This report discusses bookselling in the UK. The UK book market is one of the largest in Europe and it is growing faster than those of Germany or France. However, in 2006, although more books were sold than ever before, more booksellers went out of business than in 2005, and few bookshops made good profits. This is largely due to the fact that prices are being forced down on even the most sought after books. Some booksellers are buying titles from supermarkets and then selling them in their own shops, while the online booksellers are consistently able to sell books at heavily discounted prices. This market is very different from the bookselling market in previous decades.

Key Note estimates that the value of the retail book market in 2006 (including online sales) was £4.24bn, which represents an increase of 3.4% on the previous year. By volume, the market is growing by more than 5%. Over two-thirds of the market is accounted for by consumer sales. The remainder comprises academic and professional books, and school books.

The industry's major booksellers include: WH Smith, Waterstone's, Amazon.co.uk, Borders and Book Club Associates, with Amazon.co.uk growing the fastest. Many supermarkets also sell books, but none occupies a dominant position in the market as a whole, although they are certainly influential.

Three topics have dominated the bookselling scene in 2006: the bid by Waterstone's owner, HMV PLC, to buy Ottakar's which proved successful; and the growth of supermarket sales and online sales. In addition, the issue of pricing and how much a book is worth is very topical. Pricing is now in disarray because among the top bestsellers, every book that is published is immediately discounted. Beyond the bestsellers there is the constant three-for-two offers on books that would probably sell perfectly well without any discounting at all. Consultants to the industry bemoan this discounting because the booksellers, aided and abetted by the publishers, are destroying the value of their product and their own profitability. Some price cutting is inevitable, but the scale of it often lacks rationale.

Meanwhile, the bookshops have been taken aback by the swift rise of online bookselling, and looming ahead is the advent of the electronic book. Bookshops were never prepared for the onslaught of Internet purchasing and there is a fear that they will not be able to meet the challenge of the e-book. The Booksellers Association has recommended a number of actions that bookshops should take in order not to be caught out when e-book sales take off — in as little as 4 to 5 years' time. However, many of its proposals require financial investment, which many bookshops will find difficult to provide.

Key Note estimates that the value of retail book sales will rise by 19.9% between 2006 and 2011. More books will be sold, but bookshops' profits are unlikely to be much higher than in 2006.

1. Market Definition
INTRODUCTION
MARKET SECTORS
Consumer Books
Academic and Professional Books
School Books
MARKET TRENDS
Price Cutting
Celebrity Books
Supermarkets
Online Buying
Heavy Book Buyers
In-House Book Shops
ECONOMIC TRENDS
Population
Table 1: UK Resident Population Estimates by Sex (000), Mid-Years 2001-2005
Gross Domestic Product
Table 2: UK Gross Domestic Product at Current and Annual Prices (£m), 2001-2005
Inflation
Table 3: UK Rate of Inflation (%), 2001-2005
Unemployment
Table 4: Actual Number of Unemployed Persons in the UK (million), 2001-2005
MARKET POSITION
The UK
Table 5: UK Publishing Market by Sector by Value (£m and %), 2006

2. Market Size
THE TOTAL MARKET
Table 6: The Total UK Booksellers' Market by Sector by Value at Current Prices (£m at rsp), 2002-2006
Figure 1: The Total UK Booksellers' Market by Sector by Value at Current Prices (£m at rsp), 2002-2006
Table 7: The Total UK Book Market by Sector Share by Value (%), 2006
Book Output
Table 8: Number of New and Revised Book Titles in the UK, 2000-2006
Figure 2: Number of New and Revised Book Titles in the UK, 2000-2006
By MARKET SECTOR
Consumer Books
Table 9: The UK Consumer Book Sector by Value at Current Prices (£m at rsp), 2002-2006
Academic and Professional Books
Table 10: The UK Academic and Professional Book Sector by Value at Current Prices (£m at rsp), 2002-2006
School Books
Table 11: The UK School Book Sector by Value at Current Prices (£m at rsp), 2002-2006

