Norwegian Wood

Norway is different but similar to many countries as it grapples with the challenges of a changing book market. It is assumed by many that they are inside the European Union but they are in fact like Switzerland and Iceland outside of the Union and voted by referendums in 1972 and 1994not to join. However, they are within other European entities and often have to follow the path set by Europe without the power of a vote. Obviously they have their own currency.

They operate a fixed book market which controls the price of a title for up to 15 months. Any title bublished with a calendar year can not be discounted until after April 30th the next year. So a title published say in October only has a fix price life of some few months. There is also a National Book Sale at the beginning of each year when unfixed priced books can also be sold in a similar way that the old National Book Sale took place in the UK under the Net Book Agreement.



Print books incur no sales tax whilst all ebooks have a 25% sales tax. This is currently under a lot of pressure from within Norway as well as from the VAT changes and current harmonisation activity within Europe.

A further consideration in Norway is the vertical nature of much of their market. The major chains are owned by the major distributors who are owned by the major publishers. For example the large Scandanvian publishers Bonnier and Egmont own Norwegian publisher Cappelen Damm who owns distributor Central Distribution and bookchain Tanum. This market contruct works both ways but is seen by many outside of the verticals as unhealthy and by many within them as healthy. The one thing that is clear just walking around Oslo is that Norwegians love books and there are bookstores around every corner. There are some 650 store in the country and these are dominated by the chains Ask, Libris, Tanum and Norli.



There are also no prices on the book jackets.



Digitally the publishers and booksellers have got together to create The National Bookdatabase which aims to accommodated all the Norwegian digital books and distribute these through the bookstores. This interesting initiative is to be applauded and if they keep control of their own indigenous literature and heritage then perhaps they are showing a way in which smaller countries should approach digital.

The Times Are a Changin' for Bookselling

Today we have three stories all of which demonstrate the changes that are reshaping bookselling. Each is a story in its own right and has its own implication, but when viewed collectively, they start to piece together a picture of significant change, potential threat and opportunity.

B&N
Barnes and Noble is again being openly chased by a suitor. Liberty Media has offered $17 per share in cash to acquire control of the company and this is contingent on the participation of founding chairman Leonard Riggio, both in terms of his continuing equity ownership and his continuing role in management. Shares have reacted positively rising some 20% and its clear the market believes this is probably just the opening salvo of bidding for the bookseller and higher offers are likely.

Barnes & Noble has a new ereader announcement planned for the 24th and has established a respectable position and digital market share and has the potential to cross the digital divide that haunts so many booksellers today. However it has to deal with the shrinking physical side of the business at the same time as investing in the digital and has lots of mouths to feed.

Waterstones
UK bookchain Waterstones is finally being sold by HMV to Alexander Mamut's A&NN Group for £53m. No surprises there. The move will see Dominic Myers stay with HMV Group and independent chain Daunt Books MD, James Daunt, become MD of Waterstones. Daunt Books itself will remain as now and run by its existing shop management. Mamut is reported in The Bookseller saying he aims to ‘reposition Waterstone’s as a regional and local community-orientated bookseller’.

The challenges Waterstones face are significant. Plans are one thing but execution is another and recently some would suggest that Waterstones have had plans but little or poor execution. It will be interesting to watch the direction they now take as the current one appears to be going nowhere. Will they downsize both in terms of stores and size and even loose the megastores? Will they adopt a more feminine concept and drop the heavy male and library feel? Will they embrace all books and be a bookseller? Will they be able to retain staff and develop them? Will they make up their mind about digital? A daunting task for Mr Daunt.

Sainsburys
Sainsbury's has just been awarded the accolade as being the "Martina Cole general or chain bookselling company of the year award" by The Bookseller. The award recognises that the supermarket for "reinvigorating book zones, increasing book sales by more than 33% and attracting new book buyers to the market".

We have seen the rise in books within the UK supermarket channel with Asda, Tescos and Sainsburys all giving increased shelf space to books and of course also discounting deeply. Supermarkets will always cherry pick titles that will sell and bestsellers, thrillers, crime, romance, celebrities, children’s and cook books will always be found on their selves at low prices. We have reported on Asda selling books cheaper than greeting cards and probably merchandising them the same way.

The impact of all this on the local independent bookstore is inevitable, with many suffering the same demise to that the off-licence, grocer and butcher did previously. The added twist is that supermarkets also have excellent online stores, which can hold a huge inventory, offer even better pricing and so compete on all fronts.

Sam Jordison writing on the Guardian blog likened the award going to Sainsburys, to awarding awarding a peace prize to Tony Blair.

So have read these the observations on print bookselling and the trade today it begs the question – where next?

It is clear that traditional chains need new direction, but is their model merely broken by their inability to move to everyday low pricing and avoid insane discounting? In expanding the supermarket and niche channels has the trade effectively served notice on its chains?

We believe that booksellers finally have to wake and read what it says over their door and do it. ‘Bookselling’ is about selling books, not just front list on ‘safe’ sale or return terms but all books. Amazon log ago saw this and acquired companies and skills and extended their offer to sell used, rare, audio, etc. They understood that they were selling BOOKS.

Amazon now understands that they can go further up the chain and publish. The likes of Barnes and Noble have long had their own publishing and realised that the definition of bookselling is and should be always open to dispute. As agents, booksellers and self publishing grows then the trade will have to adjust and accommodate. Books after all are books.

