Executive Summary

The bookselling industry is going through a period of considerable change and there is a sense in the industry that this change will accelerate. It is being brought about by increased competition in the High Street and from the Internet.

The bookselling industry serves three sectors: consumers, buyers of professional and academic books, and school librarians and head teachers.

There are a number of suppliers to the retail sector: large High Street chains including WH Smith; book clubs; independent booksellers; campus booksellers; supermarkets and leisure outlets; confectioners, tobacconists and newsagents (CTNs); and school and library suppliers.

WH Smith and the specialist chains such as Waterstone's, Blackwell, Ottakar's, Books Etc and Borders account for around 45% of the consumer market. Supermarkets and the CTNs account for around 20%. The remaining 35% is shared by independent bookshops, direct selling and book clubs, plus the small retail outlets of leisure organisations and businesses such as restaurants, museums and garden centres.

The academic and professional market is largely supplied by campus bookshops and by the specialist chains. Schools are mainly supplied by specialist school and library suppliers, but booksellers are progressively taking a larger share of this sector.

The ownership of some of the large chains has changed in recent years. Waterstone's is no longer part of WH Smith and is now part of HMV Media Group, while Books Etc is now owned by Borders (UK) Ltd, which is the UK subsidiary of Borders Group Incorporated in the US.

The market has become more competitive, with an increase in discounting, led by the large chains and the supermarkets. The small independent booksellers are being squeezed. However, discounting does not appear to have widened the market and brought new people into the bookshops, as had been expected.

The Internet is making an impact on this market — especially in the academic and professional sector. How far it is eating into the sales of High Street bookshops is not clear. Some booksellers believe that Internet sales are taking a growing share of consumer sales, but there are others, such as James Heneage, Managing Director of Ottakar's, who insists that the Internet is not as yet making a significant impact on High Street sales.

Key Note believes that the number of bookshops in the UK will decline over the next few years and that even some of the larger chains may begin to reduce their branch numbers. The President of the Booksellers Association has said publicly that the market is greatly oversupplied.

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