In an exclusive interview, the book and stationery chain's new owners tell Karyn Scherer about their plans for one of the best-known names in NZ retailing.
It probably speaks volumes about the type of person she is, but Anne Norman doesn't mind admitting she hates the board game Monopoly. "It's so boring," she grumbles.
The man she has just hired as the new managing director for her family's latest business venture begs to differ. "Every household should have Monopoly," he argues. "It's my favourite game."
Ian Draper is clearly one of those competitive players who gets a little too enthusiastic when it's time to collect the rent for Park Lane. But Norman can't resist teasing him a little more.
It was largely due to Draper's powers of persuasion that she and her husband David ended up buying Whitcoulls, she suggests.
"Someone gave us Ian's name and we thought there might be an opportunity for him in our own firm. But honestly, when he came all he would talk about was jolly Whitcoulls, and we figured the only way to shut this guy up was to buy the damn thing!"
She is, of course, not being entirely serious. Yet the Normans are clearly very serious about the future of Whitcoulls, and so is Draper - so serious that for the second time in two years, they even consent to chatting with the Herald. But they absolutely refuse to allow any more photos to be taken.
"How many photos do you have of Graeme Hart?" Draper retorts.
He has a point. For several decades, the Normans have remained almost as mysterious - perhaps even more so - as New Zealand's richest man, all the while steadily building a retail empire that while not quite up there with Rank Group, is almost certainly one of New Zealand's biggest businesses, and biggest employers.
But unlike Hart, the Normans prefer to hold on to their assets, possibly forever. "If David was here, he'd say we've never sold a business," Anne chirps.
As it happens, volcanic ash has kept David in Australia on the day we agree to meet, in a nondescript boardroom in a nondescript building on the outskirts of Auckland's CBD. But his absence is not really that unusual, given that he spends around half his time in Australia anyway, running the Australian arm of James Pascoe Limited.
According to Australian company records, that subsidiary alone - which includes the jewellery chains Prouds, Goldmark and Angus & Coote - recorded revenue of more than $750 million last year. Add to that the revenue from Pascoes and Stewart Dawsons in New Zealand, plus homeware chain Stevens and department store Farmers, and we're talking about nearly 10,000 employees, and revenue getting close to $2 billion.
The Whitcoulls purchase, which was finally confirmed on June 21, has added an extra 900 or so people to the payroll, and around $150 million or so to turnover.
It doesn't seem to have sunk in for the public yet, but this very private company is larger than the Warehouse, and at least four times as big as Michael Hill International.
Group finance manager Kevin Turner, who is also present, is coy about the details. But he is happy to join in the joshing. "Why do you do it? Because you enjoy it, Anne," he prompts at one point.
"That's right. You see opportunities like Whitcoulls and how can you not do it?" she agrees. "How can you not take up that opportunity?"
Actually, plenty of people seemed quite happy to give that opportunity a miss, and the Normans are well aware there are some observers who are convinced they are throwing a considerable chunk of their considerable fortune down a slowly leaking drain.
Over the past year, stories of turmoil in the international book trade, and the threats it faces from globalisation and new technology, have raised the spectre of the similar anguish the music industry has already gone through.
While the take-up of ebooks in New Zealand remains unknown, given that no-one knows exactly how many ereaders or ebooks companies such as Amazon are selling Downunder, it is generally accepted that it is probably still very small. But that isn't the case overseas.
It was reported this week that the average British shopper now spends £4 per month on ebooks. For Random House USA, ebooks already make up a third of its sales.
Borders, once hailed as a haven for book lovers, is enduring a slow and painful death, and Barnes & Noble is battling hard to stay alive. Across the Tasman, not a single potential buyer has yet emerged for Whitcoulls' sister company, book chain Angus & Robertson.
Whitcoulls can trace its roots to a bookstore founded in 1882 in Christchurch's Cashel St, and has been rated as one of the best-known brands in New Zealand. Yet it is widely believed the Normans, and possibly PaperPlus, were the only potential buyers to show any serious interest in the chain. And it has already been revealed that they do not intend to keep the Borders brand going in this country.
But the naysayers were similarly pessimistic about the future of Farmers when the Normans bought that retail business for $122 million in 2003 - and look at it now, notes Draper.
"I think it's a great story that Whitcoulls is back in New Zealand hands," he enthuses. "It's also sitting in a group that has a history of turning businesses around. Farmers is another business that was Australian-owned for a long period of time, and that's had a huge turnaround in the past few years."
Draper is a Brit who came to New Zealand as a tourist in the mid-90s and loved it so much he decided to stay. He had previously worked for supermarket giant Safeway, and in 1995 he landed a job in merchandising for Whitcoulls. By the time he left 13 years later, he had worked under seven different owners and had become its managing director.
In February 2007, Draper sang the praises of Whitcoulls' then-owners, Australia's Pacific Equity Partners (PEP), in an article in these very pages about the private equity boom. But 18 months later he resigned, shortly after PEP announced it had agreed to pay more than $100 million for 32 Borders stores in New Zealand, Australia and Singapore.
