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.
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 …
Collect, or just accumulate?
bit of both? Some is accumulate “wanted to read” (and then forgot), but also collect “don’t want to miss out” (deal!)
the post certain rang a bell with me in that ebook buying and physical book buying are evolving somewhat differently
you now have genuine impulse buying from the comfort of your home and at genuine “impulse prices”
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 …
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 perdu, twelve 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…
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
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?
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.
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:
The Bookseller has rounded up some of the press commentary that followed Monday’s announcement of Waterstones’ new relationship with Amazon. Speaking to The Guardian, James Daunt stated that Waterstones’ owner Alexander Mamut is putting “tens of millions of pounds” into the store refurbishment programme, which will see roughly 100 of its stores refitted this year.
Some of those refits are already completed, and they merit your attention. I popped into the Twickenham branch yesterday afternoon. This was opened as an Ottakars in about 2005, and has run with that brand’s cherrywood fixtures and green carpet ever since. (Photo below shows a typical Ottakars interior: ageofuncertainty.blogspot.com)
The new Waterstones look has been delivered on a carefully managed budget, but the feel of the shop has changed totally. Gone is the clutter of over-bearing fixtures and narrow aisles, and in its place is a cool, classic/modern shop.
The most immediately noticeable changes are as follows:
The front two-thirds of the store are uncarpeted, and now have exposed floorboards.
As this photo of the front of store demonstrates, the overall appearance is clean and classy. That “gateleg” table can only carry so much stock, and is clearly not designed to have understock rammed beneath it.
Cards and other impulse items are right at the front (the entrance is immediately to the left of the photo). New books merchandising is subtle – too subtle?
But it’s the wooden floor that makes the real, immediate difference, reminiscent of Waterstone’s in Hampstead back in the 1980s. It exudes authority and class.
Twickenham isn’t the most flexible of retail spaces – it’s a long, narrow “bowling alley”, with a two-foot jump in height in the rear third of the store. As you can see, there’s a plain carpet in here; lighting is a combination of directional spots and “domestic” lampshades, and fixtures are a mix of new (all black) and refurbed Ottakars (cherry with affixed black surrounds).
Tight ceilings here, so the tops of the bookcases abut the tiles. Unless you’ve got nine-foot ceiling heights, this always induces a slight claustrophobia. The front two-thirds of the store are much airier.
So, this is an attractive, sensibly sized store with the right level of sophistication for its suburban/professional customer base. I enjoyed browsing through the store, though I’d like to be surprised a little more often by the title/range choices, which mostly feel safe and generic.
1. When the Kindle tie-up goes live in the autumn, how much space will it require, whereabouts in the store, and with what effect on the overall experience? I’d hazard that the new shopfit has fewer shelves than the old, but I may have been deceived by the general decluttering – practically all spinners, dumpbins and other detritus have been consigned to the skip. With the exception of a few book tables, everything (cards, toys etc) sells from bookcase carcases now.
2. It’s often a feature of newly remodelled shops, but the feel at present is pretty sterile. The store needs more imagery, and more opportunities for the Twickenham team to share their enthusiasm with their customers.
3. Waterstones has always struggled with merchandising children’s books properly. This bay is adjacent to the central aisle; a concession has been made to tumbling tots in the form of a mat on the timber floor, but the overall effect is still one of children’s books displayed for adults to select and buy without undue lingering. The PoS is old here, so there may be a makeover in the works, but children need a safe space that is clearly merchandised for them, and becomes a place where children want their parents to take them. This was an area that (Tintin obsession notwithstanding) Ottakars tended to get right, but Waterstones still gets wrong.
Of course, children’s publishing is being supplanted/enhanced (you choose) by iPad apps and other digital media, but I’d contend that the children’s printed book category is a whole lot more robust than paperback genre fiction. Particularly after Amazon has taken up residence in the shop.
And Amazon-to-come is now the spectre in the corner of every branch of Waterstones. Monday’s hysteria is slowly giving way to a more measured response to Waterstones’ new partnership. More measured, but no more comprehending or enthusiastic.
I’m a lover of bookshops large and small, and of course, like everyone, I understand that it’s no longer possible – no longer rational – to have pbook stores without a complementary and first-class ebook and online offer. I was very interested in this story in this morning’s Publishing Perspectives, which describes the creation in South America of an alliance between Grupo Planeta, Telefónica and Bertelsmann to create an “Airbus” to challenge Amazon’s “Boeing”. Quite what shape this project might take is unclear, but – as I argued last week at the World E-Reading Congress – publishing and bookselling can only enjoy a future that doesn’t result in total Amazon subsumption by working together – and, in the process, ensuring that a few decent bookshops survive.
