Sunday, November 09, 2008

Are Retailers getting in the way of Customers?

Last Sunday night, Carolyn Reidy, President of Simon & Schuster addressed a large audience of publishers gathered outside of Chicago. The event was the Evangelical Christian Publisher's Association, PubU conference.

Last year, Jane Friedman - then head of HarperCollins - gave a riveting address, and so the room was primed and ready to hear what Ms. Reidy had to say. Ms. Friedman's talk was mostly about leveraging content, and experimenting with new business models. By contrast, Ms. Reidy's talk was more tied to the age old issue of finding customers.

Ms. Reidy's talk was refreshing from the point of view that she bucked a lot of conventional wisdom related to the decline of reading among younger generations. However, (I think) she shocked the room a bit by suggesting that ECPA's member publishers focus on where the customers are, and not where the retailers are.

Ms. Reidy's address was a bit too well prepared, but her points were salient. She suggested that specialty retailers, like Christian bookstores, were part of the problem in selling Christian titles. Don't Christian people shop in secular establishments? Most of these retailers are small, and cannot compete with larger competitors on price. She also argued that big titles in the Christian market, are just plain big titles. When a book title sells more than 1 million copies, its a big book by any one's standards. (Immediately prior to Ms. Reidy's speech, the ECPA publishers had just celebrated 14 titles that eclipsed that mark, and two that eclipsed the 10 Million copy mark.) So, why would a consumer of such a large title buy it at a specialty retailer, when they can get it at Walmart or Costco 20% - 40% cheaper, and also pick up a gallon of milk or tires for their car at the same time?

There seemed to be a collective gasp from the audience at this notion, but most had to acknowledge the truth in it. Every publisher in the room now depends on Amazon (the most secular of all retailers) for a major piece of their sales - but they sort of see that as a special case.

In another conversation I had this week with the SVP of Marketing for a major trade house, I was surprised to learn that numbers bear out Ms. Reidy's point. About 10 years ago, it was fairly common for publishers to say that independent retailers were responsible for about 20% of sales, yet took up approximately 80% of the marketing and sales budget. Now, the numbers are that independent stores make up 10% of sales and take up 90% of the budget.

In a down economy, how long can publishers continue to support these retailers? (Some presses, I have heard are off by as much as 30% this year.) Independent or specialty bookstores are about as important a part of publishing history as the printing press, but are they, too, becoming an anachronism? (I have to say it feels somewhat sacraligious to write this, as I love independent stores.) Are these stores, which remain a destination retail establishment getting in the way of customers finding books? I think the answer to that last one is an obvious no, but then again, they are not doing anything to help their customers with other needs they might have as well - like saving time and money.

Maybe some smart retailer will partner with one or more of the big box retailers, and create a brand name specialty store within the store.... There are Starbucks in Target locations, why couldn't there be a Jabberwocky in every Walmart?


Mark Bloomfield said...

Um - seriously? A publisher can calculate that they are devoting 90% of the s&m budget to 10% of sales ... and that's ok? Can't anyone here shoot straight?

Fran Toolan said...

Hi Mark,

I never got the impression that it was ok, in fact it wasn't. What I heard was that it was a crisis situation. The publisher I spoke with was feeling as though what they were doing for independents were going to have to be curtailed - some reps were going to have to go away. And, they were afraid of the bad PR that might come with that move. As for how they calculate that kind of thing... I don't have that answer. fpt