Interview with Joan Tarrida

The global financial and economic crisis is affecting Bertelsmann’s businesses, too – but in very different ways depending on the company or country. Therefore, at each Bertelsmann business, the respective entrepreneurs have to decide locally what measures they are going to take to counter impending or actual revenue declines. And what measures they can use to perhaps even gain additional market share and the added security that comes with it. In fact, few global companies have the kind of structure that allows them to respond as quickly and flexibly to changing economic conditions as Bertelsmann – where decentralization, and each entrepreneur’s responsibility for his own sector, is seen as a cornerstone of the corporate culture. To show how Bertelsmann’s businesses in various divisions and countries are dealing with the recession, we print in interview with Joan Tarrida, Head of Publishing, DirectGroup Spain and DirectGroup Portugal.

To what extent has your industry been hit by the economic crisis? 

This crisis began to affect the Spanish book market later than other industries, but starting in March 2009 we noticed early signs: since then, the market has shown a drop in sales versus the same period in 2008. However, our industry has proven more resilient than other sectors, even those close to ours. 

Has your own business been negatively affected by the crisis? 

Some of the key indicators at Círculo de Lectores and our publishing and retail businesses in Spain have been affected. For example, the activity rate of our members has decreased slightly versus 2008 – which means people are buying a bit less. Moreover, some publishers have reduced their prices slightly due to the economic situation, which directly impacts our average turnover . Thirdly, although the situation is not critical here, we have seen a slight increase in member attrition.Over the past few months, anticipating the effects of the crisis, we have developed a plan with numerous measures to counteract this situation by both increasing sales and reducing costs. First of all, we are aiming to offer all the bestselling titles in the club at the same time as the book retail market – and at a good discount. In addition, if our customers buy a second book, they only pay €9.90 for a title from a certain range. And thirdly, we are publishing more and better long-running series in our catalogues to gain more subscribers. These three measures will help us to increase the activity rate as well as the order value.

On the other hand, a crisis always contains opportunities for a well-established business like ours: due to the high unemployment rate in Spain, we have been able to build a bigger and better commercial team, at a lower cost than in previous years. In addition, we have increased the number of salespeople who recruit members. As a result, this year we expect to see the highest new member recruitment figures since 2005.

Please give specific examples of how you are currently reducing costs. 

We have worked out a long list of savings measures to minimize both fixed and variable costs. We are focusing on cost optimization in member recruitment, advertising, marketing and catalogues. Furthermore, our plan includes several initiatives to reduce our building maintenance costs, and the introduction of a restrictive policy on various expenses such as travel and meals, to name just a couple. Finally, we are implementing plans to optimize our product costs and other variable costs by improving our logistics, commercial and administrative processes. Cost has in fact been a focus of our attention for some time already: In close partnership with the employee representatives, we have reduced the number of employees at the head office in Barcelona and in all our commercial offices around Spain by almost a fifth since 2007 – through early retirement and voluntary resignation. 

How, in y our opinion, will your businesses develop from here?

We are working on ambitious plans that will help us first to ensure stability and eventually to grow. We are offering a wider and more interesting product portfolio to our members, not only media products, but also things like travel, insurance and financial services. But of course books remain our primary business and we are maintaining Círculo’s brand positioning as a cultural institution. We are currently the number three bookseller in Spain and we want to improve this position by taking advantage of the synergies generated by our two lines of business: the Círculo de Lectores club and the Librerías Bertrand book retail chain. The initiatives we‘ve developed over recent months have had a positive impact among our members and have also been especially attractive for heavy readers who usually buy their books only in bookstores.

What entrepreneurial skills are in particularly high demand at the moment? 

More than ever we need to prove our creativity, our courage to undertake new initiatives and our entrepreneurial ability to seize the opportunities that the crisis can bring. This is anything but a cliché: we want to continue developing the solid and optimistic team that is at the heart of our company and generate excellent results – as we have done in recent years.

What do you tell your employees at times like this? 

We need to keep our teams motivated and confident that we are able to successfully overcome this crisis. We all have to be conscious that a lot depends on us. A club like ours, which attracts more than 200,000 new members every year, has a lot of potential. Now more than ever, we need to emphasize how important it is to work together towards the same objectives, and seize the opportunities this crisis contains.