And, as of next month (and notwithstanding WH Smith), Waterstones will be Twickenham’s only bookshop, as independent Langton’s closes after over 60 years of bookselling. It’s good to see Waterstones investing in its physical future, but that investment combined with an independence from Amazon would, I guess, have been even more welcome.
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No argument about what today’s big story is – though details of the proposed relationship between Waterstones and Amazon are scant at present. The Guardian is all over the story:
both merit your attention, and The Bookseller has of course been updating all day long.
The Bookseller asked me to write an instant blogpost, and you can read it here. I don’t just draw lessons from history, but I’ve been through one consummated relationship with Amazon in my life, so some reflection is allowed!
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The Bookseller has run a piece on the speech I gave to the World E-Reading Congress earlier this week, so I’m reproducing the text in this blog entry.
Whilst I’ve edited out some of the more obvious “lecture” elements (eg “Good afternoon, my name’s Philip Downer”), this is still a talk, so in places you may find it (even) more rhetorical than some of my usual writing; similarly, the grammar and syntax will be a little sketchy or forced in places!
My audience consisted of publishers, and those who provide publishing services – distribution, analysis, technical support, media coverage, plus a smattering of creatives (writers, illustrators, designers) and some online sellers of books and/or content. There were no bricks and mortar retailers present.
* * * * *
My theme for this afternoon is Bookselling: The past is another country, but the future is another planet.
This is a bit clunky, but on an agenda full of brave new worlders, keenly identifying opportunities and breakthroughs for the future of eReading, I am the lucky person who has elected to talk about shops.
I’ve given a few talks over recent months, and as I approach each one, the news for specialist booksellers appears to have got a little bit more challenging. At Frankfurt last year, I observed that “We are entering a world where a handful of corporations own proprietary formats through which all the books, and a great proportion of all other creative content, are channelled. New technology can do great things, but it can also damage supplier diversity and consumer choice.”
I stand by these words. The bigger and more powerful the mega-corporations become, the more entrenched they’ll be. They operate out of highly protected walled gardens, and their goal is to tie you, very tightly, into their specific eco-system. It isn’t in their interests to allow this situation to change – even though I would argue, it is clearly not in the best interests of every author, publisher and reader, for a handful of tech-driven organisations to own books and reading.
I’m talking to you today about retailing, rather than the broader outlook for publishing. However, the old author/agent/publisher/bookseller/reader model is significantly fractured and everyone in this industry needs to decide whether monopolies or diverse markets are more appropriate for its future.
As this is an eReading Congress, I think a show of hands would be appropriate.
Who uses an electronic device in their leisure reading – an eReader, a tablet, a smartphone? [Practically everybody in the room.]
Put your hand down if your principle device is a Kindle. [Around half of those present.]
OK. Now, lower your hand if your principle device is an iPad or iPhone. [The other half of the room.]
Sony? Kobo? Nook? AN Other? Samsung phone? PC? [No, no, no. Everybody used Amazon or Apple devices.]
Although they play very different roles, there are of course two, big dominant players in our new world, a retailer and a consumer electronics company. But Amazon and Apple are an odd couple
Amazon: is setting a course to becoming the world’s biggest retailer, and en route laying waste to the established author/publisher/bookseller ecosystem.
Take a look at its performance for the first quarter of this year:
Profit: $ 130,000,000
Amazon sells ebooks and pbooks at low margin, break-even or a loss. This (we are assured) benefits the customer.
Amazon has very patient investors, who support a high P/E ratio, currently running at over 90x. I assume they work on the principle that, once world domination is assured, the profits tap will be turned on. Otherwise, where’s the value?
How many sectors and countries does Amazon have to dominate before this happens?
Apple: is producing the products that everybody wants, selling phones, tablets and other hardware and content at a spectacular profit.
Notwithstanding Samsung, it pretty much leaves all its competitors in the dust. It also, by-the-bye, runs a highly successful and much-respected retail chain.
Looking at its quarter one performance:
This extraordinary margin, we understand, also benefits the customer; so Amazon’s 1% is a good thing, and Apple’s 29.6% is also a good thing.
Naturally, Apple’s investors are as happy as can be, and they’re even being promised dividend payments in the future. Oh, and Apple’s P/E ratio is a rather more rational 10.5.
Jeff and Steve have made this world for us in which consumers are happy to pay top dollar for the best hardware, and the lowest conceivable prices for content.
In the past month, of course, a new alliance has been formed – something of a 1990s supergroup. Is the Microsoft/Barnes & Noble alliance strategically brilliant, or a last throw of the dice? Microsoft has a track record of alliances with previous cycle winners, like Yahoo! and Nokia.
