Supply chain challenges 'most extreme' of my career, says Shelley

In his annual letter to authors, Hachette UK c.e.o. David Shelley has warned ongoing supply chain problems are causing the “most extreme” challenges he has seen in his career but stressed the publisher is coping and Christmas sales are strong.

Supply chain issues have caused big problems for the industry in recent months with a mix of factors including the pandemic and Brexit leading to squeezes on paper and printing, alongside rocketing shipping costs and delays.

Addressing the problems in this year's letter, Shelley said: “One of the issues our team have been grappling with is a worldwide shortage of paper. Due to unexpected surges in sales in all markets during Covid lockdowns, the world has gone from having plentiful paper supplies to having not quite enough. We use FSC paper to print here and the squeeze has been particularly acute in this area.

“There has also been a similar challenge in printing capacity. With more books being printed to fulfil the additional orders, printing companies have been struggling, a problem worsened by the necessary Covid regulations that require frequent disinfecting of equipment and shorter shifts with fewer people, leading to decreased productivity. The issues have been acute in illustrated printers — which tend to be concentrated in China and Europe — and lead times have lengthened considerably for all illustrated titles.”

Shelley said warehouse capacity was also “at a premium” marking it “harder than normal” to book delivery slots with retailers. “And, as if this all weren’t enough, the admin required because of Brexit has made it incredibly time-consuming and challenging both to deliver titles from outside the UK and to export books,” he said.

He said the company's state of the art Hely Hutchinson Centre in Didcot had helped it cope with some of these challenges while, like other publishers, Hachette has been printing earlier. He said: “At the time of writing, I feel our production and distribution teams are managing to cope with these challenges without too many ill effects, but it is clear that these will be ongoing issues and that 2022 will be marked by them.”

Shelley, who became president of the Publishers Association this year, added: “Watch this space in 2022 and we will continue to do all we can to navigate these challenges that are, by a long way, the most extreme that I have seen in my 24 years in publishing.”

Talking about the year as a whole, Shelley said the early lockdown months saw “extremely high” online sales, particularly in fiction, children’s picture books, psychology and self-help, but noted the market had been “tougher” for non-fiction, illustrated titles and debuts due to bookshop closures.

He said a rise in sales in bricks and mortar bookshops post-lockdown was something he hoped would be a “perennial feature” of the market. Shelley, whose firm sponsors Independent Bookshop Week, said: “We have opened more accounts with independent bookshops this year than for many years. The lockdowns, coupled with a growing realisation that it is vital for communities to support local businesses, means that I hope we are going to see this increase continue in years to come.”

Shelley added: "Another interesting phenomenon that has outlasted the lockdowns has been a diversification of the online market. Online sales for high street shops, wholesalers, indies and Bookshop.org have remained at a much higher level than they were in February 2020. I see this as an extremely positive development because a diverse book trade is a good thing for all of us, and a terrific thing for readers."

“The Christmas gifting market has also remained strong this year, which is also a good sign that books remain front-of-mind for many consumers,” Shelley added. “With emphasis on environmental concerns following COP26, books are also seen as a more environmentally sustainable gift than those made of plastic.”

Export sales had been “patchy”, however, partly due to lockdowns but also Brexit-induced border delays and extra red tape in Europe. Despite this, “sales were up on both 2019 and 2020 across export territories, with notably strong sales in Australia and New Zealand”. There was also growth in India, China and the Middle East.

“Broadly, the pattern of ever-increasing demand for books in the English language across the world appears to be continuing and an ever greater share of our sales are outside the UK," he said. "To take account of this, we are continuing to grow and expand our presence in all key markets, including our offices in Australia, New Zealand, India, Hong Kong, Singapore, Jamaica, Dubai and Ireland.”

Audio sales continued to grow, with some of that replacing e-book and print purchases, he said. Here, “some of the largest percentage rises” were in sales of children’s books and specialist non-fiction, “showing that new readers are coming to audio all the time”. 

The audio market has seen a number of big moves in the past month with Spotify’s purchase of Findaway and Storytel’s acquisition of Audiobooks.com, but Shelley suggested the UK market still needed to diversify. He said: "There is still an issue in terms of the diversity of the marketplace for audio. As a publisher, we always want to serve our readers and listeners wherever they choose to shop, but we also welcome a varied field of retailers, which is a beneficial thing for consumers, authors and publishers alike."