How’s the retail shake-out working for you?

Some smiling faces in the retail community this morning, with news that like-for-like sales in September lifted by 1.5%, easily the best result of the year.  Why the bounce?  There will have been some pent-up demand, following the armchair weeks of the Olympics and Paralympics, and – extraordinarily – there was actual alignment between fashions instore and the weather outside, so customers stocked up on winter clothing.

This didn’t necessarily mean a kiss of life for the high street, however – online sales rose by 9.9% year-on-year, compared to 4.8% in August, so the big shift from physical stores to the online environment accelerated, once customers started shopping again.  And JJB Sports called in the administrators at the end of the month – one of the biggest failures in a terrible year for business failures.

There’s an interesting piece in the FT this morning (you’ll need a subscription), which lists some of 2012’s most notable casualties – Blacks, Game, Clintons etc – and notes the overall fall in the number of trading retail units across the country.  Most pertinently, it highlights the quiet retrenchment taking place within successful non-food chains across the country, whereby multiple smaller stores are being closed in favour of a fewer, larger stores in the big centres.  (nb my blog on the top eighty retail locations, from the start of this year).  It may not feel like it, but independent retailers are increasing their share of the number of trading retail units, with 67% of all stores controlled by indies, up 1% against 2011.

And this is where the retail shake-out in the headline comes in; progressively, over the past four years, the out-of-date leviathans, the single product chains, the superseded-by-technology businesses and the unable-to-respond-to-slicker-competition-or-just-ground-down-by-Amazon retailers have been bought out, merged or closed down.  There’s now a big “middle of the market” gap between the FTSE 100 corporations and the street-fighting new players, but this recessionary climate has been rolling for long enough to allow the biggest players careful application of their cash piles to reshape their store portfolios and integrate first-class online offers, while the new companies have grown up, and been designed from the ground up, for an omnichannel (apologies to John Ryan) world.

A guaranteed better retail tomorrow requires consumer confidence, and we haven’t yet turned that corner.  (With Europe unresolved, the end of austerity is still some way off.)  Nevertheless, we are seeing the birth of a new, fitter retail sector in the UK, with plenty of entrepreneurial spirit among the start-ups, and in larger, imaginatively run, modern businesses like Hotel Chocolat or The Hut.  This is a volatile and fast-changing sector (asked Bill Grimsey), and there will be more business failures, more empty shops, more job losses.  But good retail practice thrives on its ability to adapt, to anticipate changing consumer behaviour and surprise, delight and good value.  The new generation, and the wisest of the old, understand this, and are seizing the opportunity.

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Booksellers and publishers working together: The BA Conference

I spent Monday with the Booksellers Association Conference at the University of Warwick, and wrote up my immediate reactions in this piece, published by The Bookseller.

I do believe that there is a robust future for the best independent bookshops.  But they’ll have to evolve, and to stay ahead of their customers’ expectations rather than trailing behind them.  I hope that bookshop owners, publishers and their trade associations can work together to ensure that there is still a role for these businesses.

Do add your comments.


The pbook tail: an ursine stump. The ebook tail: very long, very thin. And very different…

Some Twittering this morning, inspired by a couple of articles spotted by Jellybooks‘ Andrew Rhomberg.  One is a market report from Publishing News, the other a blog entry distributed by ebookporn.

@arhomberg

Low prices are transforming ebook buying behaviour from “buying to read” to “buying to collect” http://ebookporn.tumblr.com/post/28845301698/why-publishers-are-having-difficulty-settling-on-a …

 ‏@frontofstore

Collect, or just accumulate?

@arhomberg

bit of both? Some is accumulate “wanted to read” (and then forgot), but also collect “don’t want to miss out” (deal!)

@arhomberg

the post certain rang a bell with me in that ebook buying and physical book buying are evolving somewhat differently

@arhomberg

you now have genuine impulse buying from the comfort of your home and at genuine “impulse prices”

@arhomberg

Front list/back list ratio is 40/60 for print, books, but 20/80 for ebooks! http://www.publishersweekly.com/pw/by-topic/industry-news/bookselling/article/53430-what-happened-to-the-long-tail-.html …

@frontofstore

Concepts like frontlist/backlist, based on print runs/reviews/marketing, increasingly redundant in ebook world.