He is reluctant to talk about the past, and is clearly keen to get the business back on track as fast as possible, and certainly in time for the all-important Christmas rush.
By the time you read this, the windows of its flagship store in Auckland's Queen St may well have been cleaned - given that Anne Norman made it clear she couldn't stand the grime much longer. But planning is also underway for much more fundamental changes.
Draper confirms the Borders store on Queen St will continue to operate until its lease runs out next year, and will then be abandoned. The Borders at Riccarton in Christchurch will also be closed. But all existing staff will be offered jobs elsewhere in the group.
The other three Borders stores in Wellington and Auckland will be converted to the Whitcoulls brand. In Wellington, that means the existing Whitcoulls store on Lambton Quay may close. Despite rumours to the contrary, the Queen St store will remain a Whitcoulls, and the Normans are not planning to convert any Whitcoulls sites into Farmers stores.
In Christchurch, Whitcoulls stores in Riccarton and Bishopdale are also closing, and Cashel St and Colombo St have already been reduced to rubble. The Normans decided not to purchase the Papamoa store from the administrators, or a store in the Albany MegaCentre.
However, Draper is very excited about the potential of the remaining Borders stores, which are huge - particularly the one at Sylvia Park in Auckland. It is an ideal opportunity, he enthuses, to keep the best of what Borders had to offer - which was basically a massive range of books and magazines - and ditch the things didn't work, like music and silly knick-knacks.
Cafes will remain where they can be accommodated, and DVDs and gift items will continue to feature. And some categories will be greatly expanded, such as greeting cards, and its range of games and educational toys (hence the banter about Monopoly).
Draper proudly notes that a quarter of New Zealand's households are members of Whitcoulls' loyalty scheme, and he confirms that its popular marketing tools such as the Whitcoulls Top 100, Guaranteed Great Reads, and Staff Picks will continue. He is also keen to see a renewed emphasis on fiction, and on books for children.
"There are certain things that Whitcoulls has always done incredibly well that we want to be back and famous for, particularly fiction," he says. "We see fiction not just as hardback and paperback, but also ebook."
Yes, just in case there is any doubt about the subject, Whitcoulls will embrace the ebook, he confirms.
Anne Norman would hate people to think she doesn't understand the challenges the industry is facing.
"We haven't gone into this with blinkers on about ebooks," she stresses. "We are well aware of where they are going and what's needed to be done." But on the other hand, both are keen to point out that books make up just 30 per cent of Whitcoulls' sales.
"The ereader is important, but it's not the whole future," Norman insists. "You're still going to need a stapler and paper clips, too."
Draper is the first to admit the stores desperately need a makeover, and a new computer system. The old one, he notes, was installed in 1999.
"The only thing I would say is that in the last three years there has been very little investment in the fitouts and you can see that," he says. "They're quite tired and that's something we need to address as new owners."
In August, he and Anne plan to take a look at international best practice in book and stationery sales. A new, much-improved, touchscreen Kobo ereader will be on sale before Christmas, and many of its 60 or so stores will eventually feature the type of dedicated displays of ebooks and ereaders that are already popping up overseas. But again, they are both keen to stress that books are only part of the Whitcoulls story.
"What Whitcoulls has always been very good at is personal stationery, particularly the design and fashion type of stuff," says Draper. "It's very much at the moment about clearing out the old stock, and getting the new ranges in. There are New Zealand suppliers at the moment who are just thrilled that we are back looking at all the New Zealand products."
Turner notes that James Pascoe knows its customers so well, because they are so familiar.
"The same customer that shops at Farmers also shops at Whitcoulls, and Pascoes," he explains. "It's the same customer for all three brands."
That said, while the new owners are keen to see Whitcoulls get back to growth, they scotch any suggestion the chain might eventually expand into Australia.
Turner describes the Normans as "very hands on" owners, and at this stage they've got more than enough on their plate, he suggests.
Anne agrees: "There are just so many people with so many suggestions. We've got the funds to do it, but it's also a matter of the man hours."
According to Anne, the reaction from the existing staff to the change of ownership has been extremely heartening.
Long-time staff are particularly pleased that Ian Draper is back in charge, she says, and that he has been joined by another former executive, highly regarded book manager Joan Mackenzie.
"When we walked into the head office in Queen St, the reaction was just incredible," she says. "They saw Ian and just started clapping. The lady on the desk was just about in tears."
Draper confirms there have, indeed, been a few tears shed. "There's all the sort of emotions you'd expect, including relief. We walked into a store in Te Rapa the other day and said 'Joan Mackenzie's coming back' and you should have seen the smiles on their faces. Someone said they thought their manager had won Lotto."
Mackenzie, who joined Whitcoulls' main rival, PaperPlus, after PEP decided to move its book-buying team to Melbourne, insists the feelings are mutual.
She is already convinced the Normans will be the best owners of the business since before the days when Brierley Investments took control in the early '80s.
"I honestly believe that the business is going to have the best opportunity to thrive that it's had for a very, very long time," she gushes. "They are really extraordinary people who take a medium to long-term view and understand that there needs to be investment to deliver a great result. I think we're just terribly lucky to have a chance to work with them."