However, publishers and many readers are looking for alternatives to Amazon’s hegemony. The deal enables B&N’s Nook and College divisions to separate themselves from the old superstore business, and provides the firepower for the Nook to be launched worldwide, with a solid retailer base in the US.
Are Barnes & Noble the future, or is this just a coming together of legacy businesses? And what is a legacy business, anyway?
Ten years ago, if I’d said “legacy” to you, you’d have understood it in the old sense – “Something handed down from an ancestor or a predecessor or from the past”. A legacy was a good thing – real value created by previous generations, and a solid foundation for the present and the future.
Today, the word “legacy” is used as an unthinking term of abuse – essentially, any business that has a history longer than a few years is a “legacy” business, and thus unfit for purpose, and ripe to be taken down. Established publishing houses are described as “legacy businesses” by teenage entrepreneurs seeking to discredit them. Perhaps they fail to distinguish between a business that has a valuable inheritance, and has the capacity and the drive to embrace the new world, with one that isn’t in control of events. Or perhaps they confuse all established businesses with the fireworks of the tech sector, the Netscapes and MySpaces that crashed and burned; the Yahoos and Research In Motions whose innovation has been eclipsed by other, newer stars.
It’s inevitable that what appears to be change-making today will become – necessarily – protective and fixed tomorrow. Perhaps, in this sense, “legacy” simply means “grown-up and responsible”. Well, there are worse things to be, and, companies that once behaved radically will start to behave protectively instead, in order to maintain their primary income streams.
But let’s talk about retailing, because this is where a physical legacy can become really toxic. In the 1930s, Woolworths opened nearly 400 brand new stores across the UK. When I say “opened”, I don’t mean “rented a tin shed and screwed their name to the front”. I mean, they acquired freeholds, and built big, brand-new stores. This was a massive investment of cash and confidence in the market. The crowning glory was the Blackpool store, which opened in Spring 1938. Five storeys over 75,000 square feet, including two vast restaurants. Woolworths was one of the biggest and most powerful consumer brands in the world.
Building all those stores guaranteed Woolworth a strong presence in every town in the country. This was the legacy of its period of supergrowth, but as time passed, the retail offer lost its focus; the freeholds were sold, and the legacy of great stores was no longer a valuable inheritance, it was a millstone of failing retail premises.
Historically, this is what retailers have done – opened stores, and carried on opening them until sometime after the market cries “enough”! Clintons Cards and Game are two of the most recent examples in the UK – and then, of course, there are the challenges facing the remaining booksellers.
Right, here’s a scary prospect for you.
Imagine you’re running a chain of bookshops. We may be talking about hundreds or a handful; we may be talking about any country in the developed world. Two or three years ago, the era of the superstore came to an end. Now, I would argue, the era of the chain bookshop is going to follow, unless the model is radically reinvented.
So, if you’re running a chain of bookshops today, you have to do two impossible things.
The first is to deal with your straggling real estate, because, as I’ve discussed, the single biggest challenge for any bricks and mortar retailer is their legacy of old stores. However carefully that estate has been built, however appropriate it was five years ago, it is now shot through with toxicity. All of those shops are tied to long leases, with upward-only rent reviews. Landlords are operating in a shrinking market, so are in no position to give concessions to any business that wants to close a shop while the lease still has years to run. This leads to pre-packs and CVAs (company voluntary arrangement), but these acts of desperation are usually the prelude to administration.
All retail businesses have an unproductive tail, and any location that’s bad at the moment has the scope to get worse.
Archie Norman, Asda’s former CEO, has observed that retailers should close 5% of their estate every year, and he’s absolutely right – but I can think of no retail business that has heeded that advice until it’s much too late.
As a bookseller, your bricks and mortar shops have to be super-viable. You must close today’s loss-makers, and tomorrow’s loss-makers too.
Plenty of retailers are facing this problem right now – Argos, French Connection, Mothercare and Thorntons have all been in the news in recent weeks. However, although they’re vulnerable to online sellers, it’s still difficult to digitise a romper suit or a box of chocolates.
So, close your under-performing stores. Then define your customers and their interests, and close any further stores that don’t match that profile.
Your second impossible challenge, and one that is at the heart of this conference’s purpose, is that you have to compete in an omni-channel marketplace, and you have to do so against some of the richest corporations the world has ever seen. Logically, this is impossible, because it requires huge resources, and your chain of bookshops can’t do this alone.
