What might be lost

The following is a speech I gave at the Independent Publishers Guild conference last week. I was asked to give an overview of bookselling across all sectors, and set out the opportunities and threats for retailers in the years ahead. Since Ian Dale had already given a speech that morning about the 'big booksellers' including Waterstones, W H Smith, and Amazon, I made some late changes to reflect also on what Dale had said.

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There is no more important issue facing the book trade at this time than the future of bookshops.  But this speech isn't about saving the bookshop, it is about making space for the bookshop, reminding ourselves what bookshops do well, and why we need them. Having seen the reports of Ian Dale's talk earlier today, I'm wondering if I've come with the wrong speech.

But there's a context to this that I think it is worth exploring. When I took over as editor of The Bookseller six months ago, I spent a lot of time talking to different people about the book business: how they saw it evolving and what the key challenges were for them, and by extension us. It struck me then how little attention was being focused on the 3,500 bookshops that sell many of the books that get printed each year, both front and backlist titles.

Sure publishers talk of supermarket deals, and whisper darkly about Amazon's market share being close to 40% of their business. Everyone looks worryingly towards Waterstones, while wondering if WH Smith can continue to make more profit from reduced sales. Perhaps those marketing costs we've heard about are part of its sleight of hand.

Yet for all chatter, my impression was that the high street bookshop has become a fondly remembered but now distant cousin. Judging by what I read earlier, perhaps not even so fondly remembered.

Why is this? Simple. Amazon, supermarkets, direct sales, and now the e-book have all taken attention away from the high street bookshop.

As this article posted on FutureBook last week pointed out, some have reached the view that bookshops can no longer exist solely from selling books.

But it struck me that what happened to bookshops was key to what we do at The Bookseller. The name on the cover means something.

When The Bookseller began in the 1850s booksellers were not nearly so narrowly defined as they are today. Publishers were booksellers; booksellers were publishers. Writers were booksellers, and publishers. It seems rare now to think of booksellers and publishers under the same roof: apart from W H Smith's acquisition of Hodder Headline in 1999, the traffic has tended to be one way.

Many will argue that these roles are once again become blurred. Amazon is a publisher after all (quite a big one in fact) and many publishers, particularly many members of the IPG, will sell books direct.

However, while there continue to be these overlaps, the deeper truth is that that the fortunes of the two sides of the book trade are diverging: publishers are becoming more profitable, bookshops not so much. As Oliver Gadsby said yesterday, these are hard times for retail, but it's a great time to be an independent publisher.

For all of Ian Dale's talk about WH Smith's terms demands, the retailer's profit margin is only now, after five straight years of improvement, approaching 8%. And that is huge business enjoying all the operating efficiencies and advantages a giant should have. When I first joined The Bookseller, 8% was the typical profit margin of a trade publisher. It is now expected to be double that—at least for publicly quoted retailers.

Rising costs, rates, discounting, Amazon, supermarkets and the shift to e-books are making the bookseller's job harder to do. For some it has clearly become impossible.

I don't mean to criticise Ian dale but what he said about bookshops could have been said at any point over the past decade. But the age of the big booksellers is over, the time of the one bookseller is coming. In America Barnes and Noble is seen by many as the white knight. The last chain standing.

Dale can say goodbye to W H Smith not because they are strong but because they are weak. You've never had more routes to your customers, and more product that isn't sold through bookshops.

The contasts are everywhere.

Bookshops are dying out, publishers are not. Bookselling brands are being eviscerated from the high street—Borders in the UK and US; Sussex Stationers, Angus & Robertson in Australia. By contrast publishing brands (the smart ones anyway) are expanding online, finding new ways to flourish on the social web.

We have a good example of what is happening at this conference. The Independent Publishers Guild has been growing, and is now up to 560 members. There are three hundred of you here today. Independent booksellers are in retreat. Walkers Bookshop, Bay Tree Books, The Harbour Bookshop have gone.

It is a story the wider media has been quick to pick up on. "Bookshop numbers halve in just seven years", ran a headline on Boxing Day in the Telegraph. Publisher ebook sales double, ran a headline a few weeks later.

Let's focus briefly on the numbers.

