The Bookseller.com

28th August 2008

Graeme Neill is retail reporter of The Bookseller.

Taking Tesco seriously

09.05.08

Is it time to start treating Tesco as a proper bookseller? They revealed extremely ambitious plans this week to publishers to grow their business to a position where they are selling £200m of books in 2011. To put that into context, that's almost the turnover of a dedicated bookseller like Borders.

They currently sit in fifth place in the book market, with a 6% market share by value and 10% by volume. With 731 stores selling books that's more than double Waterstone's store portfolio.

There is a fair degree of snobbery about the supermarket sector for them supposedly shifting high levels of mis-mem tat, tacky celeb tie-ins and lowest common dominator crime. This is unfair to say the least and underestimates the strength of the sector. As one publishing sales director put it to me: "Tesco is the most successful retailer of anything they choose to sell and that includes books." Their clear merchandising and charts make it extremely easy to get someone to drop a book into their trolley.

The supermarket also has a deceptively impressive range, with To Kill a Mockingbird and Life of Pi among its big sellers over the past year. In the 2007 Richard and Judy Book Club, they achieved sales of £2.7m, a 14.8% market share in volume. But books have to fight for the space. Supermarket retailing is even more cut-throat than bookselling, with countless different types of product jostling for position instore. At first glance it may seem strange that books are given such prominence in so many stores. Beside the likes of a greeting card, a book's margin is much less. And with sales of £107.2m last year, Tesco's book sales compared to the £37.9bn turnover of the wider business barely even could be called a drop in the ocean.

However, the supermarket has a powerful ally in chief executive Sir Terry Leahy. Because of his own love of books, they are given much more space than their margin would expect. This has led Tesco to drive campaigns like World Book Day, National Year of Reading and Quick Reads.

The supermarket is not without fault. Some authors are definitely not  fans. Publishers point out that they punch well below their weight at Christmas and the supermarket admits that pulling numbers 41-70 out of their paperback chart last Christmas was a mistake that compounded matters. Their online offer is also woefully underdeveloped.

A new commercial manager in Hazel Powell (who, like Tesco books head Gaynor Allen, has a background in selling domestic appliances) is tasked with rectifying that. And interestingly, the supermarket is drawing battle lines with Amazon with the intention to compete on price on 5,000 key lines this summer. This was perhaps the most interesting part of their presentation to publishers, held in the middle of the Hertfordshire countryside on Wednesday.

For too long, publishers have bemoaned a lack of a viable competitor to Amazon, despite the noble efforts of Play.com and increasing strength of Waterstone's offer. With Tesco's spending might behind it, could we see it as an online bookselling giant in years to come? Given Sir Terry's interest, it will be enjoyable to watch.

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