This is where the book trade needs to pull together. This industry is at a crossroads where it either allows the global corporations to progress from being walled gardens to becoming super-fortresses; or it fights to ensure plurality. I salute unreservedly the stand that Macmillan and Pearson are taking, alongside Apple, in the Department of Justice case regarding agency pricing. A couple of weeks ago, Amazon decided to give away the Hunger Games eBook free of charge. Now, maybe I’m just losing it as I get older, but can anyone explain to me how giving away the best-selling book in the world helps to secure current income, or to create a future value proposition, for anyone other than Amazon? It may be that the publisher and thus the author still got paid, but at the long-term cost of proclaiming their work to be without value.
Booksellers today need the freedom to participate in the omnichannel world, and it is in everyone’s interests to lower those barriers. That means removing DRM, so that content becomes device-agnostic; customers can buy the hardware that suits them, and the content, at an appropriate price, from the retailer who can do the best job for them.
I would love to see thinking of this sort emerging from Microsoft and Barnes & Noble’s NewCo. If B&N thinks it now has the firepower to challenge Amazon without also changing the ground rules, then they will find that Amazon can always out-gun them. Anybody else with a stake in ebookselling needs to do likewise. You won’t beat Amazon by being a pale imitation of Amazon, pleading with consumers to do what’s best for the long-term health of the book trade. Consumers have enough to worry about. They will respond, though, to a different, better offer.
Your retail goal – because you’re running a chain of bookshops, remember? – has to be an integrated ebook and pbook offer, with full online visibility of stock by branch for your customers. You’ll need a financial model that supports “showrooming”, because it’s a fact of life. You’ll offer Click and Collect, targeted social marketing and all the rest of it – everything a sophisticated pure-play online retailer does, with a shop attached. You’ll need to understand more about your individual customers than ever before.
Your online and ebook offer can of course cover all categories. Your pbook offer must be reshaped to reflect the new reality. That means fewer fiction paperbacks, and fewer reference books, because the day of the “general bookshop” is over. You need to be known for doing a few things extremely well, not everything tolerably competently.
All of this sounds scary, and you will all be aware that the number of specialist bookshops in the UK has declined by over 20% since the credit crunch kicked off.
Booksellers – and, by extension, our suppliers and our customers – invested far too much energy in worrying about supermarkets, and not enough in recognising that Amazon wasn’t just another specialist competitor in a healthy eco-system, with a novel twist. Today, if we take all the UK’s true specialists, the Waterstones, the Foyles, the academic chains, all the independents, and add them together, I don’t suppose their unit sales are as great as Amazon’s are now.
There’s a school of thought that says, well, you pesky booksellers, you should have done more. Should have done it sooner. More fool you. I think this is a little like acknowledging that a fine historical building has caught fire, and saying “they should have installed a better sprinkler system. I’m not calling the fire brigade” – when there is still plenty of merit worth saving, and plenty that you’d miss if that magnificent building was gone.
Specialist booksellers – including independents – are now barely competing with each other at all any more. They’re competing with Amazon and Apple; they’re competing for time as well as spending.
However, here’s the interesting thing. At the risk of sounding like Clement Freud on Just A Minute, I’m going to run through a diverse list of retailers. Here goes:
Anthropologie • Argos • Asda • B&Q • Bentalls • Blacks • Comet • Conran Shop • Cotswold Outdoor • Dobbies • Eden Project • English Heritage • The Entertainer • Fortnum & Mason • Habitat • Halfords • Hamleys • Harrods • Harvey Nicholls • HMV • Historic Royal Palaces • Hobbycraft • Homebase • John Lewis • Lakeland • Morrisons • Mothercare • National Gallery • National Trust • 99p Stores • Oliver Bonas • PC World • Pets At Home • Poundland • Royal Horticultural Society Wisley • Ryman • Sainsbury’s • Selfridges • Tate • Tesco • Toys ‘R’ Us • Urban Outfitters • Wyevale Garden Centres
Most of these businesses are thriving, successful enterprises. Some are struggling – but all of these chains are also booksellers.
Some, like the supermarkets, are big, important players. Others offer books as a value proposition, or as part of the lifestyle offer they’re promoting, or as a souvenir of a day out.
But they all believe that there’s a place in their shops for physical books. Most of these retailers have a much clearer understanding of their brand, and of their customer, than general bookshops have.
The physical bookshop struggles, but the physical book can thrive.
We tend to look at the problem from a “growing online, declining physical” standpoint. But if the solution is to ensure that all physical stores have multichannel capability, surely the same applies to pureplay online retailers?