According to the Booksellers Association the number of independent bookshops in its memebership has fallen from over 1,500 in 2005 to just over 1,000 by 2012. That's a 30% drop.

How has this translated into sales? Nielsen BookScan data over the past 15 years records a drift away from the sector that we can roughly understand as high street bookshops, towards, the internet and supermarkets. Nielsen's General Retail Market, which includes the major chains and indies, has lost 20% of its value since 2001, or sales worth £200m. The larger Total Consumer Market, that includes internet bookshops and most supermarkets, has over the same period has gained 20%.

Because of the recession and shift to digital both markets begin to dip after 2007. But there is another way of looking at this. The gap between the GRM and TCM is growing, and this represents the value of the drift away from high street bookshops. This 'gap' begins in 2001 with sales just below £300m, a third of the value of high street bookshop sales. The sector ends 2012 at more than £700m.

Now I need to introduce some caveats. The Nielsen sectors are not so well defined as I've just implied, and of course the TCM panel will have grown as Nielsen has continued to add retailers, or as the business of bookselling has expanded beyond traditional high street shops.

But these numbers simply confirm what we all know. I was asked to set out the opportunities and threats for retailers in the years ahead: the clear and present danger is that there is rapid reduction in the number of bookshops on the high street. That the trend we've seen already escalates.

Keep in mind that much of this data is for a period before the e-book really took hold. As we know from the e-book charts we published earlier this year, some fiction titles are selling almost equal amounts in e and p, and publishers tell me that for most of those titles that is a shift not an expansion in sales. So someone is taking a hit: the bookshop.

In five years unless drastic action takes place we won't be here talking about the future of bookshops, we'll be talking about the history.

And publishers are starting to realise this--some will even admit that they are planning for it. Perhaps for the first time it has become possible for them to imagine a sustainable future for a publishing business without a nationwide high street bookseller, at least as we used to understand it, a high street activity involving, shop windows, tills, shelves and booksellers. And this is not confined to the UK. In the US, according Dennis Johnson, founder and publisher of the independent Melville House, publishers are on a "crash course learning how to survive without any volume booksellers, and in an environment with one retailer representing as much as perhaps eighty percent of their business".

I am not the only one saying how difficult it has become for high street bookshops.

A recent open letter from Foyles' Sam Husain called on publishers to offer extra support for independents. He said the bookselling model was broken and needed "a complete re-think". He called for better terms from publishers and suppliers, aiming at an average of 60% discount instead of the average of 40% currently experienced—and "a level playing field" with supermarkets and online retailers.

His views have been amplified by The Booksellers Assocation and Patrick Neal BA president. A discussion at Publishing Scotland last week heard similar sentiments from Blackwell's chief executive David Prescott, and Waterstones' Neil Best, among others.
They called in particular for extended payment terms, as is happening in the States.

To echo Kurt Vonnegut who wrote that "you are what you pretend to be", my worry is that if we decide that bookshops are of marginal interest to the business of publishing, rather than key partners in the link between the author and the reader, then they will fade away: out of mind, eventually out of sight. A retail vicious circle that suits no one.

Again, I was asked to set out the opportunities and threats for retailers, but actually that's the easy bit, and this anyway is a publishers' conference, so it makes more sense to outline the threats to you.

We do not have a good measure for what we lose when bookshops go under. We may remember that when Borders UK stopped trading, those sales did not simply transfer to Waterstones.

We talk a lot about discoverability, while forgetting that this is WHAT bookshops do. It can be likened to an older term: serendipity. You walk into a bookshop with a book in mind, and come out with a different one. We all do it, every day. But have we forgotten that it happens in the main in bookshops.

By contrast, according to research from the Codex Group, 50% of shoppers who buy books on Amazon already know what they want. A further 17% buy based on bestseller charts.

Actually, I'd say that number is way too low. The 20p ebook has further consolidated sales at the top of the charts, undermining the diversity below. The range provided, in fact, by bookshops.

The Codex research also showed that only 4% of Amazon shoppers buy because of staff (sorry robot) recommendation, only 3% by browsing.

