Asda / HMV Is It Wise.Com?

Today we read that Asda, the UK arm of Walmart, is ‘considering’ a bid for UK entertainment retail casualty HMV. Administrators Deloitte have already almost halved the number of HMV stores leaving it with some 116 outlets and the deal may be attractive given Walmart’s own position in the same market in the US.

It is an interesting rumour given that their two biggest UK supermarket rivals have clearly pinned their money on going after the growing online media marketplace. It also comes on the back of the news that Argos is reintroducing CDs and DVDs into selective stores. The CD and DVD is clearly becoming transient technology and not one to invest in today unless you see a quick buck in ‘stacking them high and selling them cheap.’

Last year Sainsbury acquired the flagging Anobii ebook service, rebranded it and now are pushing it hard to their customer-base .  It may not give them a comprehensive online media offer but it starts to plug the gap.

Tesco,  now the third largest retailer in the world, have made their online intent clear by hiring Gavin Sathianathan, Facebook’s EMEA head of retail for Europe and Mark Bennett, a former EMI and Warner Music executive who headed up Sainsbury’s digital entertainment unit. In 2011, Tesco bought an 80% stake in the Blinkbox which gave them a competitive position against LoveFilm and Netflix and it also acquired music streamer, We7 and ebook retailer, Mobcast. It now has added Blinkboxbooks and Blinkboxmusic sites and is planning to target market its millions of customers about the services. Tesco are also about to launch a Clubcard TV channel, which will be available to Tesco’s ClubCard loyalty scheme members, free of charge, and will offer a mix of archive films and television shows. An interesting move after Argos had announced it was to close its own TV station. However, with some £64bn turnover and £3.9bn operating profit, Tesco has the money to compete in the media marketplace and is not about to simply roll over.

Both supermarkets have avoided the device wars and have stuck to being online and device agnostic. A wise move.

So what about Asda? Do they need the HMV store footprint in an online marketplace? They could flip the stores into smaller media outlets, but does that really make a difference?

When virtually every laptop, ultrabook, notebook and tablet today does not have a CD drive and even the car manufacturers are starting to fully embrace online,  is buying a store range that never understood this, is it wise.com?

The Asda £1 Bestseller Returns

Yesterday we visited our local Asda Supermarket, (WalMart) here in London and were immediately greeted by the £1 bestseller paperback stand. This is the same £1 promotion we wrote about last year.

It is after all January and sales time, so it must be ok and they do it every year, so let’s not rock the boat. It is somewhat ironic the display was sited in the same spot occupied by the Kobo ereaders before Christmas! A case of, out with the new and in with the old.

It’s especially sad to see many of the same authors with £1 stickers on their jackets and Peter James with several titles on offer when he was also subject only last year to the ludicrous 20p ebook promotions.

Only this week we have highlighted what we believe is the cynical £1 children’s book promotion being run by the child friendly McDonalds. Irrespective of the health issue, 15 million books at a £1 a pop must have an impact on consumer price and book value perception.

Now we read in DBW about the downward trend in book prices. Jeremy Greenfield has been tracking the prices of the top bestsellers and his findings tell us what we already know – prices are dropping. He ends with the line, ‘it’s hard to predict that ebook prices will rise again any time soon.’

There is no silver bullet on discounting and even if one did appear the value and price perception is that they are cheap. In fact they now compete, often poorly, with greeting cards!

Sweating the Physical Book Warehouse

In today’s world of constant digital bombardment I often forget the physical world and the need to constantly recalibrate its logistics capacity and resource, to react to the growing influence of digital content and new technology.

It was good to hear David Smith’s views on the state of physical logistics and fulfilment in today book supply chain. David is the Distribution Director at Macmillan (MDL) and someone I have long held in high regard.

As I expected the sector is under increased pressure on compliance, standards, service efficiency and international trade demands and volume and David duly explained these and the constant need to react to the ever raising bar. It was with great pride, as the architect that I saw some of those PubEasy screens that I had first visualised in what seems an age ago and a different lifetime!

However, the eye opener was with respect to warehousing and management of that warehouse itself. One would expect that space would be shrinking and heavy investment would be seriously capped whilst the digital market stabilised. Wrong. Not only are MDL expanding their square footage they are also considering significant robotic investment.

Is this wise I ask?

David explained the expansion footage at Swansea and their new High Bay units. MDL is not alone in investing in the automated high bay environment, where the books come to the picker and handling is minimised. But they are now considering radical robotic systems.

The KIVA system is such a system and works on a traditional aisle layout but with the pick face being transported via defined runs to the picker and then finding its new pick dynamically allocated location. Is this better than a high bay and does it provide the slot density and is it suited to books? I then find out that Amazon has recently bought not just the system but also the company that was founded in 2003 for just $775 million! So they obviously like it.

He then talked about the Auotstore system from Swisslock. This did away with the traditional aisles, pallet bays and layout and instead creates a cube of tote boxes each containing unique stock and again works on a dynamic pick slot basis. When the stock is required the cube opens up and releases the appropriate box, feeds it to the picker and then returns to an empty slot in the cube. Space optimisation is obviously maximised and the faces are constantly being replenished and picked and handling is again minimised.   Asda are going live on this system using 70,000 bins and 160 robots!