As Sarah Wilson of the Egremont Group has argued persuasively, without a high street presence, without the ability to see and touch the goods you want to buy, online sales will plateau. After all, if we all really wanted to, we could stop using bricks and mortar shops tomorrow, and just buy everything online – it’s all there, after all. But we don’t. Consumers of the future will be looking for an “integrated experience… as they choose to shop across channels and increasingly look on pure plays as employing yesterday’s model”.
OK, this is where it gets interesting. You’re running a chain of bookshops, remember? But chains are inevitably bland. Chains are corporate. Chains are bound by process; necessarily managed to lowest common denominator standards.
I’d posit that more good managers leave book chains and open their own bookshops than happens in most other sectors. They do it because they love what they do.
So, at this stage in the development of the bookshop, I think it’s time to acknowledge this. You could create a partnership model, like John Lewis’s.
Or you could be bolder, and create a franchise model. The centre would provide the technology, the systems back-up, the buying power. The managers acquire ownership of the stores, buying an interest in them or purchasing them outright, customising their shops as appropriate for their markets.
You cease to have a chain of stores. Instead, you have a network of individual specialists. They may go down the children’s route, open cafes, build non-book sales. Or they may, like the Harvard Bookstore, invest in Espresso Book machines; providing a real specialist service, with same-day delivery to local addresses, and next-day around the world.
That network of stores doesn’t have to be restricted to your core business. You can sell your chain’s expertise to other independent bookstores, and reinvent yourself as a bookshop service organisation.
We have a number of good businesses supporting UK booksellers. Gardners’ networked Hive website, offering pBooks and eBooks online; the Bookseller and Nielsen, providing news and reliable data; and of course the support of the Booksellers Association. I’d like to see all of these organisations – and others – committed to supporting everyone who is a bookselling specialist, whether they’re primarily selling eBooks or pBooks, online or instore. If anyone could pull this together it would be the BA, but the organisation would have to repurpose itself appropriately.
There’s a way forward for individually managed and owned shops that have full access to ebooks, and yet can localise their offer to suit each physical location, each local residential, business and academic population, in a way that chains inevitably struggle to deliver.
And funnily enough, your carefully tailored local offer could be exactly what individual customers around the world are looking for. And today, you can reach out to any potential customers. You can identify where there are similar populations, elsewhere in the country, elsewhere in the world, and serve them too.
Of course, this means that you and your shop need to have to have an opinion. A point of view. A personality. All of these things rolled up into a specific and saleable competence. Please some of the people most of the time, because you can’t be all things to all people.
Supermarkets have done their damage, and will reduce their book ranges as the mass-market transitions away from paper books. This is an opportunity for our industry’s specialists, who need to improve in quality and consistency. Some of our best bookshops are among the smallest and most independent, in every sense of the word.
Customers will still seek out good, well-run shops, and I suggest that the distinction between “independent” and “specialist chain” is a whole lot less important to everyone’s future, than the distinction between “specialist” and “non-specialist”.
A healthy bookselling sector is in the best interests of everyone in the trade – authors, agents, publishers, readers. Bookselling needs to remodel itself for the future, and do so in partnership with all the other key players in the publishing business.
But books and bookshops still matter, and there are still people who want to sell books. If those specialist bookshops focus on competing with each other for ever diminishing returns, they might disappear altogether. The more effectively they can work together, the more robust our retail offer in the future.
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My eBook, A Year at Front of Store, is available in these Amazon Kindle territories –
I started writing the Front of Store blog a year ago, as a response to British retailers’ 2010 Christmas trading numbers. A year later, a new set of results has been published, another Christmas has been put to bed, and it feels like a sensible time to take stock.
When I created the first entry, I couldn’t be certain what directions my blog would take – I knew I had plenty to say, both about my “home” trade of bookselling, and about the broader world of retail. And the news stories kept on coming throughout the year – Borders, HMV, Waterstone’s, and more recently Westfield, Tesco and Mary Portas. Underpinning the bricks and mortar triumphs and travails is the real unavoidable success story of modern retailing – online commerce, digitisation and Amazon.
Ah yes, Amazon. An inescapable part of everyone’s life now, bringing good things (service and value) to the consumer, while driving a coach-and-horses through established practices in every sector it touches. Like Apple, Amazon anticipates the future, leaving its competitors to react to its initiatives. Too often, Amazon’s competitors try to protect their heritage, where instead they should be repurposing their companies for the future.
There came a point last autumn when I looked at the total word count and thought, blimey, I’ve got a book here. Hence a Front of Store e-book – and, of course, I’m selling it through Kindle Direct Publishing. Industry estimates suggest that around 1.3m e-readers were bought in the UK over the Christmas period, and of that number, 1.2m were Kindles.
