International sales ‘increasingly important in 2019’, predict publishers
Publishers will increasingly look to international territories for growth this year in the face of a stable but flat domestic market, according to industry leaders giving The Bookseller their predictions for what 2019 holds for the trade.
Yet paradoxically the terms of many international trading relationships are currently uncertain amid the deep confusion surrounding Brexit, scheduled to take place just weeks from now, as many pointed out.
“In a domestic market squeezed by rising costs and price resistance, with only so many ways of dividing up the cake, international markets will continue to grow in importance as the risk of being severed from some of them increases,” observed Pan Macmillan m.d. Anthony Forbes-Watson. OUP’s Jane Harley warned: “Overseas markets have become increasingly important for the health of the UK’s educational publishing sector and we must work harder to champion the strength of our high quality materials and maintain the demand post-Brexit.” DK c.e.o. Ian Hudson predicted that China would “continue to take centre stage” as publishers became ever more global in their search for growth.
Inevitably publishers commented widely on Brexit uncertainty, with Penguin Random House UK c.e.o. Tom Weldon confirming his company was currently “planning for a number of different scenarios” since the future was still unclear. Faber c.e.o. Stephen Page said: “The manner by which we decide to withdraw from the EU [or don’t] could have repercussions on our publishing processes, our costs, our copyright framework, the high street, and our staff. We’ve planned as far as we can, but one of the challenges for the next year will be about coping with whatever environment is thrown at us while remaining concentrated on publishing our books excellently.”
The effect of political turmoil on the domestic economy worried Waterstones m.d. James Daunt. “We always hope for a good year and most retailers are fairly pessimistic both by nature but probably [also] because right now only a screaming lunatic would be positive,” he said. “If we have anything that resembles a hard Brexit it will be catastrophic. It we have a soft Brexit it will be terrible. I’m one of those retailers that thinks everything about the way we are heading is bad for the economy.”
But Booksellers Association m.d. Meryl Halls said she was “cautiously optimistic” about the year ahead, with booksellers continuing to “cement their position as retail leaders in the UK”, bucking the trend of the troubled high street. Blackwell’s c.e.o. David Prescott acknowledged “a lot of nervousness around at the moment” but said: “History shows us in economic downturn the book is actually surprisingly resilient and always has been.”
Continued growth in audio and children’s, and strides forward in dealing with diversity and inclusion issues, were also among the c.e.o.s’ predictions for the year. Perminder Mann of Bonnier Books UK anticipated more initiatives across the industry along the lines of her own company’s move to only accept anonymous application forms in a bid to tackle unconscious bias. “I hope we’ll also see more publishers throw their weight behind diverse voices, especially in children’s publishing,” she added. DK’s Hudson also thought publishers should “redouble their efforts on environmental and ethical supply chain issues as these become more and more important to consumers.”
In academic publishing, SAGE’s Stephen Barr predicted that evolution would continue “rapidly”, with the Teaching Excellence Framework pushing publishers to innovate beyond the textbook, and the renewed push for maximising open access making it all the more important that research funders and publishers work together to find models which “also maintain all the strengths of the global scholarly communications ecosystem.” Springer Nature’s Daniel Ropers agreed, saying publishers, funders, librarians and researchers would need “a greater level of co-operation than ever before” to reach the ambitious goals they had set themselves for 2019.
The full list of 2019 predictions from industry leaders can be read here.
BA says Amazon ‘gaming system’ as £63m business rates bill revealed
The Bookseller’s Assocation has warned Amazon is “gaming the system” and branded the business rates regime “unfair” yet again after it emerged the online retail giant paid £63m in business rates despite recording £8bn in UK sales.
Controversy over Amazon’s business rates bill emerged after Lesley Smith, Amazon’s director for Public Policy in the UK & Ireland, was forced to reveal the figure at a House of Lords communications committee meeting yesterday (8th January).
Amazon said business rates were “just one of a number” of taxes the online retailer pays in the UK but Jake Berry, minister for the high street, told MPs on the committee: “It doesn’t seem that is creating a level playing field to me.”
Meryl Halls, m.d. at the Booksellers Association, told The Bookseller the business rates regime is “systemically ruinous for traditional retailers” and, while calling for change, said booksellers were “sick” of having to restate their case is not fair while Amazon “games the system”.
“The fact that Amazon have finally been forced to declare the amount they pay in business rates reinforces the point that their in-built advantages are breathtakingly large and systemically ruinous for traditional retailers,” said Halls. “Let’s not forget that Amazon is now the highest valued company in the world, and Jeff Bezos the richest man on the planet. Their entire business model is built on minimising their contribution to the infrastructure the high street is supporting – local authority investments in roads, schools; government investment in hospitals, education, transport, the welfare state.
“High street retailers are sick, frankly, of being put in the position of constantly shouting ‘it’s not fair’ – it’s clearly not fair, but in the end Amazon are only gaming the system. The system needs to change, and the government needs to act to reinvent a rates and taxation system that is now broken beyond repair, anachronistic, no longer fit for purpose – and to act quickly and decisively if we to avoid seeing the demise of more high street retail businesses, and the long term jeopardy of all high streets.”
As well as Amazon addressing the issue of business rates in a recent blog – which said “the story of Amazon’s contribution to the UK economy … hasn’t always been clear”, emphasising it has invested nearly £10 billion across the UK since 2010 – a spokesman for Amazon said: “Last year, Amazon paid local authorities in England and Wales over £63 million in business rates for the sites we use to serve our customers. Business rates, which are just one of a number of taxes Amazon pays in the UK, are set by local authorities and are based on the rateable value of the land a business uses. Since most of our facilities are very large—a million or more square feet with many thousands of employees—they need to be located away from city centres and near major transportation infrastructure, which enables us to meet the needs of the customers and sellers that rely on Amazon every day. These payments are just part of Amazon’s broader £9.3 billion investment in the UK economy since 2010, which includes creating 2,500 jobs last year — bringing our total UK workforce to over 27,500.”
Business rates are a long-running bone of contention for the book trade, with Waterstones m.d. James Daunt recently warning that the government needs to rethink business rates, while Blackwell’s c.e.o. David Prescott told The Bookseller he does not expect the government to change business rates this year after offering mild relief aimed at small retailers in the 2018 budget.
Daunt recently told The Bookseller: “They [the government] need to rethink business rates completely. It’s by no means straight forward and obvious as to how you do that and in particular the government needs the certain billions or whatever it gets from rates so it’s not something that can just be magicked away. They’ve talked also about some form of tax on online which -scratching at that – that’s been very, very modest and I think that’s something that should be considered.”
Prescott has said: “Business rates help was helpful, everything is welcome on that front. It doesn’t change anything for or bigger retailers. The system is broken and has been broken for a long time. The government know that and between shops and online there are big inconsistencies to bout it mildly. I was on the BA board eight years ago and business rates was top of the agenda then. It’s taken far too long.”
Yesterday’s hearing also came in wake of the closure of the physical premises of the Big Green Bookshop, one of London’s best loved independent bookshops, due to “absolute monster” rates and rents. “Rents and rates are the two biggest outgoings and it’s going to be really nice not having to pay £10,000 a year rates,” co-owner Simon Key said of its recent decision to go online-only.
Supermarkets ‘putting the squeeze on books’, say trade professionals
Industry professionals say supermarkets are putting the squeeze on mid-list commercial fiction, with the shelf space afforded to books in the nation’s largest chains dwindling over the past 18 months and selection becoming “increasingly competitive”. The squeeze is also thought to be affecting children’s publishing.
However ASDA and Waitrose have told The Bookseller they have not cut back their book space, although ASDA confirmed it has become “more selective”, with fewer new release slots available. Tesco and Sainsburys declined to comment.
Contributing to The Bookseller‘s c.e.o. predictions for 2019 this week, HarperCollins c.e.o Charlie Redmayne noted that supermarkets were becoming “an increasingly challenging environment with growing competition for space.”
One editor who preferred to speak anonymously also voiced concerns to The Bookseller, saying: “Understandably the supermarkets are still selecting the likes of Jojo Moyes, Lee Child and Peter James, and in some cases in higher quantities than before, which means as ever it’s the smaller authors who are bearing the brunt. Even a small Tesco order should be 2,000+ copies, so it’s not a gap that can easily be filled.”
