Collins Booksellers examining options for REDgroup Retail

The franchisee-owned Collins Booksellers says it’s interested in doing a deal with Ferrier Hodgson, the administrator of the collapsed book chain REDgroup, around the Angus & Robertson book stores.

“We are aware of the business opportunity and are considering our options,” Collins Booksellers chief Daniel Jordon told SmartCompany this morning.

The comments come as Collins announces it has snapped up a decade-old online book retailer Seek Media for an undisclosed sum, as it looks to boost its online presence.

And in what it describes as a first for the book franchise industry, Collins says it will distribute a percentage of online revenue sales directly to the nearest bricks and mortar Collins store. This plan, which will kick off in July this year, is based on a geographical territory by postcode. Jordon declined to name the percentage to be distributed.

On the REDgroup Retail collapse, Jordon says Collins has “enormous empathy” for Angus & Robertson franchisees who attempted to terminate their franchise agreement after the private-equity owned business collapsed.

Jordon also downplayed the view that book retailing in Australia is on its way out, saying REDgroup Retail’s collapse was caused by a number of factors, with cautious consumers just one ingredient.

“A lot of the commentary around [the collapse of REDgroup] has been to do with customers shopping online, but that’s not correct,” Jordon says.

“It’s more to do with management issues, and a private equity issue.”

The collapse has been “quite damaging” for the wider industry, notwithstanding an increase in market share for Collins stores located near Borders and Angus & Robertson stores.

Still, the retail sector has been doing it tough post-GFC, Jordon says, and Collins has not been immune.

But rather than see online sales as a threat, Jordon says Collins is trying to find the trend as an opportunity, and adapt in the fast-changing book industry.

Collins, which has about 5% Australian market share, was bought by franchisees in 2005 after the company went into liquidation. In 2007, Collins bought book business Bookcity, so there is form in picking up franchises.

Jordon describes the Collins of today as a “unique beast” with 24 shareholders owning 52 stores.

While declining to name the price of the Seek Media purchase, Jordon says the acquisition will significantly boost Collins’ online offerings, which at the moment has the equivalent turnover of a large store. Seek Media operates its own book retail website, and provides website hosting arrangement and order services for other retailers.

A spokesman for Ferrier Hodgson could not be contacted this morning.

This story first appeared on SmartCompany.