The first salvoes in what promises to become a full blown and protracted price war will be fired today when WH Smith and its arch-rival Dillons, Britain's two biggest book chains, unveil big discounts on a range of current best-sellers.
The launch of the price-cutting campaigns follows the collapse last week of the 95-year- old Net Book Agreement between publishers and retailers, which guaranteed minimum prices on titles. WH Smith was one of the NBA's staunch- est supporters.
Waterstones, the high-street book chain owned by WH Smith, is offering discounts of up to a third on 19 titles, including the latest works from authors such as Salman Rush- die, Robert Harris and Martin Amis.
Dillons, the Thorn EMI subsidiary, is cutting the price of the five titles short-listed for the prestigious Booker Prize by pounds 2 from today. Both offers will run for at least a month.
On Monday, WH Smith begins discounting some 60 fiction and non-fiction titles in both hardback and paperback by up to 50 per cent.
Analysts say that WH Smith, the established leader with a 25 per cent share of the UK book market, should emerge as a winner in any drawn-out price war as it can negotiate favour- able one-off deals with publishers. However, they point out that there could be a short-term hit on profits of between pounds 5m and pounds 7m as margins on best-sellers and other titles are sacrificed in favour of increased sales. Such a shortfall would put downward pressure on current pre-tax forecasts of pounds 100m.
Books account for 27 per cent of WH Smith's retail sales in the UK and about one-third of gross profits.
By contrast, any margin pressure at Dillons would have very little impact on its Thorn EMI parent.