War in book trade: not many dead

Small shops have survived the end of price fixing, says Fraser Nelson

TO ITS enemies and supporters alike, last September's collapse of the Net Book Agreement was the big bang of Britain's book industry. For the first time in 100 years, booksellers could reduce the recommended retail price and undercut each other. The NBA's enemies predicted that price wars would awaken a mass book market. Its supporters feared that first-time authors and small booksellers would disappear.

Six months on, neither has been proved right. Trade over Christmas, the most lucrative period in the bookselling calender, showed that it takes more than low prices to sell books. Publishers that were first in with the reductions failed to find their mass market, and many failed to lift sales enough to break even at lower prices. Small sellers, which couldn't afford to cut, emerged from the Christmas price wars intact with barely a dent in their sales. Surprisingly, it seems, for those who brought down the NBA, the plot has failed so far.

"Last summer's surge in paper prices knocked the operating profit out of a good many publishers," explained one analyst. "They saw NBA as trapping a mass market and thought that its removal would permit a sales surge. This didn't happen."

Publishers Reed and Hodder Headline were the first to bail out of the NBA and slash cover prices in preparation for the Christmas rush. In early January, Hodder issued a bullish trading statement announcing a sharp sales increase, suggesting that its mass market had indeed arrived.

But these publishers, at the front line of the price war, had cut margins to razor-thin levels, and the extra sales failed to compensate. By March, Reed Consumer Books had seen its operating profits fall by 60 per cent. Hodder Headline, despite a sales jump of 10 per cent, saw pre-tax profits fall by 30 per cent.

Willie Andersen, managing director of the Glasgow-based chain John Smith Books, believes that companies which relied on slashing cover prices to recover sales had a primitive understanding of the book trade.

"They just don't have a clue," he said. "If a book's drivel, it's going to be drivel at whatever price it's at. The public aren't so gullible as to be taken in by these gimmicks; they're only going to buy a book that's worth buying. If you reduce the cost of a book, its sales are not automatically going to shoot up."

Alan Giles, managing director of Waterstones, argued that a marketing strategy based solely on price cuts mistook the complex nature of the trade. "When people are buying books, price comes as a secondary consideration," he said. "We only discounted 50 titles, and the sales response was mixed."

Supermarkets, in the strongest position to "stack 'em high and sell 'em cheap", have been noticeable by their absence from the market. Early fears that they would double as warehouses of cut-price blockbusters have been allayed.

"The most important result that's come out of the NBA collapse is that supermarkets don't seem to be taking an interest," said Mr Andersen. "You can see they're not sacrificing any of their ketchup space for books."

Delia Smith, with her winter cookbook, found herself unlikely ammunition in the Christmas price war. Her cover price, pounds 16.99, was reduced to pounds 9.99 - it was by Delia that bookshops would stand or fall.

It was only when London bookseller Graham Davies found himself selling hundreds of Delias at the full price that his fears for his bookshop's future subsided.

"After the NBA collapse, we were very, very nervous," said Mr Davies. "We make most of our money from best-sellers, so I couldn't afford to offer any reductions. But even at the full price, Delia was a complete success. It shouldn't have happened, but it did."

Mr Davies's customers evidently decided not to shop around. "We didn't know exactly how important price was going to be," he said. "In the event, our customers stayed loyal, but that probably won't last forever."

So until price becomes the dominant factor in book sales, the future of small bookshops seems secure. The Booksellers' Association has noticed no increase in the number of sellers shutting down, adding that the NBA is a relatively small threat compared with the growth of book chains.

Distributors, for whom closed bookshops mean bad debts, say they are no more concerned than they were last year.

But the book world moves slowly. While price wars have not taken off in the first round, there's still time for things to fall apart, as Mr Giles admits.

"At the NBA collapse, people's main fears were that price cuts would edge out first-time writers and marginal titles from the market," he said. "That hasn't happened so far, but things take time. I'd say that the jury is still out."

Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvDownton Abbey review: It's six months since we last caught up with the Crawley clan
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
premier league
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
ebooksAn unforgettable anthology of contemporary reportage
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
Plenty to ponder: Amir Khan has had repeated problems with US immigration because of his Muslim faith and now American television may shun him
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments