Discounts and Used Books Drive Consumer Demand

Posted on April 30, 2004

Consumer demand for general trade books held steady during 2003 compared to 2002, however spending on a per-book basis slipped, resulting in lower 2003 consumer expenditures, according to recent findings from Ipsos BookTrends, a tracking service from Ipsos-Insight. BookTrends found that while Americans bought nearly the same number of books in 2003 as they did in 2002 -- 1.176 billion books in 2003 versus 1.177 billion books in 2002 -- overall spending on books decreased 2%, falling from $11.3 billion in 2002 to $11.0 billion in 2003.

The disparity between unit and dollar trend performance during 2003 is partially explained by continuous increases in used book buying, and supported by increased traffic at used bookstores and online retailers. In total, the number of used books bought by consumers between April and December 2003 increased 5% over the same period the year before, while demand for new books fell by 2%. Overall, the used book market accounted for 14% of general trade book sales, gaining one share point since 2002.

"Sales from the ever-widening used book distribution channels, including online options, are beginning to impinge on new book sales. The challenge for publishers and traditional book retailers will be to devise effective strategies to leverage and preserve their backlist sales, which have, up until now, largely been exempt from heavy discounts and provided better gross margins," said Barrie Rappaport, chief analyst of Ipsos BookTrends.

Continued discounting on hardcover books further contributed to the decline in per-book spending. The list prices for both mass market paperbacks and trade paper titles have increased since 1998 (by 9.6% and 1.9%, respectively) and the total per-book spending after discount has increased (by 13.3% for mass market paperbacks and by 4.8% for trade paper titles). However, the ongoing Ipsos study of more than 16,000 nationally representative households found that the average amount spent per new hardcover book purchase in 1998 was $23.73; in 2003 that amount dropped to $22.75.

"Hardcover books are actually less expensive now than five years ago�both the list price and the average amount paid by consumers. Whereas once the hardcover was a prestige item and contributed significantly to publishers' and book stores' gross margins, competition between price clubs and chain superstores has put the squeeze on publishers and independent and small chain bookstores," said Rappaport.

"At the same time, lower prices have made hardcovers more accessible to consumers, so we�re seeing more non-traditional titles in hardcover, such as crossover juvenile fiction novels � those that appeal to kids of all ages," added Rappaport. "The latest Harry Potter The Order of the Phoenix was published in hardcover to much consumer consternation about inflated book prices, but at least one leading online retailer is currently offering the bestseller at 70% off the list price."