It would therefore be profoundly foolish to début anywhere other than on Kindle. Naturally, if I have a smash hit on my hands, I’ll make use of other formats – but the effort required to make a Kindle book has been fairly demanding – many evenings of editing and formatting in, and swearing at, Microsoft Word.
The initially published result was below par, so today’s buyers are being offered the second edition; after KDP struggled to translate tables and jpegs into ebook format in the first version, I went back and substituted lists and descriptions. This probably says more about my book-creating abilities than it does Amazon’s – but it underlines the complexity of creating “real” books, and the relative ease of ebook publishing.
I was talking to a friend last week who spends much of her life on planes and trains, and who loves her Kindle – convenience, accessibility and readability all score high marks with her. However, she confessed that she struggled to remember what she’d read on the Kindle; by contrast, physical books have a tactile presence that imprints itself on your memory (and thereafter, they sit on your shelves, whispering “remember me?”).
“A Year at Front of Store” is journalism, news and comment as it happens. I’ve carried out some pretty vigorous editing – excising time-expired pieces, eliminating anything that required colour illustration (or indeed any pictures at all), improving syntax (a bit), and adding in summaries and afterwords in the appropriate places. I’ve also included pieces that were published elsewhere, and added the full text of my Frankfurt address from October.
What I haven’t done is to apply any Winston Smith editing, so I don’t foresee that Mamut will buy Waterstone’s in June, or that London will riot in August.
There are a number of themes that I’d like to explore for a book “proper”, which will require a shift from journalism to more considered writing. The retail industry continues to be the most fascinating business arena – fast-moving, unpredictable, unsafe, and undergoing its most fundamental changes since the birth of the supermarkets.
I’d like to give a big hurrah for WordPress, which allows the Front of Store blog to happen, and whose text is relatively easy to shunt into Word, and thence to KDP. The blog has created opportunities for the Front of Store consultancy, as well as opening up some fascinating opportunities to speak at conferences and to advise behind closed doors.
Finally, thanks for reading. Readership of Front of Store has been growing exponentially – January’s hit-rate is 30% higher than December, which was 48% higher than November – and so on. Here’s to an exciting, challenging, ever-changing 2012.
The festive season hangover – the publication of Christmas trading results – is almost completed. WH Smith will announce next week and, on past form, that is likely to be the end of it. Thereafter, we will have to wait for actual half-year and full-year reporting, so that we can understand the levels of discounting that were needed to deliver some of those better-than-expected like-for-likes.
Away from the real strugglers, two businesses caught my attention. The first was, of course, Tesco, whose -2.3% LFLs sat uncomfortably next to Sainsbury’s +2.1% and Morrisons +0.7%. CEO Philip Clarke has now been in post for well over a hundred days, but he is acknowledging that Tesco has to change. His comments, allied to the poor trading figures, caused a sharp fall in Tesco’s share price, but it’s very clear that action is under way.
I’ve written before about the grudging nature of the Tesco store experience (here), and the sense I always get that the best interests of the consumer have to be aligned with the best interests of Tesco, rather than the other way around. It looks as though Clarke understands this – the Big Price Drop was yesterday’s response to today’s problem, and achieved the double of being trumped by other supermarkets’ vouchers whilst alienating loyal Clubcard holders; Fresh & Easy is looking like a bullet that needs to be bitten.
And here’s what interested me most: in conversation with Retail Week’s Alex Lawson, Clarke said:
You can go on growing space but we probably won’t be growing very big hypermarket space any more. We have got a few hypermarkets coming but will be announcing more on the bias of stores in April.
In other words, less of this in future?
And rather more of this?
We’ve seen problems for big box operators, as a result of online competition, in specialist sectors – Comet, Best Buy, Borders, Virgin Megastore and many more. However, the suggestion that Non-Food isn’t pulling its weight at Tesco; that Non-Food is as vulnerable in Tesco to online competition and showrooming as it is in less diversified specialist retailers – well, that is quite a sea-change. With 10% of all retail spending in the UK now taking place online, it’s inevitable that Tesco will be suffering attrition from online-only retailers, but the strategic shift implied by Philip Clarke (presaging an announcement in April) could herald the biggest shift in the pattern of UK retailing since Woolworth failed. Perhaps it also paves the way for Tesco to save the high street…?!
However, I don’t buy the “big box dinosaur” argument, although – as the Tesco Extra picture above demonstrates – you can reach a point when the size of your store becomes oppressive, and just adds to the unwelcomeness that can be part of the Tesco experience.
But good big boxes will survive and thrive, both because retail parks work exceptionally well (particularly away from London) as the most cost-effective way of bringing a diverse retail offer to a scattered population, but also because the big box experience, when done well, can deliver results that the high street just can’t match.
