Britain’s economic “recovery,” which the Conservative–Liberal Democrat coalition that has run the country since May 2010 once promised would be well in hand by now, has receded beyond the horizon. Despite that, U.K. booksellers are more optimistic than they were a year or so ago, reporting that consumer confidence has increased in what one independent described as “a slightly more buoyant atmosphere.” The view was echoed by a number of in-house sales directors, and by James Daunt, now finishing his second year as managing director of Waterstones, the U.K.’s largest book chain. Daunt noted that while London is “robust, some parts of the country are truly awful”—particularly the north, where a high percentage of the population relies on government jobs, which are no longer secure.
Last summer, the Olympics provided a mood boost, though no significant sales increase. It’s hard to account for the high spirits this summer. It’s likely that Britons have adjusted to the new reality and are spending. It helps, too, that publishers are responding to the e-book surge by producing more covetable print editions.
Bowker research presented at the Books & Consumers Conference in March revealed that the rise of e-books was not enough to prevent an overall 1% decline in the value of consumer book purchases in 2012. The U.K.’s consumer book market was worth £2.1 billion last year—significantly down from the 2007 record of £2.5 billion. Yet unit purchases were only 2 million behind the 2007 figure, at 296 million, and up from the 2011 figure.
Bowker’s data shows that e-books accounted for 6% of 2012 purchases by spending, and 11% by units last year. Most book buyers still don’t own tablets or e-readers, and e-reader owners continued to buy two-thirds of their books in print form. But the rise of e-books has accelerated the shift among book buyers toward online purchasing. Online-only retailers took 38% of consumer book purchases by units in 2012, jumping ahead of bricks-and-mortar booksellers at 37%. However, physical booksellers remained ahead in revenues. Not surprisingly, Internet-only retailers—with Amazon way ahead of its rivals—took 95% of e-book purchases. Worryingly for bookshops, e-book purchasers bought most of their print books online as well.
While these trends may be alarming for high-street booksellers, Bowker also demonstrated those booksellers’ continuing role in book discovery. Consumers cited browsing in physical stores as their #1 method of discovery, and twice as many book sales resulted from browsing in bookshops than resulted from online browsing. As Sam Husain, CEO of London-based independent bookseller Foyles pointed out, increasing numbers of customers would like to buy print and e-book bundles; if this were possible, it would boost in-store sales—but at the moment the idea poses problems for publishers.
“Trading conditions for bricks-and-mortar bookshops are exceedingly tough,” said Tim Godfray, CEO of the Booksellers Association (BA), a U.K. trade group. “Booksellers are not only having to meet high occupancy costs, but also competition from online retailers, selling both print and electronic books. 2014 is going to be similarly difficult, but we have to keep positive. We have seen in the U.S. how American independent booksellers have managed to increase their number of businesses and locations in 2012 compared to 2011, with the support of U.S. publishers. Booksellers in the U.K. and Ireland are currently developing strategies that we hope will lead to an evident upturn in their economies, with support from U.K. publishers. It is extremely encouraging to note that U.K. publishers are becoming increasingly aware that bookshops are by far the best means whereby consumers can ‘discover’ books. With Independent Booksellers Week 2013, we hope more consumers will become aware of the importance of bookshops in their high streets and will rediscover the joy of purchasing from their local bookshops.”
Independent Booksellers Week (IBW) has taken place in the last week of June for the past seven years and is organized by the BA. IBW is also part of the IndieBound campaign promoting the idea of shopping locally and sustainably. Publishers support it with special terms and an ever-growing range of collectibles. This year, hundreds of author events for adults and children took place at some 360 participating bookshops nationwide.
IBW is very much a celebration of traditional bookselling, though a debate at London’s Southbank Centre ensured that the public is adequately acquainted with the problems booksellers face. Shoppers have been made increasingly aware of the issues and there’s no doubt that bricks-and-mortar-store sales last Christmas were boosted by increasing dissatisfaction with tax-avoiding e-tailers. The BA produced a range of downloadable posters, which reminded customers, in the bluntest terms, that physical bookstores pay a fair rate of tax (unlike Amazon). The campaign, “Keep Books on the High Street,” received a thumbs-up from the public, and customer traffic and spending increased at indies.
Yet readers have to be very loyal indeed to ignore online savings of 50% in some cases, or the opportunity to buy the latest Dan Brown for just £6 in hardcover with a basket of supermarket shopping of £30 or more. Booksellers in Britain are in competition not just with Amazon and other online retailers, but with mega-grocers like Sainsbury’s, Tesco, and Asda, which can afford to treat a few bestsellers as loss leaders. Recent research (carried out for IBW) revealed that 63.5% of book buyers admit to browsing in bookstores and then buying more cheaply online. However, 68% said bookstores are the best place to discover new books and 66% said they preferred to pick up a book before they buy it—and 59% said they preferred to buy in bookstores.
Indie booksellers, and many independent retailers, are in a double bind: while Amazon and supermarkets are creaming off sales and paying scarcely any sales tax, rents and business occupancy tax rates remain high. Rents can at least be renegotiated when leases come to an end, but business rates are recalculated upward every year, which means the costs of running a business and its turnover may well be inversely proportional. “Monstrous and self-defeating” is how Daunt described the situation, pointing out the inflationary effect such policies have on in-store prices and the harm that they do to local employment.
Ten years ago, when Britain still had several bookselling chains and supermarkets were growing the market rapidly, the managing director of one of the U.K.’s major publishing groups airily declared that “we don’t care about the independents!” Now publishers have to care, because independents and Waterstones are all that stand between them and Amazon. It’s noticeable that, year-round, indies are able to offer a wide range of discounts tailored to their customer base; noticeable too that they still play a key role in creating quality bestsellers. It is to the indies that the Faber-led Independent Alliance of Publishers looks for many of its sales.
Waterstones, which now has 286 stores, and which will have refitted 80 of them by year’s end, is recovering and is on course to turn a profit next year. When it does, everyone will breathe easier—for its survival is crucial to the ecology of the British book trade. Meanwhile, publishing sales directors agreed that customer traffic is up and returns are down, as the chain’s upgraded hub facilitates speedy reordering and fulfillment to the branches. Kerr MacRae at Simon & Schuster believes Waterstones could be more proactive with brand-building and new authors, which is what supermarkets are doing (with certain authors at least). Daunt counters that such a move would be a step backward compared to the recent past, when publishers would focus on just buying front tables and windows in every store across the land if the price was right. Today the watchword is “local,” with stores stocked and events planned according to the demands of each Waterstones’s local customers.
Come September, independents and chains alike will unite behind an industry-wide promotion, designed by M&C Saatchi, under the banner, “Books Are My Bag.” And bags will be “a walking advertisement” for the initiative, provided free to booksellers who order them and supported by “more than 100 celebrities,” including some authors, who will aim to promote the benefits of the local bookshop. It is the first time the trade has united behind a generic campaign, and there is much optimism.
So what of the future? Britain remains seriously in the economic doldrums, but people are still reading. Booksellers have stepped up their game, and while it would be unfair to suggest that the 74 who went under during the last 12 months were not well managed, there is a sense that the fittest have survived. But the key question remains: how much further will the digital inroads go? The U.K. is on something of a plateau right now. If e-growth continues to slow, there will be increasing recognition that there really is room for physical books and a need for bookshops to sell them. If it accelerates, a lot of booksellers will head for the hills.
It could all have been so different: if only Waterstones’s managing director, Alan Giles, hadn’t decided to outsource the chain’s online fulfillment to Amazon back in 2001.