An agent, also speaking on condition of anonymity, said that publishers were increasingly looking to the supermarkets for bulk sales because other retailers were ordering fewer advance copies, with Waterstones buying “little and often”. “Companies like Waterstones are taking less of a risk and so publishers are looking more to supermarkets to market a book. These slots are more competitive than they used to be,” the agent said. Literary agent Robert Caskie of Caskie Mushens also noted it was “increasingly important to get a book into the supermarket, to get hardback sales for publishers”.
Retail analyst Nick Bubb said most supermarkets were cutting back on low-margin entertainment products that were better sold online: “Gone are the days when you’d see a huge pile of the latest Harry Potter book in Tesco,” he noted. “And I suspect Waitrose shoppers pick up more books at the John Lewis ‘click and collect’ parcel counter than through the tills.”
ASDA’s buying manager for Books Phil Henderson told The Bookseller: “I’m pleased to confirm that ASDA has not reduced Books space over the last year and we do not have plans to reduce space in 2019. The number of New Release slots available has declined, which is a strategic move to give the titles we select a longer shelf life in store and create a stronger business model with our publisher partners. The trading team are being more selective, enabled by a closer understanding than ever of who the ASDA customer is and what she requires from our offer.”
Waitrose also said it had maintained space for books and where space allowed had increased allocation of childrens’ books in 120 shops. “Our selection of fiction, cookery and childrens’ titles, which is available in more than 200 of our shops, remains an important and popular part of our offer. We have therefore maintained the space dedicated to books, indeed where space has allowed, we have increased the allocation of childrens’ books in 120 shops and we are now displaying a selection of books at the checkouts to inspire our customers,” a Waitrose spokesperson said. “In addition, we have introduced a new initiative where our Partners (employees) read the book in advance and their review is displayed with the book on shelf. We have also launched a ‘Featured Fiction’ offer with the Telegraph whereby customers with the correct voucher can get £1 off a new book every two weeks.”
Nielsen BookScan recorded that, although non-fiction and general & literary fiction were up last month, categories for crime & thriller, food & drink and romance & sagas were all down on December 2017 (respectively 10.4%, 13.8% and 15.3% in volume terms and 7.5%, 10.6% and 8% in value terms).
While Tesco this morning (10th January) reported “strong” Christmas trading, with sales up 2.2% at its UK supermarkets over the six-week period to 5th January and up 1.9% in its third quarter, Sainsbury’s this week blamed “cautious customer spending” for a fall in its sales. Its total retail third quarter sales, which includes the run up to Christmas, were down 0.4% and like-for-like sales down 1.1%. Of this, general merchandise (non-food) sales declined by 2.3%. Across the board, the British Retail Consortium (BRC) said it was the worst December sales performance in a decade.
Whiley takes on Radio 2 Book Club
The BBC Radio 2 Book Club will relaunch again with presenter Jo Whiley, with upcoming choices including Girl With A Pearl Earring and YA author Angie Thomas.
Now scheduling changes at the station will see Whiley taking on the book club for a slot running every fortnight on a Monday between 7pm and 9pm, from 21st January. The show will be overseen by BBC producer Anna Richards.
The first selection will be Claire Adam’s debut Golden Child (Faber), followed by Tracy Chevalier’s Girl With A Pearl Earring (HarperCollins) on 4th February marking the historical novel’s 20th anniversary. Thomas’ second novel On The Come Up (Walker Books) will be discussed on 18th February before cult classic The Catcher In The Rye(Penguin) by J D Salinger on 4th March with Ronan Hession’s Leonard & Hungry Paul (Bluemoose Books) scheduled for 18th March.
Whiley said: “I’m thrilled to be hosting the Radio 2 Book Club on my new show. As an avid reader, I’m excited to discover some new authors and revisit some classic novels, as well as hear what the Radio 2 listeners think about our selection.”
Mayo now runs the Simon Mayo’s Books of the Year podcast, sponsored by W H Smith, and featuring guests such as Ben Macintyre, Alan Johnson and Mark Kermode.