Market forces: Preparing for a US invasion

The book market in the UK is finally waking up, just as its US cousins are plotting their invasion.

The book market in the UK is finally waking up, just as its US

cousins are plotting their invasion.



Many predicted a price war would be triggered by the end of the net book

agreement (NBA) in 1995, which guaranteed book retail prices. But the

major players, WH Smith, Dillons and Waterstone’s, resisted drastic

price cuts.



That conflict averted, the industry is now bracing itself for a new war

- of consolidation. The first salvo was fired in September 1997, when US

giant Borders acquired Books etc. Then in February 1998 came the

announcement of a merger between Waterstone’s and Dillons and the

creation of the HMV Media Group, with a market share of around 18 per

cent. The deal followed the failed attempt by chairman Tim Waterstone to

buy WH Smith in October last year.



Ottakars, the 47-strong chain, listed in April, has been the subject of

rumoured take over bids from Border’s main US rival Barnes and Noble,

which is keen to enter the UK market. Barnes and Noble is the leading

operator of bookstores in America, with 454 stores and a further 559

outlets in shopping centres.



Both Borders and Barnes and Noble have introduced the ’lifestyle’

superstores in the US, offering coffee shops and seating areas, designed

to encourage customers to browse. According to Mintel, the estimated

value of the book market in 1997 was pounds 3.35 billion, and that

figure is set to rise to over pounds 4 billion by 2001. In 1996 book

clubs and mail order accounted for nine per cent of the market, while

supermarkets held five per cent.



Another challenge to the traditional book market is being mounted by the

internet. In the US, the internet book store Amazon.com, which launched

in 1995 to sell discounted books directly from publishers’ warehouses,

has ruffled a few feathers. In the UK, Waterstone’s, Heffers and

Blackwell’s, which offer 1.5 million titles, are among those now

on-line. While the internet option can offer a huge range of stock,

often at discount prices, Tim Waterstone believes there is a limit to

the threat posed by on-line book-selling. ’The net will mostly be

important for academic books and I doubt it will ever exceed more than

five or ten per cent of the market,’ he says.



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