Books provide good profit for retailers, but more promotions are needed to move books this gift-giving season
Supermarket retailers who scrutinize their reading racks may yearn for the magic to return.
That magic represented 15 million copies of last year's blockbuster “Harry Potter and the Deathly Hallows” book that sold within 24 hours of its release. The unprecedented media frenzy around the book, which helped drive retail sales prior to its release, is rare.
The final edition to the seven-book J.K. Rowling series pushed hardcover juvenile sales up 13% in net dollar sales and a 10.5% increase in net unit sales. Overall trade publishing experienced a 4% increase in revenue but only a negligible increase, 0.4%, in unit sales between 2006 and 2007, reported the Book Industry Study Group, a nonprofit research organization in New York.
While retailers fondly remember last year's phenomenal “Harry Potter” success, they can't afford to look back.
Terry Cerwick, senior category manager, non-edibles, Bi-Lo, Greenville, S.C., acknowledged the lack of another hit release on the caliber of “Harry Potter,” but pointed to a lot of other titles on the market. “Like everything else, consumers always find a favorite. All we have to do is make sure we have it.”
Gary Urda, vice president, distributor sales and retail marketing, Simon & Schuster, New York, said the impulse nature of the book category makes it essential to have the right mix of titles on the shelf. “It's knowing what is going to work and making sure you carry the right titles at the right time regardless of format.”
Book formats — the size, quality and price points of books — have long been a publishing marketing scheme. The growth at mass market chains like supermarkets, according to Urda and others, is in trade paperbacks, which is a step down from hardcover to softcover, but the format maintains the same standard size and text of the hardcover and uses quality paper stock. Mass market paperbacks, popularly sold at supermarkets, represent another lower-priced level of books in the category. It is a smaller, cheaper book format.
Urda said only the hottest titles move in hardcover, and many shoppers are gravitating to trade paperbacks. “It's hard to have an impulse paperback at $26-$28 price points. The trade paperback at $15 with a discount is working,” he said.
Joceyln Schmidt, vice president and director of sales, adult mass merchandising, Random House, New York, expects trade paperbacks will be the choice of holiday shoppers given price sensitivity in a recession.
The publisher is gearing up to run special holiday mass market and trade paperback promotions at individual chains. “Certainly mass market [books] and trade paperbacks are good stocking stuffers because of price sensitivity,” she said. Displays can be a four-sided Christmas display with gift-giving books from multiple publishers or a holiday table devoted to cookbooks with signage and discounts. It all depends on the individual retailer, she said.
She expects the tried-and-true fiction — whether hardcover or mass market by authors like Dean Koontz, Danielle Steel or John Grisham — to sell well. Also expect more finance titles that address how to manage one's money to be prevalent this season. Movie tie-ins also offer big sales potential, said Schmidt. Random House will tie into “The Road” by Cormac McCarthy, set for film release on Nov. 14, and “Revolutionary Road” by Richard Yates, to be released Dec. 26. Both titles will be sold in mass market and trade paperback formats.
A nonfood executive with a West Coast retailer said book promotions, especially of best sellers, have worked well. “We do them four times a year, typically, and they are very successful for us. Our sell-throughs are very good. It's a very profitable category for us, and it really works well. We put large displays in our store lobbies, and we work with a couple of very good suppliers. The displays have been very successful,” he said.
The retailer noted that price points on those promotions undercut Barnes & Noble prices.
Dewayne Rabon, vice president, general merchandise and health and beauty care procurement and sales, Winn-Dixie Stores, Jacksonville, Fla. also said in-and-out book promotions have generated good sales for the chain. “We have inline books along with our magazines, but this past year, we did three or four book blowout-type programs. These are in-and-out programs where we brought in 4-by-4-foot bins, which contained an assortment of different books that are discounted at a percentage off. This assortment ranged from cookbooks to children's books. All three of those promotions have been very successful for us this year. There is good variety in the assortment, and I see us continuing to use that three to four times a year, putting it out in front of the consumer.”
Some retailers reported sluggish sales in their mainline sections. Part of the problem is dedicated sections are not always in ideal store locations. “It's hard to find the space for books. When we put them in the [magazine] mainline, that's often an aisle that is not traveled a lot. For the stores that we have put them out on power panels, or shipper floor displays when the new release comes out — we are doing OK with those. But really it is all about location and finding a spot,” said Lanny Hoffmeyer, corporate director hardlines, photo and lobby, Center Store merchandising, GM/HBC, Supervalu, Eden Prairie, Minn.
Book distribution has grown to be all pervasive with mass market retailers taking share away from the traditional booksellers and big bookstore chains, and online retailers like Amazon taking market share away from retail outlets. E-books now offer the opportunity for consumers to directly download books and bypass retail stores. All these factors can make it challenging for supermarkets to sell books. Discounting is essential to stay competitive, said food retailers.
“If you are not doing 35% off hardbacks, you are not going to sell that many books. In our stores, we've got entire reading centers, where the consumer can come in and find hardbacks at 35% off,” said Nick Barainca, director of nonfood, Scolari's Food & Drug Co., Sparks, Nev.
“You have to keep the selection fresh,” noted a nonfood executive with a Northeast retailer. “You have to keep the product rotated through. You also have to have an attractive price. There has to be a value equation for the consumer.”
The value equation is especially important in a struggling economy. “It will be a challenging retail landscape,” said Michael Norris, senior analyst, Simba Information, a Stamford, Conn.-based market research firm. He noted that publishers are working hard to add value, and he did not expect to see big increases in the book category anytime soon. But mass market retailers continue to capture sales growth away from the traditional bookstore chains, he added.
For supermarkets, however, book merchandise is profitable, somewhat risk-free and relatively easy to merchandise if the space is available. “Book category price points are higher than average general merchandise so the average ring even at the discounted rate is good. Customers do respond to the book category even if it is sold in other markets at full price,” said Jerry Lynch, a former Wegmans executive who now is president of the International Periodical Distributors Association, New York.
— Additional reporting by Dan Alaimo
13%
Net dollar increase in juvenile hardcover sales last year, aided by ‘Harry Potter.’
Source: Book Industry Study Group