It’s ironic that in Gower Street Waterstones already has part of the answer in its fight against supermarkets. However it appears to have not understood it. Merely refurbishing a shop and changing the layout is no longer good enough. Now is the time to return to basics.

The Weakest Book Chain Link?

The demise of the current book chain channel is probably far more predictable than the demise of the independent bookstore. These retail giants now find their economic model being threatened and undermined and we have to ask if one chain is even one chain too many?

Interestingly the two who have both moved to the media centre ground Borders in the US and HMV /Waterstones UK are experiencing the most problems.

Borders now themselves in a world full of giant new entrants, who are redefining ‘big’ and making Borders and also Barnes and Noble look small. They now have internet competitors who have superior logistics and pricing and operate with less fixed overheads. Finally, they also find themselves threatened by supermarkets and low cost outlets who simply select better tighter ranges and do it cheaper. Some would say that chains must change if they are to avoid the fate of the old styled bookclub and others suggest that their model is beyond fixing.

Forget the poor Christmas trading period, miss mash of a digital strategy, web site crash these are just symptoms of a company that has lost its course in an ever changing market. Borders can refinance till the cows come home, but unless there is radical change it is in danger of just being another casualty of change.

As US publishers prepare to meet with Borders over the retailer's cash crisis, they carry the threat of them potentially putting the bookseller on stop. They also do so without their top attorney, Thomas Carney and SVP CIO Scott Laverty who both stepped down this week and it is also rumoured that these aren’t the only top casualties as boardroom knives get sharpened.

It would appear that it is in every publisher and distributor interests that Borders survives but if this becomes a slow death then some will not want to be left exposed. Credit insurance may protects some, but it doesn’t instil confidence and a retailer without sufficient positive cash flow to pay their way, either faces serious cut backs, or more often is a retailer on death row.

In the UK the HMV Group face; shares falling by some 24%, Christmas sales down 10%, weak profits and challenges over the servicing of a bank loan. On top of this gloom, this year it plans 60 store closures and also cut costs by a further £10 Million. They claim that the demand for CDs, DVDs and games was weaker than expected and that Waterstone's bookstores has performed and delivered unchanged results during the Christmas period.

It is fairly obvious that DVD, music and games are moving online and that others such as supermarkets are selling increasing numbers on a narrow range of titles. The days of high street video and music have gone, so chains who sought comfort in consolidating media space are now suffering.

However we now need to ask ‘who needs who?’ Is it better today to have a wounded Borders than a dead one, or a lop-sided HMV than a Waterstones damaged by friendly fire?

Can the US market take out the number two bookstore and some 676 stores and not feel the fallout? What would happen in the UK if Waterstones was forced to shrink and Waterstones become a media store in order to protect the HMV Group? Any reduction in book shelfspace in either market will be significant and the fallout may not benefit others in the High Street but further strengthen Amazon’s appeal to consumers and power over publishers.

All chains are only as strong as their weakest link.

Finally, we are entering a era where there will be even more books competing for eyeballs, dollars and shrinking shelfspace. Sale or return works if one has a balance of hits, also rans and misses but if that balance becomes unstable then publishers’ models will increasingly become challenged.

Borders, Bookchains and Hard Times

Describe the state of US and UK bookchains today and you have to wonder where they are going to be tomorrow? Many think that these are institutions and that as institutions they just keep going but they aren’t and they don’t have a divine right to trade.

We have seen the demise of some and read many analysts column inches on the challenges facing others. Will Barnes and Noble be privatised and will its sale change anything? Will Waterstones become all things to all people and end up with HMV over the door and a cinema inside? Whatever the issues the greatest challenge is sustaining a physical presence in an increasingly digital world. It not about ebooks its about the Internet and consumer trends away from the High Street. It’s about competing with virtual inventories and stores who do not have the brick and motor cost overheads and are open all hours for self service. Its about competing with libraries fighting for digital virtual business and could change the model to one of lending for free. Finally, they now have to compete also with the likes of WalMart and Target in the US and Asda and Tesco in the UK.

Today Borders has laid off more employees at its Ann Arbor headquarters. Mary Davis, a spokeswoman for Borders, declined to specify the number of "job eliminations" at the company's headquarters, which had 650 workers before the cuts. As recent as January, Borders laid off 88 staff in Ann Arbor. Borders have also reported a net loss of $64.1 million in the fiscal quarter ended May 1 and although this was down from the $86.0 million in the first quarter in 2009, the company's total revenue has dropped from $650.2 million to $547.2 million.

Borders is heavily backing its digital strategy and is selling an e-reader developed by Kobo, which also created an e-book store for Borders. Although Borders claim that they hope to secure 17% of the e-books market within a year, this would seem to some highly ambitious. Kobo is not Borders and their reliance on a third party could be seen by some as being similar to when Barnes and Noble thought Amazon would be its internet store!.

Large chains are public companies and have large investment holders who demand a return and set performance targets and these are often not easy to achieve in the current climate, let alone in a market subjected to a high volume of digital ‘noise’ and radical change.

Some would suggest that one of the biggest problems the chains have is that they have forgotten how to be booksellers and have become glorified shop windows for publishers. Nothing wrong with that as long as the market is buoyant but when it isn’t and times are difficult they may find themselves exposed and with only one hand to play. Amazon taught everyone that bookselling is about selling new, used, old, rare, remainders, self publishing – BOOKS. It not about letting publishers ‘wallpaper’ or effectively merchandise bookshelves with low risk sale or return front list.