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Booksellers net just two per cent

A typical UK bookshop’s net profit margin was two per cent in 2007.

Even with no VAT being charged on books in the UK or Ireland the average gross profit per book is lower than other markets due to low margins in both countries as well as low selling prices, according to a Booksellers Association of the United Kingdom and Ireland report.

International Market Comparisons A Benchmark Study of Profitability reveals that the Netherlands benefits from higher prices and better margins despite levying six per cent VAT on books.

The fixed price agreement in the Netherlands means that books cannot be sold at a discount until a year after release. There is no longer a fixed price agreement in Ireland or UK markets.

The report compared UK bookselling to that of the Netherlands, Ireland, Sweden, Finland, and the USA. Its findings focus particularly on the trade, or consumer, sector defined as bookshops which primarily sell fiction, non-fiction/reference and children’s books to the general public.

Relative to other markets studied, the UK is more fragmented with greater on-line and supermarket share than other markets.

Use of promotions and discounts creates a vicious circle for UK booksellers. Their use does not translate into higher growth in volumes when compared to other markets studied, said the report.

The report estimated that UK bookshops had lost 10 per cent of volume sales to other sources, including supermarkets and online retailers, in the study period.

Gross margin for UK booksellers per book was put at 25 per cent—lower than the average of countries surveyed. The report focused on traditional bricks and mortar booksellers, excluding internet sellers and supermarkets.

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22Nov08 288
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