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Supermarket retailers are confident that their channel will remain relatively unaffected by the expansion of virtual book sellers.As supermarkets capitalize on innovative merchandising opportunities, grocers and wholesalers say sales will increase, despite indications that the channel might have lost some market share last year.Books continue to sell well despite the competition for consumers' leisure

Supermarket retailers are confident that their channel will remain relatively unaffected by the expansion of virtual book sellers.

As supermarkets capitalize on innovative merchandising opportunities, grocers and wholesalers say sales will increase, despite indications that the channel might have lost some market share last year.

Books continue to sell well despite the competition for consumers' leisure time. To the surprise of analysts who predicted that Webcasts, books on tape or satellite TV would erode demand for books, sales of paperback and hardcover titles (excluding the children's, educational and religious segments) grew nearly 1% in 2000. Ipsos-NPD Group, Port Washington, N.Y., estimated that consumer book sales generated $10.4 billion in revenue last year.

E-tailers fared especially well, according to Ipsos-NPD, with a 7% market share, representing more than half of the unit growth last year. The combined food and drug channel lost one share point, matching the 3% of sales each earned by mail-order companies and used bookstores. Large chain bookstores dominated the industry with a 24% market share, book clubs produced 19% of industry sales, and independent bookstores posted a 15% market share. Combined warehouse/club stores and mass merchants each maintained a 6% share. All remaining outlets account for 14% of book sales.

Several years of steep sales declines for small bookstores at the expense of book superstores, combined with the popularity of Internet book sellers, have dramatically transformed how consumers browse for and purchase books.

Despite the doubling of's book sales from 1997 to 1999, and a 30% sales increase in 2000, it's possible that on-line book sales are beginning to flatten out. In mid-April, Jeffrey Bezos, chairman of, cautioned that "on-line books, music and videos would post very slight sales growth in the first quarter from the comparable period last year."

Since many book purchases in the grocery store are for immediate consumption, industry watchers say it is more likely that book superstores, where consumers stock up and buy specialty books, will be hardest hit by and others.

Ken Bruce, director of nonfood at Martins Supermarkets, South Bend, Ind., asserts that retailers are constantly evolving to successfully deal with the changing competitive environment.

"Martins Supermarkets have well-equipped reading centers with books, magazines, reading glasses and accessories," he said. "Good variety, fair prices on paperback best sellers and everyday discount pricing on hardcovers continue to make the book category valuable to consumers and the chain."

The retailer also looks for tie-ins such as video releases and children's book themes that are conducive to cross merchandising outposts.

A category manager from a large, regional grocery chain maintains that "grocery stores have a huge advantage merchandising paperback best sellers. Frequent shoppers find new release books in a well-signed section as soon as these titles are available for sale. Our efficient environment lets customers get in and out quickly, and even find a child's book, while avoiding a lengthy afternoon at a book superstore with two floors of a time-consuming, albeit exciting, selection."

Overall book distribution will expand as supermarkets use secondary locations to place focused assortments, according to grocery retailers. Health, wine, cooking methods and children's books are the most popular non-best-seller classifications merchandised in grocery stores. Nationally, 54% of book sales in units are popular fiction, 11% are cooking/crafts, 9% are religious titles and 8% are nonfiction books, while other genres, including technology, art, travel and health, each contribute 2% to 5% of unit volume.

Book distributors concur that while no channel is insulated from competition, grocery shoppers often have a particular agenda when they purchase a book along with orange juice, vitamins and greeting cards. Typically, popular fiction or romance novels are single-title purchases that consumers have waited for in paperback, and are easily accessible in the supermarket's reading center. Retailers and distributors believe that last year's 1% decrease in market share will be reversed this year. As supermarkets capitalize upon opportunities to merchandise books with coordinating videos for adults and kids, and aggressively cross merchandise books in appropriate locations, sales and market share will increase.

Judy Curtis, vice president of sales, Charles Levy Circulating Co., Chicago, one of the nation's largest book and magazine wholesalers, is optimistic regarding the growth opportunity for book sales in the grocery channel. "Numerous promotions and programs heighten book sales, appeal to new customer segments, enliven the category and complement a variety of in-store events," she said. CLCC, founded in 1893, has seen the book category evolve from an undifferentiated category to more customized assortments, consistent with the role that a retailer assigns to the category.

For example, to interest potential new book shoppers who already frequent the store, supermarkets can duplicate successful micromerchandising strategies that have been implemented for the vast magazine category. Outposts near the pharmacy, health and beauty care aisles, and adult and children's cereal planograms are high-traffic areas that attract consumers with specific needs and interests. "Grocery retailers can broaden the appeal of books through niche selections, thereby increasing awareness of special interest books routinely available in-store," Curtis said.

Craig Traviss, marketing manager, Gopher News, Minneapolis, a regional distributor of books and magazines, said that "supermarket executives who understand the revenue, margins and full-service aspect of books have many reasons to expand the category through secondary placement and cross merchandising." Gopher News has outposts of cookbooks, kids titles and health-related books in supermarkets that maintain such displays year-round.

Curtis and Traviss emphasized that grocery retailers should take advantage of in-store events, such as signings by noted authors. Grocery retailers can coordinate cookbook demonstrations with seasonal promotions in the produce department, or health care books can be a topic of discussion for pharmacy -- or dietitian-led store tours. These events help supermarkets compete with traditional bookstores and brand the grocery store as a destination book seller.

Supermarket retailers generally agreed that expanded reading centers achieve sales plans and consistently generate better than a 20% margin. Book superstores have steeper discounts than narrow price reductions offered by supermarkets. Most grocery chains, however, believe that the current selection and pricing structure of books are not a serious deterrent to sales.

Whole Foods Markets, Austin, Texas, mirrors its book assortment with the health and wellness merchandising throughout the store. "Becoming familiar with natural foods is an educational process," said Jon Nix, category manager. "Consumers hear many facts, but are more inclined to believe what they see in print."

Nix is confident that book sales at Whole Foods Markets influence new product trial, and have a specific role of creating excitement and enhancing the overall information-rich atmosphere throughout the store.

There is at least one distinct difference between book and magazine merchandising in the grocery channel. A few years ago, several grocery chains slightly expanded in-line space to accommodate the proliferation of magazines on topics ranging from new technology to fitness to crafts. In contrast, grocers have largely adhered to basic book merchandising and have not expanded the space afforded to books.

Some supermarkets have well-developed children's sections. "Sales of higher-end board books, as well as traditional coloring, activity and educational titles, have increased, and supermarket category managers are interested in reviewing new kids' products to keep the category fresh and competitive with alternative channels," said Curtis of Charles Levy. The wholesaler has developed multi-faceted children's sections, which are 8-foot to 16-foot planograms that can go in the main book section, in the cereal aisle or in the toy aisle.