Canadian book industry ‘flat’ as titles flood market

Hi all –

A very distressing article from Saturday’s Globe & Mail here. (These links tend to disappear quickly, so I’ve copied the article into this post…)

As somebody who works in publishing I can tell you that everything this report cites is the truth–especially the fact that “If an Indigo buyer decides not to carry an individual book, the publisher of that title effectively loses half of the Canadian retail channel.”

– S.


Canadian book industry ‘flat’ as titles flood market


From Saturday’s Globe and Mail

February 2, 2008 at 2:01 AM EST

The retail book business in Canada generates annual sales in excess of $1.5-billion, much of them through one company – Indigo Books and Music – but overall sales through traditional book retailers are “flat” at a time when Canadian publishers are releasing more new titles than ever.

Those are just some of the key findings of an ambitious, 102-page study of Canada’s retail book sector conducted for Canadian Heritage. Prepared for the federal department last April through July by Turner-Riggs, a Vancouver market-analysis company, the study provides a panoramic survey of the industry. Released late last week on the Canadian Heritage website, The Book Retail Sector in Canada is likely to become essential reference work for both the beleaguered industry and policy makers.

While Canadian readers and publishers are turning more to online sales and so-called “non-traditional retail channels” such as Costco Wholesale, visits to commercial bookstores “still account for the majority of book sales,” the study says. And it’s here that Toronto-based Indigo, with more than 230 stores nationwide, is king: In 2006, it accounted for 44 per cent of domestic book sales – 67 per cent if one excludes online and mail-order sales and sales at university and college bookstores.

One result? “If an Indigo buyer decides not to carry an individual book, the publisher of that title effectively loses half of the Canadian retail channel.” Generally, though, the study says, “chain stores are playing an important role in presenting a wide selection of Canadian titles to consumers.”

What the study defines as independent bookstores – and this includes Quebec’s two regional chains, Archambault and Renaud-Bray – accounted for a 20-per-cent market share nationwide. (Within Quebec, the two francophone regional chains, which together have almost 50 stores, held a 44-per-cent share.)

The arrival of the Chapters chain in 1995, the subsequent creation of Indigo, and Indigo’s takeover of Chapters in 2001 have revolutionized the retail industry, the study says. The chains initiated a decline in the number of independent booksellers, prodded publishers to lower their wholesale prices, and introduced radical discounts on the list price of many of their major titles.

“Such discounts are now firmly entrenched as a marketing strategy,” the study reports. Indeed, they’ve been reinforced by the discount gambits practised by Costco, Wal-Mart and, with the result that “purchases are more informed by price and less by the unique aspects of the individual book, including its literary or artistic merit.”

Discounting, moreover, has contributed to the phenomenon of “more sales for fewer books.” For instance, sales tracker BookNet Canada, which surveys an estimated 70 per cent of the market, reported that 373,402 titles sold at least one copy in Canada in 2006 – but it was the top 10,000 titles that accounted for 64 per cent of unit sales.

Are there too many books, especially new books, in the market? The Turner-Riggs study suggests that may be the case. While Canadians, unlike Americans, continue to be book buyers and readers (average time spent reading: 4.5 hours a week; average number of books read each year: 17; percentage of Canadians who buy at least one book a year: 81), they have been faced with a steady increase in the number of new Canuck titles available to them. In 1998, Canadian publishers – including wholly foreign-owned companies such as Random House Canada that, the study says, now account for at least 59 per cent of domestic sales – published close to 12,000 new titles. Six years later, that total was almost 17,000.

“The net effect is that a growing number of books are contending for the attention of roughly the same number of book buyers, a situation amplified,” the report notes, by the growth in stores selling used and remaindered books (out-of-print or overstocked titles sold at steep discounts), the growth in online sales, and “an increasingly saturated media environment.” One result is that “both the average sales per title in Canada and the average print runs in many title categories have been falling in recent years.”

Faced with concentration in the retail sector and onerous pricing policies, Canadian publishers, meanwhile, have been looking more to non-traditional channels and e-commerce as outlets for their wares. But so far, according to the study, these options account for no more than 24 per cent of sales. In fact, the Association of Canadian Publishers observes, only 30 per cent of its 125 members have e-commerce-enabled sites – a sign, perhaps, that publishers don’t wish to aggravate their relations with Indigo, other online services, or independent booksellers for that matter.

The Turner-Riggs report also comments on the impact of the appreciation of the Canadian dollar in recent years. Federal statutes require that the list price of a foreign-published book imported to Canada by a Canadian company or the branch plant of a foreign-owned firm “not exceed the Canadian-dollar equivalent of the foreign-currency list price by more than 10 per cent.” However, “if the Canadian price exceeds this point, a Canadian bookseller is permitted to source the book from outside Canada.”

The rise of the Canadian dollar – it was pegged at 95 cents (U.S.) in the concluding month of the study – has been laying the groundwork for that to happen more and more.

An Edmonton or Fredericton bookseller who relies on increased foreign sourcing undermines the territorial rights of the Canadian companies that bought those titles, the study observes. It argues, too, that price deflation on imported titles “creates downward pressure on list prices for titles originally published in Canada, which further squeezes the margins of publishers and booksellers alike.”