The pandemic shutdown has taken a toll on Indigo, a retail anchor whose survival along with independent booksellers will affect publishers and authors. Both offer cultural value and they all need immediate help from Ottawa.

 

Philip J. Cercone

July 27, 2020

 

Among its many socioeconomic impacts, the COVID-19 pandemic shutdown has created crisis conditions for Canada’s struggling retail sector of independent and chain bookstores, which has serious implications for the future of cultural life in Canada.

During normal years, Canadian authors and publishers bring to light a tremendous output of books to be sold in Canadian bookstores. Right now, after months of creative adaptation to unprecedented conditions, they need urgent help from the federal government to get back on their feet and play a significant part in the post-COVID recovery.

More Canada is a publishing industry think tank working pro bono under the umbrella ofthe Canadian Forum Foundation and whose steering committee is made up of publishers James Lorimer of James Lorimer & Co., Jeff Miller of Irwin Law Inc. and myself of McGill-Queen’s University Press. In our roles on the steering committee, we are aided by the opinions and guidance of numerous Canadian-owned publishers which have been meeting weekly by Zoom for over a year, a process that has informed two recent reports on the state of the industry. The first report, about the economic state of the industry and published on June 17, is titled Covid-19 and the challenge to chain retail bookstores in Canada’s cultural landscape. The second, about the role of book publishing in the post-COVID recovery, was published July 21 and is titled Independent bookstores in Canada’s post-COVID cultural landscape.

The reports underline the large part bookstores play in the Canadian cultural landscape by mixing culture with savvy commerce. In English Canada, bookstores offer readers access to a careful selection from the over half-million individual book titles available yearly from international and Canadian publishers and distributors. More importantly, bookstores carry on a range of outreach activities and spread information about new books and authors. They host book launches and readings, reach out to the reading public in schools, meetings and conferences. They contribute significantly to the cultural lives of communities, and are highly valued as physical meeting places and social hubs in an age when so much of life unfolds in the virtual sphere.

The first report issued in June by More Canada dealt with Indigo Books. It is no surprise to anyone that bricks-and-mortar Indigo, Chapters and Coles stores dominate retail bookselling in English Canada. But Indigo was already in financial difficulty before COVID-19 hit. The company lost $49 million in 2018-2019, and had a record loss of $185 million in 2019-20.

In the post-COVID world, retail bookselling is volatile and highly challenged. Indigo has just closed 19 Coles stores across the country. In June, its CEO, Heather Riesman, called the pandemic a “seismic” event after the company reported a fourth-quarter loss of $171.3 million.

Clearly, there’s a danger of larger retailers going out of business if government help is not forthcoming. For the more-than 100 independent Canadian publishers that publish most of the new Canadian-authored books, this is a hard prediction to swallow. Indigo is their biggest customer by far, with a 75 percent share of the Canadian retail book market. The fates of Canadian authors and publishers is intimately tied to Indigo’s and, accordingly, as Indigo goes, so do Canadian publishers and authors.

Independent publishers assisting the More Canada think tank reported that they are at risk because of Indigo’s dominant role in retail bookselling in English Canada. With its portfolio of Indigo, Chapters and Coles stores, the chain is the single largest customer for many publishers. With book sales plunging because of temporary store closures by Indigo during the early months of COVID-19, inventory now being returned and payments delayed, publishers are already financially stressed.

What we found in our weekly More Canada deliberations with independent publishers is the fear that Indigo could seek new foreign owners to tackle its ongoing business issues. Our experience with foreign companies selling books in Canada is that foreign ownership undermines Canadian cultural identity as reflected by our publications of Canadian authors on bookstore shelves.

Indigo has sought help from Ottawa under the Large Employee Emergency Financing Facility (LEEFF) program for large businesses, but has gotten the run-around. We publishers urge immediate government action on any Indigo request, but at the same time, we hold the strong view that any federal support must come with conditions attached reflecting government cultural policy goals of the Department of Canadian Heritage under Minister Steven Guilbeault.

Canadian publishers strongly believe the Department of Canadian Heritage, with regard to Indigo, must maintain the longstanding policy requiring Canadian ownership of retail bookselling and distribution and prevent foreign ownership.

Nevertheless, it should assist Indigo financially because it is part of the cultural book supply chain of this country along with independent bookstores, and encourage it to do more to promote Canadian authors and their books, building on Indigo’s current success in doing so. In return for government help, Indigo should be required to devote 20 percent of its store bookshelf and display space to Canadian published books. This emergency assistance would go to Indigo, as well as to independent retail bookstores, only if it agrees to offer Canadians a wide range of Canadian books.

