SMEF0096

Written evidence submitted by the Booksellers Association

Bookselling in the UK

The Booksellers Association (BA) is a membership organisation for all booksellers in the UK & Ireland, representing over 95% of bookshops. The Booksellers Association exists to support, advise, and work with its members to create excellent products and services for booksellers. Our members have bookshops throughout the length and breadth of the UK serving a wide variety of urban and more rural communities, from Cornwall to the Highlands and Islands. Our members’ shops are integral to their local high streets and communities, bringing a wealth of social, cultural, and economic benefits.

Bookshops function as vital placemaking destinations, attracting customers and visitors who in turn spend in neighbouring retail and hospitality settings. They have played an enhanced role in supporting our high streets as they seek to chart a post pandemic recovery. As of July 2023, the BA has 964 independent booksellers in membership accounting for 1053 branches. We are delighted to say that the number of high street booksellers has grown by over twenty percent since 2017, driven by the skill, resilience, innovation, and passion of booksellers small and large. However, this recovery is fragile and should not be taken for granted, particularly during the cost of living crisis.

In preparing this response the BA has surveyed it’s independent members in the UK of which there are further details below. We are pleased to have the opportunity to contribute to this inquiry.

Access to Finance for Independent Bookshops

Of the bookshops surveyed over half had applied for finance through traditional banking channels in the past ten years. The applications were made for a variety of reasons, the most common being to help fund the opening of a first shop, the expansion an existing shop, and the opening of an additional shop which together account for over half of the applications made. Other common reasons for applying for finance include for cosmetic improvements to shops and covid related borrowing.

Over 60% of those who applied for finance were unsuccessful in their applications. There doesn’t seem to be one specific reason why so many bookshops have been unable to secure funding through mainstream lenders – the reasons provided by lenders for refusing applications include applicants’ credit history, shops being located in listed buildings and Covid recovery grants being included on year end accounts. Although in almost half of cases booksellers were not told why their application was unsuccessful.

Of those who were unsuccessful in securing finance from mainstream lenders, over 80% did manage to secure funds from elsewhere. Personal savings were the most common way for booksellers to access funds to start or expand their businesses followed by borrowing money from friends or family.

Due to the unique way bookshops are admired by their local communities a number of booksellers were also able to raise from private local individual who recognize the contribution of bookshops to the local area or through more formal crowdfunding sources.

A number also got into a significant amount of personal debt to fund their businesses through credit cards or high interest personal loans. None of those who were unsuccessful in applying for business loans raised funds through small business grants or award schemes. The impact of denied loan and overdraft applications had varying effects on booksellers, from causing additional stress due to cashflow issues to stagnation in the business.

Women, Ethnic Minority and Working Class Booksellers

Based on responses to our survey there don’t seem to be any specific challenges for women booksellers when it comes to accessing SME Finance. The responses for men and women were broadly similar.

However, for booksellers who identify as being from a working class background there do some to be some additional barriers in accessing finance compared to those who don’t identity as being from a working class background. Almost three quarters of working class booksellers were unsuccessful when applying for finance from mainstream lenders compared to 43% of booksellers from non-working class backgrounds. Non-working class booksellers were also more likely (67%) to receive an explanation as to why their application was declined compared to working class booksellers where only 55% received such an explanation.

Statistically our survey wasn’t able to tell us much about the experience of booksellers from ethnic minority backgrounds. However one bookseller from a black Caribbean background gave us this piece of anecdotal evidence:

“ I am a black working class woman. I come from a long line of people who have been excluded from banks and other financial institutes…So when starting a business I did not consider going to a bank or other financial institution, because that is not what my community does. There is also a fear of debt for many marginalised groups and they often do not want the added burden of bank loans in an industry that already has many working at less than minimum wage. Not an issue for the privileged who have savings or the bank of mum and dad… I believe there is a much bigger question about financial institutions and how they are accessed by marginalised groups and the representation that is so desperately needed in these spaces.”

Conclusion

In recent years bookselling has been bucking the high street trend. The sector has been growing and an increasing number of bookshop owners have wanted to scale up their businesses and open additional shops. However the results of our survey indicate that the finance sector appears to view bookselling as a relatively high risk sector with the majority of loan and overdraft applications being unsuccessful. Consequently booksellers are having to rely on personal savings as well as loans from friends and family.

This is not only impeding growth and revitalisation on our high streets but also having a negative impact on the diversity of the sector. The start up costs of a new shop are in the tens of thousands of pounds, with a recent new shop in London needing around £90,000 of funds before it could open. Requiring aspiring booksellers to rely on personal savings and loans from friends and family quite clearly closes the sector to a large number of people from less well off backgrounds depriving their communities of the social and cultural enrichment a local bookshop can offer, and the local economy of a thriving business on its high street.

September 2023