Can Woolies make books stack up?

<p>It used to be difficult to find the books in most Woolworths shops&mdash;they seemed to be hidden somewhere among the pick-&rsquo;n&rsquo;-mix, bargain CDs and inexpensive Worth It home electricals.</p>
<p>No longer. Since hiring former W H Smith and Borders book buyer Matt Bridge in October last year, Woolworths has moved to boost sales by giving books a higher profile within its stores, with 10% more dedicated space by Christmas this year.</p>
<p>It may not be about to take on retailers such as Waterstone&rsquo;s in terms of depth of range and literary cachet, but Woolworths does see books as a potential safe haven amid challenging conditions in its staple music and film markets.</p>
<p>Book sales at the chain are rising while some other categories, such as CDs, are struggling. Add the Woolworths Group acquisition last year of book wholesaler Bertrams to the ramped-up retail offer, and the book business can be seen as arguably one of the healthier parts of company&rsquo;s portfolio.</p>
<p>In its full-year results to 2nd February 2008, Woolworths said its combined book business, including its retail and wholesale sides, grew by 6.4%. Trevor Bish-Jones, the group&rsquo;s c.e.o, admitted that book retail still represented a &ldquo;very low quantum&rdquo; of sales, but that the sector&rsquo;s performance was &ldquo;good news for the business&rdquo;.</p>
<p>The crux of the book strategy is simply giving more space and a promotional push to the category. Previously, particularly on the adult side, the book offer was sporadic, largely featuring in shops only during Christmas. Woolworths is now stocking books all year round.</p>
<p>Gerry Berkley, trading manager for games and books at Woolworths, says, &ldquo;We do particularly well on certain types of books linked to gifting, such as autobiographies and humour titles, but we wanted a more all-year-round presence.&rdquo;</p>
<p>Although Woolworths currently has less than 2% of the UK books market, Berkley says it&rsquo;s possible for the chain to take a 10% market share or more on certain titles, such as this year&rsquo;s instalment of Katie Price&rsquo;s biography, Jordan: Pushed to the Limit.</p>
<p>&ldquo;It&rsquo;s all about space, how much we give over to books, and how hard we work that space,&rdquo; says Berkley.<br />
<br />
<b>Promoting the range</b></p>
<p>The most high-profile marketing campaign thus far&mdash;the biggest ongoing book promotion the retailer has ever been involved in&mdash;has been a tie-in with the Daily Express. Under the six-month deal, Woolworths will offer Express readers a &pound;6.99 book discounted to &pound;2.99 every Friday and the book will be reviewed in the paper. Books covered by the promotion will be presented alongside newspapers at the front of 500 stores,&nbsp; in a bid to catch impulse buyers.</p>
<p>The promotion launched on 31st May with front-page coverage in the Express and a free copy of Martina Cole&rsquo;s novel, Broken. The first title promoted at &pound;2.99 will be Crossfire by Andy McNab on 6th June.</p>
<p>So far this year, the retailer has also offered several promotions including buy-one-get-one-half-price on chart titles, with price points on a par with W H Smith and the supermarkets.</p>
<p>The new, more aggressive promotional strategy is all part of plans to increase sales of adult books to the women with children who make up Woolworths&rsquo; core customer base.</p>
<p>Berkley says the key is hitting that core customer with the right range. He adds: &ldquo;Books are all about gift and convenience. If you are in Woolworths and you see the new title from Martina Cole, it will be an add-on sale&mdash;these are not hugely considered purchases. We are not a destination like Waterstone&rsquo;s.&rdquo;</p>
<p><b>Category reshuffle</b></p>
<p>Three years ago, the adult and children&rsquo;s books sections in Woolworths stores were split. Children&rsquo;s became part of the toy department and the adult books offer was intermittent, run mainly as part of the gifts range at Christmas.</p>
<p>In the past few months, permanent adult books sections have been brought back into the core entertainment section and now feature in 720 Woolworths stores. The offer in most of these outlets is a top 60 chart of paperbacks as well as a range of hardback bestsellers. In the largest stores, however, there will be 10 bays of books, with around 450 titles.</p>
<p>The company is now experimenting with integrating children&rsquo;s books into the main entertainment category. It is keen to introduce more children&rsquo;s fiction and will bring out a children&rsquo;s bestsellers chart by Christmas. In addition, books for pre-school children will be more heavily promoted.</p>
<p>&ldquo;We see a lot of opportunity for growth in the kids&rsquo; area for us,&rdquo; Berkley says. &ldquo;[Children&rsquo;s] fiction has not been as strong as it should have been&mdash;and that&rsquo;s partly because it has been lost in a no man&rsquo;s land between toys and entertainment.&rdquo;</p>
<p>The majority of Woolworths&rsquo; books are selected by EUK, their parent group&rsquo;s distribution division. Berkley believes that having Bridge as the company&rsquo;s first dedicated books buyer has helped the chain strengthen the section. Bridge meets EUK&rsquo;s buying team every week to put together offers and pick titles suitable for Woolworths&rsquo; customers.</p>
<p><b>Upping the online ante</b></p>
<p>The impact of Woolworths&rsquo; new relationship with Bertrams will perhaps be most felt online where the wholesaler has helped select titles for an enlarged range as well as providing distribution.</p>
<p>On 29th May, the number of titles available on went up from less than 2,000 to 10,000. Over the next few weeks, this will massively expand, rising to over 400,000 titles across a wide range of categories.</p>
<p>It will be the retailer&rsquo;s second attempt to put a serious book offer online. An earlier attempt was abandoned after EUK, which supplies books, CDs, games and DVDs to supermarkets, struggled to support the number of titles Woolworths&rsquo; website listed.</p>
<p>Yet while Bridge and Berkley have made a number of changes, some industry observers say Woolworths might continue to find difficulties in upping its game in books&mdash;both in its stores and online. But, as Nick Gladding, lead retail analyst at market research firm Verdict, says: &ldquo;There is a logic to selling more books in Woolworths stores because of the new link with Bertrams and as many independent book stores near its stores will have closed down.&rdquo;</p>
<p>However, Gladding says Woolworths may find it difficult to provide a range which its shoppers can rely on if they do not invest in the shops as well. He points to another high street retailer, W H Smith, who successfully upped their book offer, but only after making significant changes to its stores.</p>
<p>&ldquo;To do well at books a retailer needs space and decent stores. Books would need to be part of a bigger makeover of stores and that requires a lot of commitment and resources,&rdquo; Gladding adds. &ldquo;I can&rsquo;t see it being a real money-spinner.&rdquo;</p>
<p>John Stevenson, an analyst at brokerage firm Shore Capital, also says it makes sense for Woolworths to make use of the new synergies with Bertrams, although many believe it is only a matter of time before the distribution part of the parent group separates from the shops.</p>
<p>&ldquo;Woolworths has space to fill and this looks like an opportunistic move fitting in with the Bertrams acquisition rather than a firm strategy,&rdquo; says Stevenson.</p>
<p>However, publishing insiders say Woolworths has got a chance to drive up sales from a low base and is no doubt relishing the possibility of developing a category with reasonable margins.</p>
<p>&ldquo;With EUK behind them, they are likely to get pretty good terms from publishers,&rdquo; says one source.</p>
<p>Berkley admits that Woolworths hasn&rsquo;t done particularly well with books in the past, believing this was because it didn&rsquo;t have its offer and prices right. &ldquo;It is a competitive market, but we have proved we can do well in other entertainment formats,&rdquo; he says. &ldquo;It is a matter of getting the right promotions and presentation for our customers. We are not trying to be a specialist bookseller. What we want is a value-led offer for our regular customers. If we can get it right, our customers will buy from us.&rdquo;</p>