Penguin Random House US is working with colleagues at PRH UK to retrofit the latter’s Grantham Book Services warehouse, located in Grantham, England, into a new operational hub for PRH US to fulfill orders from customers in continental Europe. The move is a reversal of plans announced by PRH UK last year to shut the Grantham facility by the end of 2025 as a result of the company's closing of its third-party distribution business.
In a memo, PRH global CEO Nihar Malaviya wrote that, after discussions between PRH UK and PRH US operations teams, it was decided that the warehouse could be used by PRH US to improve how the publisher delivers orders to accounts in continental Europe. The creation of a new U.K. hub for PRH US appears tied to Amazon’s decision last year to stop importing books for its U.K. and continental online stores, instead requiring American publishers to source books closer to the point of sale. The change has cost U.S. publishers millions of dollars in lost sales.
Although Malaviya didn’t refer to Amazon, he noted in the memo that the new hub will let its European retailers “sell more books at lower costs,” and that by bringing its printing and shipping functions closer to its continental European customers, PRH US will be able to “lower our carbon footprint and help our environmental and sustainability efforts.” Amazon cited reaching its sustainability goals as the reason for announcing the sourcing shift last year, though publishers believe that the move was more about offloading shipping costs to their businesses.
The new operation will be run on behalf of PRH US, Malaviya said. A new affiliate of PRH UK under the leadership of Annette Danek, executive v-p, chief supply chain officer, and managing director of U.K. distribution operations, together with local management, will support the operation.
Both Malaviya and Tom Weldon, chief executive of PRH UK, emphasized that the overhaul of the Grantham site does not mean that PRH UK has changed its mind about getting out of the third-party distribution business. It does mean, however, that a “significant” number of the roughly 200 workers at the warehouse who were scheduled to lose their jobs will now stay on to operate the new hub. Malaviya noted that even as PRH UK continues to gradually shut down the distribution business, it is also building the logistics and systems capabilities for the new hub. He said that the revamped facility is expected to be operational by next summer.
PRH US's creation of a new hub to reach U.K. and European retailers is the latest move by a U.S. company to respond to the disruptions caused by Amazon's sourcing decision. Earlier this year, Independent Publishers Group CEO Joe Matthews said that he was expanding the Chicago-based company's U.K. distribution arm's ability to help U.S. publishers meet Amazon’s requirements. He called early results "encouraging."