Of course some believe there is a ready answer to this, that selling direct, or investing in discoverability based websites such as Anobii, or Bookish, will ameliorate these changes.

I heard a year or so ago that meta data was the new bookseller. It was a phrase that seems to me to almost perversely misunderstood what booksellers do.

There is an element of truth to it of course. As Kobo's Lindsey Mooney has already said: good meta data sells books, it aids searching and understanding, and helps discoverability. We all need to use it. But the smartest metadata in the world is not going to help me find a book on x if I am searching for one on Y. Similarly, an email telling me I might like S because I've read B, is never going to recommend me the book I didn't even know I wanted.

I don't mean to detract from what has been achieved so far by booksellers such as Kobo and Amazon and what they will achieve in time, but online bookselling as it is, is a narrowing experience. It is one reason the big publishers are become ever more focused on their big brands.

Now some of you might think that bookshops are reaping what they've sowed, that the inefficiencies of sale and return, the over expansion in the 90s, and expensive high streets shops, wedded to their inability to grasp the digital nettle, and their odd unwillingness to put a big pile of your titles front of store, have contributed far more to this scenario than anything publishers have done.

But that's not really the point. We lose something when a bookshop dies, and until we know what that is, we ought to think more carefully about not losing it in the first place. I heard after lunch that in the digital age we are building new walls: I say keep the old walls, just do something different inside them.
 
So I am calling for some research. Something the trade associations could look into. What is the wider impact of not having stockholding bookshops in hight street locations. The charts we saw earlier are not simply a transition, they represent a contraction, a movement towards fewer shops, or shops where fewer books are displayed, where fewer titles are discoverable. So what happens when books become less visible to the general public, do consumers simply buy online the same titles they might have seen otherwise, or do they figure out other things to do with their time.

We've done this kind of research before. Fourteen years ago we embarked on a project looking at the costs of the supply chain,  we now need to reverse this: look at the real costs of not having this supply chain.

Now it seems to me that just dwelling on the gloom is precisely what we shouldn't be doing.

Sure, we need to accept the reality. But actually this reality is more nuanced than the basic figures indicate. Markets are not linear. So let's be clear. Bookshops are not going down without a fight. The high street may be difficult, but it is not dead. E-book sales may be growing, but there are whole bits of the market that show little sign of going digital only. Even for commercial fiction, the e-book market looks to be slowing down.

I recently judged, with Gardners, the shortlists for the independent bookshop category of the Bookseller's Book Industry Awards, and read submission after submission from independent bookshop owners, growing their businesses on a sustainable model. With imagination and verve many are trading profitability despite the perfect storm we've all heard about. Some had even won better terms off publishers.

There was no uniform strategy. Some discounted, some did not. Some sold coffee, some did not. Some were running events businesses, some were focused more on bookselling, to customers and institutions. Some sold beer with books, other biscuits. They had strategies that were relevant to where they were, what high street they were on.

I'd say the one common factor was that none now rely just on the book. In fact the BA's own health checker shows that bookshops with cafes are more profitable than bookshops without. Soft drinks are a better margin business than books. As James Daunt has said, the bookshop provides the theatre for selling other consumer goods.

Speaking of Daunt, is Waterstones yet a turnaround story? Not quite, but as I told various members of the Fouth Estate recently, it is not HMV either. And in this market that might be considered success.

Sure, the chain is operating in a tough world, it's digital strategy can look perverse, and it will no doubt need greater publishing support going forwards (particularly on the academic side) but Daunt's strategy of creating 'attractive' environments in which to sell books etc, paid off this Christmas. The better shops did well, the refurbished shops did better. It is suddenly looking a better bet than Barnes & Noble, whose Nook business may be undermining rather than aiding its bookshop business.

Meanwhile, Blackwell's is reducing its losses, it is tapping into the student market in interesting ways, going direct to universities with deals for them to buy books on behalf of students as part of their student fees package. Just as academic publishers have done. It has been experimenting with pop-shops, Blackwells Connect, taking books to students when they need them, not year round.

John Smith recently reported increased profits, and growing like for like sales. And even Foyles, of which we will hear more of soon, remains profitable despite the huge impact the ongoing crossrail development is having on its flagship store.