3. Industry Background
RECENT HISTORY
Historical Background
The Net Book Agreement
The Internet
Book Clubs
NUMBER OF COMPANIES
Table 12: Number of UK VAT-Based Enterprises Engaged in the Retail Sale of Books, Newspapers and Stationery by Turnover Sizeband (number and %), 2003, 2005 and 2006
EMPLOYMENT
Table 13: Number of VAT-Based Local Units Engaged in the Retail Sale of Books, Newspapers and Stationery by Employee Sizeband (number and %), 2003, 2005 and 2006
DISTRIBUTION
REGIONAL VARIATIONS In the Marketplace
How ROBUST Is THE MARKET?
KEY TRADE ASSOCIATIONS
Book Marketing Ltd
Booksellers Association
Publishers Association
Nielsen BookData

4. Competitor Analysis
THE MARKETPLACE
Consumer Books
Academic and Professional Books
School Books and Library Books
Market LEaders
Table 14: Financial Results of Leading Booksellers (£m and £000), 2005/2006
Amazon.co.uk
Company Structure
Current and Future Developments
Financial Results
Blackwell UK Ltd
Company Structure
Current and Future Developments
Financial Results
Book Club Associates Ltd
Company Structure
Current and Future Developments
Financial Results
The Book People Ltd
Company Structure
Current and Future Developments
Financial Results
Borders (UK) Ltd
Company Structure
Current and Future Developments
Financial Results
British Bookshops & Stationers Ltd
Company Structure
Current and Future Developments
Financial Results
David Flatman Ltd
Company Structure
Current and Future Developments
Financial Results
Waterstone's Booksellers Ltd
Company Structure
Current and Future Developments
Financial Results
WH Smith PLC
Company Structure
Current and Future Developments
Financial Results
Marketing Activity
Main Media Advertising Expenditure
Table 15: Main Media Advertising Expenditure by Bookshops (£000), Years Ending September 2005 and 2006

5. Strengths, Weaknesses, Opportunities and Threats
STRENGTHS
WEAKNESSES
OPPORTUNITIES
THREATS

6. Buying Behaviour
Consumer Penetration
Table 16: Penetration of Books Purchased in the Last 12 Months (% of adults), 1997, 1999, 2001 and 2003-2006
Penetration of Purchasers by Sex, Age, Social Grade and Region
Table 17: Penetration of Purchasers of Hardback and Paperback Books by Sex, Age, Social Grade and Region (% of adults), 2003-2006
Profile of Purchasers by Sex, Age, Social Grade and Region
Table 18: Profile of Purchasers of Hardback and Paperback Books by Sex, Age, Social Grade and Region (% of adults), 2003-2006
AUDIO BOOKS

7. Current Issues
A DIFFICULT MARKET FOR MANY
SUPERMARKETS
DISCOUNTING
THE RICHARD & JUDY EFFECT
CORPORATE NEWS
INDEPENDENTS UNITE

8. The Global Market
Introduction
Europe

9. Forecasts
ECONOMIC FORECASTs
Table 19: Government Economic Forecasts (000, % and million) 2006-2010
FORECASTs 2007 to 2011
Table 20: The Forecast UK Booksellers' Market by Value at Current Prices (£m at rsp), 2007-2011
Market Growth
Figure 3: The Forecast UK Booksellers' Market by Value at Current Prices (£m at rsp), 2002-2011
Future Trends
The Digital Future
Challenges for Booksellers

10. Company Profiles
Blackwell Uk Ltd
The Book People Ltd
Borders (uk) Ltd
Waterstone's Booksellers Ltd
WH Smith PLC

11. Consumer Confidence
METHODOLOGY
KEY FINDINGS THIS QUARTER
THE WILLINGNESS TO BORROW
Confidence Slips Slightly
Table A: The Average Amount Consumers Are Willing to Borrow in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), November 2005-2006
Significantly More Adults Are Willing to Borrow
Table B: The Number of Adults Willing to Borrow in Order to Purchase Expensive Items (000 and %), November 2005-2006
SPENDING FROM SAVINGS
Little Change in Spending from Savings
Table C: The Average Amount Consumers Are Willing to Spend from Savings in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), November 2005-2006
Saving Grows in Relative Importance
Table D: The Average Amounts Adults Are Confident Spending to Purchase Expensive Items (£ and %), November 2005-2006

12. Further Sources