According to a report published today, the book battle will be sparked by the invasion of the UK market by aggressive American companies which started last year. They are keen to open large book superstores, similar to those found in the United States. The report's authors say that with shop rents in the UK being far higher than those in the US, the new entrants may need to cut prices in order to generate the high sales they need to make their investments pay.
"It could mean a much more aggressive approach on price," said Clive Vaughan, of Verdict retail consultancy. "It may be localised but it could nevertheless have a significant effect on prices charged across the country."
The report suggests that the biggest losers in a price war would be the smaller independent booksellers and WH Smith, which recently sold Waterstone's to a new company that will merge it with Dillons.
WH Smith, which recently bought the John Menzies chain, has been losing out to specialist chains like Waterstone's and the supermarket chains which are selling cut-priced best-sellers.
The US invasion began in earnest last September when Borders, a US book superstore retailer, bought Books etc. Borders is opening large book shops that also serve coffee and feature areas where customers can browse through magazines and surf the Internet.
Barnes & Noble, another American book retailer is also keen to find sites in this country but has yet to open any stores.
The new American entrants are likely to try to offer consumers something different to stake a claim in a market dominated by Waterstone's and Dillons which account for one in five of Britain's book sales. Waterstone's has also been opening superstores.
A price war would be good news for consumers who have been faced with continued high prices despite the collapse in 1995 of the Net Book Agreement which allowed publishers to determine book prices.
Since then only popular best-sellers and classics have had their prices cut while prices of other titles have risen sharply. A new hardback that is not on the best-seller list is now typically priced at pounds 15.99-pounds 17.99 while paperbacks often cost pounds 5.99-pounds 6.99.
However, Waterstone's claimed that price was not the major consideration for book buyers. Alan Giles, who runs the combined Waterstone's-Dillons business, says consumers find the range of books on offer, the knowledge levels of staff and the environment of the stores all more important than prices.
"I don't think the Americans will try to build market share on price," he said.