So it seems to me that even in this hostile environment, bookshops will survive, even if it is not in the kind of number, or with the kind of sales volumes we'd like to see.

I thought we had an opportunity to do something about this. To shout about the strategies that were working, or could work, and to develop new strategies to meet the challenges ahead. To put words into action.

And it struck me that this was something The Bookseller needed to do.  If The Bookseller as a brand means anything, then it must mean that we are for booksellers.

So it was against this background that we embarked on the Foyles Bookshop Workshops that took place last month. Foyles as you know is moving down Charing Cross Road - not the first time it has moved, but the first time for quite some time and probably the last time. You will have seen some of The Bookseller's coverage of this, so I won't rehash everything we did and why we did it. But it was essentially our chance to imagine what a bookshop, albeit a  40,000 sq ft bookshop, could be, and do. If we did it right, not only would it help Foyles, it could provide an imprint for other bookshops, and a showcase for everyone.

What I learned is that the bookshop is more than the sum of its parts. That for people across the trade, the bookshop is an institution that needs to be preserved. Bookshops were the conduit to readers, but they were also the conduit into publishing, and writing.

Specifically, we learned what a bookshop could do, as well as selling books. As James Spackman said: "Buying books is not a transaction, it's a ritual, a ceremony, with Foyles the church."

But that is just the beginning. The workshops also allow us to begin figuring out what a bookseller needs to be in the future, and how the divide we have talked about can be closed.

Bookshops can help themselves. But bookshops won't survive unless publishers want them to. But do they? I think we need the research I mentioned earlier. But what is the gut reaction.

If you talk to booksellers that question is not easy to answer. Some wonder why publishers are not helping them to help themselves. Of course there is the issue of discounts, of the level playing field, of payment terms. We also hear of consignment and even vendor managed inventory. But some have also questioned why publishers don't rethink how they publish, give bookshops the opportunity to sell cheaper paperbacks alongside the hardback, where an ebook edition is in the market. We have seen good experiments around bundling, offering the bookshop the chance to sell the ebook along with the print book, and also putting audio links on childrens books.

But not nearly enough, and nothing so far from the big publishers. More on that soon I hope.

So we come on to the final threat bookshops face: publishers. In fact, not publishers, publishing but publishers becoming replicant booksellers. At Christmas a number of publishers launched price promotions direct to consumers, and we'd expect that to continue. Penguin even has a pop-up mobile shop. And of course the IPG audience is one for whom direct supply had always been part of the business model.

One can hardly blame publishers: they are exhorted to know their customers, and as the routes to the customer shorten, who wouldn't dive in. We can't blame publishers any more than we should question authors who bypass publishers and publish direct to the Kindle; or agents who do similarly. Stephen Page called it a 'riot of cross-dressing', except that so far booksellers have been slow to remove their clothes.

And this last threat is growing. We do not know the size of this market, but in the US there has already been a significant shift, and with the launch of websites such as Bookish, the merger of Random House and Penguin this looks likely to continue.

We may find that the bookseller response is to travel in the opposite direction, to become more skilled, to do as Waterstones is doing with its Academy and arm booksellers with the tools to make the difference. But that doesn't come cheap.

In a sense Ian Dale, and others are right to voice their concern about bookshops. Bookselling like publishing needs to make the journey into the next age of the book business, as readers habits change and their requirements for content shift. But bookshops are locked out of the apps space, and so far in the e-book market they are forced into being passengers, or worse, footsoldiers in a digital game of thrones.

My point is simply that without publishers help they won't make it. And if they don't what are we left with: does Amazon need any more market power?

To return to an earlier point. We can all expect the market to become more mixed up. We are going back to a business where the roles are not nearly so well defined as they have become, perhaps back to an 1850s model, less cross dressing probably, more riot.

But at the core these roles are different - they are specialist. And If I've done anything over the past six months I hope I've reminded everyone what a bookseller is and sparked a public discussion about what they can be, and in a small way unshackled that sector from an unnecessary cycle of despair, that may have clouded the collective vision.

To coin a phrase: we are all in this together. At least we used to be. The Foyles Workshops showed we can be again.