%. He’d have to spend a lot of political capital to convince the electorate that this is merely a case of “that was then and this is now.”
It’s Your Data, You’re Entitled to Access
It can increase your efficiency, especially when it comes to avoiding duplicate ordering on product. It can provide you with up-to-the-minute information for customers waiting for special items. It can give you an overview of your true “open to buy” position, even if you don’t use a formal OTB system.
It’s called a “backorder report.”
It goes by many names in our industry. Some call it an “open items report.” Others allow you track “orders in process.”
But it is absurd that in an age of computers, a supplier can’t tell you over the phone what you’re waiting for, or if the list is longer, e-mail it to you. It’s absurd if the only way to find out is to make trial checks of random ISBNs that you may or may not have already covered.
To err is human. Being able to track backorders in real time helps you avoid those errors. It also allows you to modify backorders up or down in quantity depending on current market conditions, things you’ve heard more recently about an author/artist, the combination of special orders and inventory needs, or the prevalence of other products releasing in the same category.
There shouldn’t be a supplier in North America who is guilty of saying, “Our computer doesn’t provide that information.”
It’s your information.
Ed Underwood on the Jesus Movement
I’ve devoted a post on my personal blog this weekend to an early reading of Reborn to Be Wild, publishing in June from David C. Cook. This review clearly spells out who this book might be aimed at, and I think it’s the right timing for a title of this nature. Check out my comments; I will be returning to this later for a second review! I think you’ll consider placing an advance order.
Old Earth Creation Science Author Hugh Ross
Some of you have a simple Basic Doctrine or Apologetics section. In one of our stores, a manager renamed it, “For The Skeptic.”
In larger stores that section is subdivided into subsections one of which is often, “Bible and Science”
But did you know you could actually subdivide the section further? The Creationist community is somewhat divided into “Old Earth” and “New Earth” factions. An “Old Earth” creationist is someone who accepts the standard scientific age of the planet. (Not the same as “theistic evolution,” however.) A proponent of this view is Hugh Ross. You can read more about him in this Wikipedia article here.
Here’s a recent promotional video from Baker Books for Why The Universe Is The Way It Is. If you double click on the link, it will take you direct to YouTube, where you’ll see a number of other videos from Ross in the right-side margin.
Christian Book Shop Talk 