And so to Dixons. It’s been a filthy Christmas in electricals, with Best Buy closing down and Comet getting worse and worse as Kesa takes time to sell, leaving Dixons looking relatively healthy with a -7.0% like-for-likes. Chief Executive John Browett has been concentrating on changing the way the stores look and – more importantly – the way the customer feels about his business. I think he’s on the road to success – I liked the “Black” store at Westfield, and I really liked the refurbished Currys/PCWorld retail park store I visited earlier this week.
Like the store in this photograph, a consolidated electricals offer is now available under one roof, and sensibly the consumer electronics – audio, visual and computing – are on the ground level, with white goods – washing machines and vacuum cleaners – on a mezzanine. This makes for a smaller and more efficient footprint, but it also enables Dixons to create an electronics offer that I think makes John Lewis look tired and off-pace.
John Lewis? Bow, bow ye upper middle classes! But where JLP presents a brown goods world of carefully delineated TVs, radios, hifi and computing, the new Dixons layout recognises that we don’t use devices in this way any more, and that the distinctions between various product lines are now blurred. Its layout and flow presents a more effective offer for the consumer, and invites them to enhance their home electronics more effectively than old-style competitors. Wireless sound systems and big screens are now computer adjuncts, not “hi-fi” and “television”, and Dixons gets it.
Their Knowhow sub-brand message is driven home with relentless effectiveness – we really do understand this stuff, it says. Much has been made of the culture changes within the business, recognising (at last) that an ill-informed hard sell in an intimidating environment just doesn’t work any more. The new stores are customer friendly with good graphics, plenty of explanation and demonstration items, and informed but unpushy service.
Dixons has a huge estate – over 600 stores of various ages and configurations – and it has much to do to bring them all into line with current best practice. I’m optimistic, though – I think they’ve really got something here. However – please – they’ve got to do something about branding. The new stores aren’t “two stores under one roof” – they offer an integrated selection of electricals for the kitchen and every other room in the house (and office). Currys was a dismal washing machine shop, with neglible brand heritage (and it’s a word that looks poor on fascias, sounds blah when you say it). PC World harks back to the glories of Windows 95, but it leads with Apple and Kindle – suddenly, “PC World” sounds about as on-brand as Radio Rentals. Time to can these hoary old brands, and return to the one with the best heritage in the sector:
Images: Wikipedia; The Guardian; Peterborough Today
There’s been an explosion of righteous anger directed at Amazon in the United States over the past week, following the launch of its one-day Price Check programme:
The gist of this – as you will already know – is that the Amazon customer pops into their local bricks-and-mortar retailer, chain or indie, scans the barcode and price of their desired product into their smartphone, pings this free sample of market research over to Amazon, and enjoys a discount on the product as a result.
From sea to shining sea, there has been an explosion of disgust from competing US retailers and commentators – although Amazon is only formalising and rewarding a long-entrenched consumer behaviour. The practice of “showrooming” – online consumers using brick shops as unpaid research and product testing facilities – is well established. As Jonathan Main of Crystal Palace’s Crow on the Hill bookshop tweeted last weekend:
ooh look, a pair of showrooming hipsters.It’s not a good look walking all the way around the shop with yr phone set to camera, book in hand.
However, Amazon has crossed a line by encouraging and rewarding this behaviour, and is suddenly under fire from US Senators, noted authors and others. Here’s a digest of opprobrium from the MobyLives blog, complete with a splendid suggestion that Amazon should pay an “affiliate fee” to the brick retailers from whose knowledge and curacy they’re benefitting. And here’s Richard Russo in the New York Times, reporting reactions from well-known authors – Stephen King, Scott Turow etc – to Amazon’s move, with less hysteria, and a more considered appreciation of what’s at stake.
Scott [Turow] reminds me what happened the last time someone stood up to Amazon. Nearly two years ago, the Macmillan publishing group adopted a new sales model that would cost Macmillan in the short run, but allow other companies to enter or remain in the e-book market without having to take a loss on every sale. Amazon’s response to more competition? They refused to sell not merely Macmillan’s e-books, but nearly every physical book Macmillan published. Amazon eventually backed down, but its initial response helped shape a widespread sense that it envisions a world in which there will be no other booksellers or publishers, a world where, history suggests, Amazon may not use its power benignly or for the benefit of literary culture.
And yet, and yet…
Amazon’s positioning is consistent – like Wal-Mart, their constant focus is on reducing prices and adding value for their customers, and all of their actions are directed at this goal. As Jeff Bezos pithily sums up: “There are two kinds of companies, those that work to try to charge more and those that work to charge less. We will be the second”.