Perhaps unsurprisingly, Mackenzie believes that fears ereaders will kill off bricks-and-mortar booksellers are greatly exaggerated. Surveys show that Kiwis continue to rate shopping as one of their favourite leisure activities, she says, and she doesn't believe we get the same social stimulus from doing that online.
"The other adjunct to that is that since the introduction of ereaders and ebooks I reckon there has been more public debate and talk about books and reading than there has been in my entire lifetime... Yes, ebooks absolutely are here and we're going to be a real player in that, but ultimately they are just a format and we have had to adapt to all sorts of different formats over the years."
By all accounts, the local publishing industry is also delighted with the new owners.
Macmillan boss David Joel says the current state of many stores is "absolutely appalling", and he is particularly pleased that both Draper and Mackenzie are back on board.
"Ian is a great guy," he enthuses. "He's hugely competent, and they couldn't have found a better person. And the same goes for Joan."
As for the Normans: "I don't think anyone has got an unkind word to say. They're seen as saviours, and I'm sure they'll bring the business back into balance and profitability, and they'll do it with a passion and an interest that was so obviously missing before."
It is widely believed the sale of REDGroup's New Zealand assets, including Whitcoulls, Borders and Bennetts, has so far raised just $35 million.
Unsecured creditors, who are collectively owed more than $21 million, are not expecting to get back more than 4 per cent of what they are owed.
Although many remain bitter about the losses they have suffered, they are also relieved the sale process didn't drag on too long.
"In terms of what could have happened, this has probably been the best possible outcome," says Andrew Baker, whose Palmerston North company, IQ Ideas, supplies puzzles for Whitcoulls.
"From my dealings with the new owners and the decisions they've made, they're getting things back up to speed as quickly as possible, and they seem to be doing a pretty good job," says Baker. "In terms of what it means for local business in New Zealand, I think it's all good news."
Auckland academic Ian Hunter, who was commissioned by the Normans to write the history of Farmers for its centenary, hopes the entire business community also learns a lesson from the history of Whitcoulls.
In particular, he hopes the Normans' success will inspire business schools to teach their students there is more than one way to triumph in commerce.
Hunter, who is an associate professor at the University of Auckland Business School, has spent much of his career recording the history of some of New Zealand's most prominent private companies, and has long been convinced that the success of family-owned businesses is often overlooked in this country, particularly by the media.
In fact, there are plenty of families like the Normans - such as the Gallaghers, the Barfoots, and the people who run Jason Products, just to name just a few, he says.
"You look at the history of New Zealand business through the '80s and '90s and one of the tragedies has been those iconic companies who were purchased by corporate raiders or by private equity firms who really had no vested interest in growing those organisations or committing to the people inside those organisations," he suggests.
"I think the dramatic difference the Normans offer is not only are they New Zealanders, but they have proved that they buy these iconic companies and they hold on to them, and they invest in the people and the brands."
It's a hot topic internationally, says Hunter, exemplified in Britain right now by the fact that once-dowdy department store John Lewis has suddenly become the toast of business commentators for surviving so well through the latest recession.
"I was at an international conference last year of deans of business schools, and there were some guys there from Harvard, and they were standing up and saying: 'We need to revisit the model we've been teaching our students because it's been shown to be hollow'. And managers and directors are also wanting alternative approaches. The Normans have proved that there are alternatives, and that it can work over several decades."
In their personal lives, as well as their business lives, the Normans practise what they preach, he says.
"They practise frugality, and they're thrifty, and they're careful where they spend their money, and they invest in the stock, so the presentation is there. It's 'intelligent business with heart' - I think that is the essence of what we need to teach our students, and it's the message our young business leaders need to hear today."
While Anne Norman is quick to note that New Zealand has many successful retailers who have chosen to raise money from the public - such as the Warehouse, Briscoes, Michael Hill and Kathmandu - she confirms that James Pascoe is unlikely to ever go down that route.
The problem with public companies, she agrees, is that they are much more exposed when there is a downturn.
Pascoes, she notes, like Farmers and Whitcoulls, has so far managed to survive the Great Depression and two World Wars largely because it has been able to accept that not every year will be a good year.
Three children and a son-in-law already work in the company, so a succession plan is firmly in place.
"We're long-term people. The previous owners of Farmers, before the end of each year they had a massive sale to get the sales up. We don't have to do that. There's no window dressing. We're not having to report to the Stock Exchange. We have a totally different approach."
Sir Stephen Tindall did indeed hint several years ago that investors' focus on the short-term was one of the reasons he was at that stage keen to take the company private. And Sir Michael Hill is also making similar noises at present.
Kevin Turner agrees public companies do have some drawbacks. "It's all about maintaining the share price, rather than running the business," he suggests.
As a private company, James Pascoe is able to reinvest its profits in its businesses, instead of handing them over to investors, he notes.
"That's something that a lot of business aren't able to do because they have to pay out to their shareholders. But there is a real reinvestment here.
"Look at Farmers and the way it's come on - you'll find that in Whitcoulls in a short period of time, too. We're able to reinvest and grow the business. It's actually quite important."