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Christmas jitters

13 December 2004

The all-important festive season is not currently delivering what booksellers were hoping to get for Christmas. The general trend on Britain’s high street is down, affected by a stalled housing market, high petrol prices, rising utility bills and general uneasiness about what the future holds in store. The effect is a faltering in the enthusiasm with which consumers are approaching the biggest buying bonanza of the year.

Last year provided a good Christmas, highlighting the fact that retailers are hugely dependant for their profit on December sales by contributing 17% of annual revenue. This year aggressive discounting of up to 55% in the battle for market share has meant that the 2% drop in sales last week, compared to last year, was matched by a 4.8% drop in value.

The Bookseller quotes the example of Michael Palin’s bestselling Himalaya, which had sales worth £800,000 last week, but at a heavily discounted average selling price of only £11.92 (published price £20) the trade ‘gave away’ a stunning extra £540,000 in discounts. Sales on bestsellers sales are being achieved at a wafer-thin margin.

In a report in Publishing Trends British consultant Barney Allan commented: ‘Not many industries discount their bestselling product 40% or more on release. I think it has handed the initiative to the supermarkets and damaged both the publishers and the trade.’ In the US sales are also disappointing, but the discounting has not been so steep because the Robinson-Patman Act ensures that publishers have to offer the same discount structure to all bookshops. It’s therefore harder for the big chains and the supermarkets to undercut the independent bookshops, as they do in the UK.

Allan goes further, seeing the current situation in the UK as an opportunity for American publishers: ‘I think all British publishers should be really worried about the challenge from the US houses. If the US publishers can overcome their fear of flying, they will become the locus of the world’s English language book supply. Better cost structure, bigger runs, and a weak dollar all add up to a big headache for British publishers.’ Fortunately for the Brits,  American publishers have to date never focused on export, but perhaps now is the moment when they will. Certainly in the bookselling arena the international division of American chain Borders is showing sparkling growth at a time when domestic sales are in the doldrums.