Amazon discounts heavily, but doesn’t appear to its millions of customers to be an asset-stripping, cost-shredding retailer – its website and apps work like a dream, its web content is compendious, its eReader has defined the market, and its logistics are impeccable. Unless the customer has a vested interest in the status quo (in itself a suspect motivation), what’s not to like?
The Word magazine (tag line: “Intelligent Life on Planet Rock”) operates a busy blogging site, with hundreds of regular contributors who are literate, informed and witty. It’s been running a thread titled: How is the Kindle working out for everyone?, and the answer – almost unanimously – is, it’s working out brilliantly, thanks, and I’ll never buy another paperback as long as I live.
Amazon delivers what customers want, but for some profound psychological reason, this doesn’t appear to be enough for Amazon – a win somehow isn’t a real WIN unless the competition is left coughing up blood in the gutter. It holds its retail competitors, its suppliers, and the jurisdictions in which it trades, in barely disguised contempt. Because they don’t share Amazon’s absolute commitment to value for the customer, they are, ipso facto, incomprehensibly selfish and feeble.
So, for Jeff Bezos, there are two types of company. However, there is only one type of world. One in which we need to cooperate as well as compete, one in which our actions have a social cost as well as a fiscal value.
There’s a sense in which Amazon’s mantra is Tea Party Commerce – the only thing that matters is what’s good for the individual; on balance, the customer’s low price is worth any number of negative outcomes elsewhere in the value and quality chain. As author Tom Perrota puts it in Russo’s NYT piece:
People have to understand that their short-term decision to save a couple bucks undermines their long-term interest in their community and vital, real-life literary culture.
This is about much more than poor, lovely bookshops, and the whole “Bookstores–those holy, papery pockets of goodness and light” argument. Indeed, while book people will always be vocal and often small-c conservative/big-L liberal, books weren’t formally included in the Amazon Price-Check promotion at all.
Amazon provides individual consumers with a great-value, highly reliable solution to many of its shopping needs, and books are just a minority part of its commercial mix; there is every indication that it aspires to become the largest retailer in the world. However, Amazon is so pointedly committed to YOU, the Always Right, Always First, Individual Customer, YOU, that they create impoverishment elsewhere which perhaps YOU (the customer) haven’t considered, or might not be wholly comfortable with.
Now, we are on very shaky ground here, because I don’t want to imply that giving the customer a good deal is depriving manufacturers of their Bentleys, publishers of their corner offices, or brick retailers of an extra slice of toast for breakfast. And lecturing consumers on how to spend their limited personal budgets is at best sanctimonious, at worst just crass. There is, however, a broader cost to pursuing lowest prices and disregarding everything else, when the value to the consumer starts to deprive the broader community.
Mary Portas’s report High Street Review, commissioned by David Cameron, has been published today. You can read it here, and I’m going to withhold comment until I’ve digested both the report and the reaction over the next couple of days. In introducing the report, Portas has stated:
I don’t want to live in a Britain that doesn’t care about community. And I believe that our high streets are a really important part of pulling people together in a way that a supermarket or shopping mall, however convenient, however entertaining and however slick, just never can.
Our high streets can be lively, dynamic, exciting and social places that give a sense of belonging and trust to a community. I fundamentally believe that once we invest in and create social capital in the heart of our communities, the economic capital will follow.
Her argument is being framed as anti-out of town, but it is also implicitly anti-online.
Out-of-town shopping can certainly suck the life out of a town centre, if that centre isn’t pro-actively managed and repurposed. But local retail jobs will still exist (albeit fewer of them), and the retailers will still be paying their business rates to the local council, and their taxes to central government. The consumer is getting better value and convenience, but at the expense of a vibrant town centre. These things can be fixed. And most brick retailers, wherever they’re situated, will raise funds for charities, support local schools and sports clubs, and add something back into the community they serve.
The very best value for the individual consumer, however, comes from online retailers who eschew these niceties; who avoid paying sales taxes and corporation taxes by every legal means (typically relying on laws that pre-date the creation of the online channel), and whose contribution to charity, education, the arts or recreation, is negligible. Local retail employment vanishes, and both high street and retail park will in due course be tinned-up.
It isn’t the job of consumers to seek anything other than the best deal for themselves and their families; and constant change has been a factor for retailers since the first recognisably modern shops opened in the 18th century. But we are running the risk that, by saving ourselves money in the short term, we will become more impoverished, both financially and spiritually. Interesting times indeed.
Lord Kitchener: University of Bolton, data.bolton.ac.uk