PN notes that Nielsen Bookscan has reported a fall of 30%, almost one-third, in US sales of fiction backlist titles in printed book form, for the period ending 22nd July 2012, compared to one year earlier.

The shift in market shape is accelerating, not slowing down, with the article noting a significant fall in physical book space at retail outlets (over and above Borders’ US closure).  One major American publishing group is reporting that 80% of backlist sales are now in ebook format – the pbook long tail is getting shorter and shorter.  Assuming Amazon still accounts for a large part of those backlist sales, backlist bread-and-butter in bookshops must be looking very stumpy indeed.  And without backlist sales to prop up the discounted frontlist, the book-specific store model looks very troubled.  Booksellers need to diversify, and to recognise that the “general bookstore” is probably unsustainable.

But hell, you know that already.  What’s piqued my interest today is the effect that all of this will have on publishers – and not so much on the grand strategies of media groups (many of which are quite forward-looking), but more on the basics of seasonality, range management and changing consumption patterns.

Amazon made one of their opaque announcements this week, proclaiming that for every 100 physical paperbacks and hardbacks they had sold in 2012, UK customers had downloaded 114 titles to its Kindle e-reader.  Such is Amazon’s dominance in the UK book market that this was headlined “Readers are now buying more e-books than printed books“, ignoring the enfeebled minority of book-lovers who are doltish enough not to use Amazon.

Ebook customers aren’t behaving like pbook customers.  Are you a traditional “heavy book buyer”?  If so, how many books might you buy for yourself at a time – four, five?  Any more, and the weight/bulk will be too much to carry, and once you get home, there’s the imputation that all those pages piled up at your bedside must be read.

Whereas ebooks – pah, easy.  Click, download.  Click, download.  Moby-Dick – always meant to read that.  Click, download.  À la recherche du temps perdutwelve volumes for £3.25 – no problem.  Click, download.  Having it on your Kindle is almost tantamount to reading the thing anyway.

Back to that ebookporn piece.  As the writer notes, people are downloading “huge chunks of content that will never be read”.  The piece concludes:

If your download 70 books at $0.99 each you are spending $70 and acquiring years of books to read. Very soon this reader stops purchasing and that sales bubble bursts.

If instead they were to spend not $70 for 70 books but $7 a month for access to 7 million books this reader spends $84 a year, year in and year out.  Knowledge is light and it stands to reason that access to all books can be sold like a utility such as electricity, water, and internet access.

This is what might be described, broadly speaking, as the Spotify principle, and it’s one that slashes through publishing, bookshops and libraries as we know them.  Which has more value to a reader who has no desire to surround him/herself with dead tree content – 70 ebooks, most of them unread and never-to-be-read, or an almost infinite quantity of content, from classics to trash, all available from the cloud at a moment’s notice?

This brings us back to frontlist and backlist.  I can understand how new ebook content can break through and succeed, whether a title starts with word-of-mouth build, typical of self-published hits, or is driven by a professional marketing campaign.  However, that approach divides ebooks into Monster Hits and Everything Else.  When publishers were putting out a few dozen pbook titles each season, they were reasonably certain that most bookstores would carry/display/promote most of those titles.  The books would get their place in the sun, and then (if they’d sold a few copies) earn a position in the backlist, where sales could tick over unto eternity.  They would move from frontlist to backlist; most of them heading ultimately to oblivion, and few lasting for lifetimes.

There is no straightforward translation of this old world into the land of ebooks, where hits will be bigger and faster, but will probably also be forgotten more swiftly.  The solution, of course, is not to try and force a frontlist/backlist pbook mindset on the ebook world, but to adapt methods that works best for readers – who now have the freedom to behave in a totally different, less considered way.