As our more recent second task force report showed, the independent bookstore sector in English Canada appears to have marginally weathered COVID-19 reasonably well. Some of the stores that remained open offered customers home delivery and curbside pick-up. While their sales were very low during the lockdown, the independent booksellers are surviving.

Publishers have identified four federal actions to sustain bookstores in English Canada. The federal government must maintain Canadian ownership of retail bookselling and distribution, help independent bookstores do more to promote Canadian authors and their books, tie financial support — including commitment of 20 percent of bookshelf and display space to Canadian books — and new funding measures for retail bookstores if they agree to offer Canadians a wide range of Canadian books.

In order to strengthen existing stores and encourage 50 new ones being established, as proposed in the More Canada December 2018 report Increasing Canadian Awareness and Reading of Canadian Books, we now add with the latest report a recommendation that independent bookstores and Indigo get the same low Canada Post shipping rates now enjoyed by local public libraries. If independent bookstores and Indigo could use the library book rate, they could grow their online sales and be effective competitors with Amazon. They would also be able to stock more books from smaller, independent publishers.

The July 2020 report, prepared in consultation with a dozen of the country’s leading and largest independent publishers, makes other recommendations for the COVID-19 recovery phase.

Independent bookstores in English Canada have survived the first wave of COVID-19, after decades of extremely tough business conditions for their sector of book retailing. What happens to them now is of paramount importance to Canada’s cultural landscape writ large, among authors, publishers, freelance copy editors, designers, typesetters, printers, distributors, book sales representatives, book agents, libraries, schools, colleges and universities and, above all, readers.

Independent bookstores are by far the most effective vehicle for enabling the discovery and reading of Canadian-authored books. These bookstores account for 19-20 percent of sales, far better than the overall 12 percent share held by Canadian-authored books in the retail book trade. Independent bookstores dramatically outperform public libraries, where Canadian-authored books currently represent only 8-9 percent of books borrowed and read. For independent Canadian publishers, responsible for three-quarters of all the new books by Canadian authors published annually, independent bookstores are a crucial channel by which their books find readers.

In the post-COVID world for the foreseeable future, retail bookselling will remain volatile. Online book sales have spiked during the COVID shutdown period, giving Amazon greater presence in English Canada. Still, the “buy local” sentiment and the new positive attitude of the public to Canadian suppliers and products offer energy to independent bookstores.

There are six action items proposed in the July 2020 report:

1. Recognition that independent bookstores are a cultural industry, like filmmaking, magazine publishing, and music because are key to the discovery and reading of Canadian books
2. Funding for research, professional development, technology and marketing projects to be undertaken by the newly formed independent bookstore organization
3. Funding to bookstores to cover most of the costs of new marketing and discovery activities promoting Canadian books, for stores devoting 20 percent of shelf space to those books
4. Sales incentives for bookstores, providing them a 10 percent bonus on their sales of Canadian-authored books published by independent Canadian publishers
5. Access to Canada Post’s low library book mailing rate for stores dedicating 20 percent of their shelf space to Canadian-authored books
6. Measures to direct public spending on books directly to bookstores, mirroring the achievement in Quebec of ensuring the viability of retail bookselling and ensuring the discoverability and reading of Canadian as well as international books

For federal and provincial cultural policy makers, independent bookstores are a valuable resource that should be strengthened as part of post-COVID cultural recovery measures. They can help reverse the steady decline in discovery and reading of Canadian-authored books in English Canada.

In Quebec, policies to sustain a healthy independent bookstore sector have been in place for over 20 years, including policies today that direct public institutions such as libraries and schools to spend their public funds in retail bookstores. The result is a robust network of bookstores across the province, which has more independent bookstores than all of English Canada.

New policy initiatives are needed in the rest of Canada, with the federal government taking the lead. These initiatives would help address the gap in federal cultural programs identified in the 2019 book program evaluation, which concluded that it had been successful in increasing the production of Canadian books but it could do much better in ensuring that those same books are available and read by Canadians.

Under the leadership of Doug Minett, the co-founder of The Bookshelf in Guelph, Ont., the Canadian Independent Booksellers Association (CIBA) has arisen. Hopefully, this group will perform the same good work that the Canadian Association of Canadian Booksellers did before it was disbanded in 2015.This newly formed national organization of independent bookstores in English Canada gives governments a mechanism for delivering new measures. The group’s founding survey of 100 stores by Minett documented its core orientation toward strengthening the discovery and reading of local, regional and Canadian books.

The message to Heritage Minister Steven Guibeault is clear — the ball is now in your court.

Philip J. Cercone is Publisher and Executive Director of McGill-Queen’s University Press, Canada’s largest trade and academic book publisher.