The Bookseller.com

2nd December 2008

Paul Smiddy is a City analyst.

Christmas jeer

01.11.07

Balls. It is that time of year when the editor asks me to reach for my crystal version, and tell you how I see Christmas. The visions are clearer than they have been for quite some time. Christmas will be average—as in very average. Helping retailers will be the timing: Christmas Day falls on a Tuesday, so there will be many hoping for a three-day retail fest beforehand. On the other hand, almost every other indicator suggests caution; I am very worried about the economic outlook. The UK consumer's desire to spend his way out of difficult times is almost as sensible as trying to cure a hangover with a bottle of White Lightning. It just makes the day of reckoning that much more unpleasant.

The housing market has become critical to UK consumer sentiment: a generation or two has grown up used to house prices rising faster than everything else in the economy. The result is that most of us have given up saving. The savings ratio (net of borrowing) is lower than a badger's badger, as Jeremy Clarkson is prone to say. I think that a few months of house price deflation will reintroduce many to this lost art of saving—with the concomitant result that they will spend less.

But this somewhat cheerless scenario may well not come to pass until the New Year—shoppers may delay the arrival of common sense for another month in order to enjoy the festival. The hurt may be more noticeable on big ticket items anyway. Another factor helping the book market is that the release schedule looks very promising. In any event, my Christmas wishlist is fit to burst. So the present, reasonably promising, market growth may run on—but at what level of discount?

The other factor that should cheer specialist booksellers is that the release schedule looks biased in their favour, rather than the sports/celeb-heavy list of last year. It also looks as though food price inflation will carry on increasing into 2008 (after a long period when food prices have fallen in real terms). Forget the bluster from Leeds or Cheshunt about our leading supermarkets being the consumer's friend in the battle to keep prices down: higher inflation is inevitable owing to factors outside their control. Sir Terry Canute cannot stop the tide. This means that supermarket shoppers who have slipped the odd volume into their trolley will find they no longer have the same slack in the weekly budget. So there are two reasons to suggest that the supermarkets' share gains in the book market may come to a halt—temporarily. Wishing you happy shopping, happy Christmas and happy reading.