The big question with robotics is the obvious significant investment needed and the return it would generate and whether this can be justified within a publishing distribution business.  Automation isn’t just about single, cartoon picks or bulk movement it’s about all these demands in an environment that is also being impacted by constant changes in the market. The investment challenge for the physical book chain is the forecasting the impact that digital and the realignment of physical retail and distribution will cause.  What is certain is that further consolidation is needed and some will still say that there are too many players out there today and too many not able to make the investment needed. Further consolidation is almost demanded if the physical supply chain is to maximise its   economies of scale and scope to work deliver greater efficiency.

I always remember visiting a large publisher’s distribution facility only some 15 years ago. I watched  with amazement as it was just closing down on early Friday afternoon and wondering if they Ire seriously in the business of logistics or merely playing at it. It’s great that the likes of MDL clearly understand logistics and distribution and how to sweat the asset.

ASDA: Saving You Money (On Books) Everyday

Its now February and still we find Asda are continuing to turn up the discount screw on books.



This weekend we visited their store in Bristol and found many shelves filled with the £1 'b format' offers we previously covered, but now also some special £3 large format offers and one rack of £8 hardbacks. Has anybody done the maths on just how many ‘offers’ Asda has today on books and just how many units this adds up to?

The interesting question someone should be asking is, who is merchandising and supplying this depth and range of offer across the Asda estate and whether it is just a seasonal offer, or part of a more permanent one?

Today the UK press is covering Asda’s ereader offer, which is a bit strange given they don’t have an ebook offer – yet. The reader however will turn heads not because of its quality, but due to its price ticket of just £52.



The View Quest Colour eBook Reader or Mediabox 5" Media Tablet with eBook, Music and Video playback is described as,

the perfect travel companion. You can play music and videos with its built in speakers and a 5" widescreen, read eBooks in portrait or landscape mode, store and view photos and images and also has a built in voice recorder. The tablet is backlit for night time reading, and has a power saving mode to reduce eye strain and improve battery life.

We found many available from all sorts of sites but could not get one for less than £99. They claim it is fully compatible with Adobe ACS4 DRM, so on the face of it and despite its screen, its cheap.

So the question is where ASDA is going on books and the strategy of the other UK supermarkets, on what is becoming a high profile market opportunity?

Book Pricing Madness?

Today we took these pictures in Adsa, Island Gardens, London.
Just in case you can’t see it the price of the majority of the books is £1.

Yes £1 on the sticker.




So what can you get for £1?

Jack Higgins, Jeffery Archer, James Patterson, Catherine Cookson, Reginald Hill, Jackie Collins, Ian Rankin, Danielle Steel, Michael Connolly, David Baldacci, Clive Cussler and much more.

So we went to Amazon UK and Waterstones to see just how these deals faired and looked a few at random:

James Patterson, ‘Four Blind Mice’ RRP £7.99, AMZ £5.03 Waterstones £6.79
Ian Rankin, ‘A Good Hanging’ RRP £7.99, AMZ £5.59 Waterstones £5.59
Jeffery Archer, ‘Shall We Tell The President’ RRP £6.99, AMZ £4.94 Waterstones £6.39
Michael Connolly, ‘Black Ice’, RRP £6.99, AMZ £4.11 Waterstones £7.01

We wonder how anyone can compete with discounts so blazen and so deep. These prices are probably below those in the bargain market and equal to the Wordsworth classic prices. Forget whether these were bought in for clearance or are just being sold at a loss, the consumer perception is the only thing that matters and that it says books are cheap and the place to get them is the supermarket.

Interestingly we didn't see people fighting to secure these bargains and as you can tell from the pictures the aisles were exactly bustling with browsers. We obviously didn't also see anyone flipping to the copyright page to check the age of the books.

We had a look at Asda’s online offers but failed to find the same depth of offer although they did boast 80% off and have a significant range of titles available.

So it is just sale time madness or book pricing maddness?

The Price Is Right

We walked around Adsa (WalMart UK) this week. Denim jeans £3 and designer denims for £14, hardback and paper books, that are both current and fighting for sales in every other bookstore offered at 50% off. We can now buy most popular CDs between £5 and £8 and yet we still refer to this as ‘rip off Britian’.

The reality is that players such as the supermarkets have driven out production and supply chain waste and moved from production based, to market and demand driven costing. The physical manufacturing, distribution and replenishment processes have been squeezed and yesterday’s prices now look a total rip off.

Amazon and the chains have broken the price of books as it relates to the list price, but not necessarily as it relates to cost. Book prices have dropped but jacket prices have often increased to compensate.

Enter the ebook. We have written many times on the issue of pricing ebooks and the price alignment with other formats. The reality is that in a demand and market driven environment and especially one where one digital book looks the same as any other, a price point will happen. Music, DVD and other media markets may have their anomalies, but in the main, price points still prevail irrespective of the production cost.

So when Sourcebooks recently decided to withhold the release of the ebook, so it didn’t impact the hardback sales, we ask once again – is it wise.com?

Amazon is creating an eBook price point of $9.99 that, irrespective of your position, is likely to stick. Ask Apple about iTunes and their infamous $0.99 price point. The challenge is not how to continue to confuse consumers and fight price points but how the market can make such a move work and still reward the author.

When we look at some of the significant business model changes that are happening today, we realize that we must be flexible and even prepared to burn the model altogether. For example, look at Spotify music streaming service, which still pays royalties but is ‘free’ at consumption. Look at how network carriers have created bundles of services and in doing so have effectively cut the cost to their customers.

We still have not found the answer to the potential digital rent for free from a library versus digital pay to buy retail models.

The one person we must continue to reward is the creator. Interestingly there appears little reason why they can’t be paid more frequently, if not in real time for their digital sales.