Note, methods.  Sales will fluctuate; surge, recede and return again.  Content will no longer be defined by its copyright date, but by its relevance to a particular reader’s needs.  Publishers will require a whole range of different sales tactics which are reliant on understanding the end customer.  This is best achieved through partnership with sellers, sharing sales data and market understanding, though it runs counter to Amazon’s established strategy – Seattle is determined to hold on to its data and control the customer relationship.

The “Spotify” approach is a rational response to the hangover that will follow downloading excess; alternatively, publishers may have to assume that a high proportion of ebooks will be sampled, but never read, and price them accordingly.  Neither solution represents a straightforward “format shift” (in the way that hardcovers were succeeded by paperbacks in the mid 20th century).  Consumers aren’t thinking in those terms, so publishers are going to have to change their model fundamentally.  And because the book has been such a successful object for so many centuries, that’s a difficult shift for people and corporations alike.  Ask any old bookseller – we know…

And to close, a gratuitous photo of about seventy pbooks, all of them pretty well-read…


The changing entertainment market

Retail Week, The Grocer, The Bookseller and others have all reviewed Kantar Worldpanel‘s latest analysis of the UK entertainment market, which focuses on the 12 weeks through to mid-June.

Despite all this coverage, there is a some vagueness as to what is and isn’t included in their definition of entertainment.  As far as I can tell, however, we are looking at:

– CDs (and other recorded music)

– DVDs (and other video content)

– console and PC games

– downloads

It looks as “downloads” includes ebooks, but the sector definition as a whole doesn’t include pbooks.

It’s unclear how broadly downloads are defined – all apps, or just those that have some kinship to traditional formats?  If so, that would be a “yes” to Angry Birds, but a “no” to business apps.

It’s also unclear whether all subsidiaries are properly accounted for – so, for instance, are LoveFilm downloads included in Amazon total?

Still, whatever the definition, it all makes for a good story.  The changes in percentage point share are pretty predictable – Amazon up, HMV down, Game Group – with multiple store closures following administration – well down.

But I am interested in the scale of some of the gains.  Of course, the overall size of the market fluctuates, but for iTunes to move from 6.0% to 8.8% represents an increase in penetration of nearly 50%.  And, LoveFilm or not, Amazon’s growth continues powerfully, with no reason to assume it will slow down in the foreseeable future.

Tesco’s tribulations and Sainsbury’s progress are both graphically illustrated here – indeed, if these numbers are a microcosm of current trading at Tesco, that would be a concern.

Meanwhile, Play.com sees its share slide, as it loses consumer visibility.  Amazon isn’t just taking sales from bricks and mortar retailers…

That the “Others” are growing their share suggests diversity in the market.  I wonder who they might be?


Sainsbury’s and Anobii

I’ve written a column for The Bookseller on Sainsbury’s acquisition of the majority of the Anobii business from HMV – you can read it here:

http://www.thebookseller.com/blogs/what-anobii-link-means.html

To read more on the background to the deal, click here.


There are a Million Stories in the Naked Book…

Philip Jones, deputy editor of The Bookseller, presents The Naked Book, a fortnightly radio show “dedicated to ripping the covers off print books and finding out what lies beneath”.

I was invited to participate in the most recent edition, Face the Bafflement and Do It Anyway, where I was joined by Dublin publisher/commentator Eoin Purcell, and Laura Owen of New York City’s Paid Content.  We covered the waterfront at an indecent speed, and with a high degree of candour, and low levels of obeisance.  It’s the longest day today, and it’s pouring with rain – what better way to pass an hour than to log in and enjoy.

You can listen to the broadcast here.


Waterstones and Amazon: A good partnership?

I’ve written a piece for Retail Week about Waterstones and Amazon, published today.  You don’t need a subscription to access it, though you will need to log on:

http://www.retail-week.com/comment/waterstones-and-amazon-a-good-partnership/5037121.article?blocktitle=Retail-Comment-&-Opinion&contentID=5972#.T8iIObBfGZg