The bookstore business in the US is highly fragmented with many players, big and small, fighting for a market share and trying to increase their sales. While traditional retailers sell books through a large number of store chains, companies that retail books using the Internet are showing increased activity. These companies have a wider reach and can obtain greater margins since they do not need to invest in shops and bookstores. This paper provides an economic analysis of the industry.
We will write a custom Research Paper on Bookstore Business in the USA: Economic Overview specifically for you
301 certified writers online
The US book publishing industry publishes many categories of books such as fiction, children’s books, education, and school textbooks, biographies, autobiographies, and so on. Out of all these categories, paperback fiction has the largest sales figures for the year 2006 and this amounts to 208.4 million $ or 51.4% of the total sales. Please refer to Table 1 for a break up of the share of different categories of books published in 2002.
Table 1. Categories of Books Sold (WSJ, p. 58)
| ||$ Million||$ Million||$ Million||$ Million||$ Million|
|Book Clubs & Mail Order||852,384||775,669||706,634||659,290||639,511|
|Mass Market Paperback||1,216,710||1,196,026||1,089,580||1,091,759||1,141,980|
|El-Hi (K-12 Education)||5,795,044||5,939,920||5,945,860||6,570,175||6,189,105|
According to the Wall Street Journal, the book industry in the US is a thriving industry with thousands of books sold by hundreds of booksellers and publishers. There are many categories of books such as children, fiction, nonfiction, education, research, and so on and these are consumed across the country by students, homemakers, professionals, adults, and other groups. Books are sold by several retailers, specialist book shops, supermarkets in railways stations, and many other outlets. The following table provides an analysis of the major booksellers.
Table 2. Major Players in the US Book Publishing industry ((WSJ, p. 63)
|Stores||Employees||Market Share 2007|
|W H Smith||Book Chain||1,423||669||18,790||15.4%|
|Reader’s Digest||Mail Order||1,26||N/A||4,300||2.5%|
|The Book People||Mail Order||N/K||N/A||N/K||2.1%|
According to the Wall Street Journal, while the overall trade turned positive in 2005-2006 and growth went to 2.4%, the projections for the year 2010. The trend figures are shown in Table 3.
Table 3. Trends in the US publishing industry (S&P, p. 47)
| ||% Change||Compound Growth Rate||Projections|
|Book Clubs & Mail Order||-3.0%||-6.9%||-2.1%|
|Mass Market Paperback||4.6%||-1.6%||-.5%|
|El-Hi (K-12 Education)||-5.8%||1.7%||1.9%|
As can be seen from the data, eBooks are gaining huge popularity and this category of publishing is expected to rise to 85% of the total sales. Wall Street Journal suggests that changing the reading habits of people who prefer to download a book is the main reason. The category of eBooks are Internet-based books and subscribers to the service can either download the whole book or read it online. Such books can also be shared among friends and colleagues. It has been also suggested that eBooks save trees since printing is not done by the publishers and there is an increasing trend towards the green planet and save the movement of the trees.
The Wall Street Journal provides a snapshot of the prevailing interest rates and these figures are shown in the following table
Table 4. Interest Rate Trends (Wall Street Journal, 2007)
|US 10 Yr. T-Notes Comp. – about|
|Data retrieved at Sep 25 01:14:34 GMT • All quotes are in Greenwich Mean Time • Data provided by eSignal|
|Dec ’07|| |
|Mar ’08|| |
|Jun ’08|| |
|Sep ’08|| |
|Dec ’08|| |
As can be seen in the above table, for the projection for December 2007, on the 10-year promissory note, there is a net negative charge of 0.015 points. There is a difference of 35 points between the high and low-value trade.
From Table 5, the spending on books as a percentage of the Gross Domestic Product can be seen for the years 1998 – 2006. US had spent 0.351 of the GDP with a real percentage change for the years 1998 to 2006 at +0.6 percent. The figures suggest that reading books is not very popular in the US. Germany has the highest spend of 0.424% of the GDP but the increase over the previous year was +0.9% while UK had a spend of 0.356% of the GDP with an increase of +1.9% over the previous year.
Table 5. Spending as a percent of the GDP (S&P, p. 23)
|% GDP||Real % Change 1998-1999|
The forecast for the GDP is given in Table 6 for the month from September 2007 to February 2008. The figures are in Billion US Dollars. Annual Rate Seasonally Adjusted
Get your first paper with 15% OFF
Table 6.U.S. GDP Gross Domestic Product Forecast (S&P, p. 25)
.As shown in the table, the GDP is rising and is projected to rise from 13, 919 billion $ in September 2007 to 14, 203 billion $ in February 2008.
According to a report published by the Wall Street Journal, there is an increase in the number of books that have been bought in 2006 when compared to the previous years. Please refer to Table 6 for an analysis of the sales figures.
Table 6. Consumer Confidence (WSJ, p. 17)
|Number Buying (millions)||29||29||28||30|
|Average Number Books Bought||10||10||11||11|
|Average Book Spend||72||78||84||83|
The number of people buying in 2006 was 30 million and the percentage was 64% and both these figures show an increase over the past years. While the average amount spent on books per person was 72 GBP, the figure in 2006 was 83GBP. The US book publishing industry publishes many categories of books such as fiction, children’s books, education, and school textbooks, biographies, autobiographies, and so on.
Balance of Payments
The Wall Street reports that the deficit in the current account has reached the figure of 225 billion $ for the 2005 fourth quarter. The deficit was 185.4 billion in the third quarter. The total deficit of the year 2005 was around 805 billion USD and this figure is about 6.4 percent of the GDP. The huge rise in deficit has a domino effect on the US market and there is an increasing chance of debt funding happening.
As seen in Table 3, the overall book-selling business in the US is expected to grow at a rate of 5.3 percentage. The Wall Street Journal also suggests that with importing of lower-priced books, the market would further get diluted. Table 7 shows the consumer price index for all categories for the month’s May to August 2007.
Table 7. Consumer Price Index for 2007 (WSJ p. 19)
As shown in the table, the CPI has changed in August and the trend is rising. The forecast is that the CPI will increase in the coming months.
Position in Economic Cycle
As seen in Table 6, over the years, the spending by individuals on books has been steadily rising. The increase in spending can be explained as the growth phase in the market. If the US economy slows down, there is a possibility that the book-selling market would slow down or even turn negative.
According to the Wall Street projections, unemployment for the period from September 2007 to February 2008 would vary between 4.6 to 4.8 percent.
Table 8. U.S. Civilian Unemployment Rate Forecast Percent Unemployed Seasonally Adjusted. ( S&P, p. 29)
The Wall Street Journal has placed inflation at 1.93 percent. The key indicators are shown in Table 9.
Table 9.Inflation Indicators (S&P, p. 9)
|Current Economic Indicators|
|September 24, 2007 (Close of Day)|
|GDP Growth %||3.90|
Book Selling and publishing in the US is showing an increasing trend with more books being bought. A major part of the increase in sales has been in the eBooks sector. The US economy has shown an inflation rate of 1.93 percent. The GDP has been growing at a rate of 4.6 percent while unemployment is expected to remain at 4.6 percent. The trends are expected to continue to February 2008.
S&P, Country Risk. (September 2007). US at a glance: 2007-08, Country Risk Service. Economist Intelligence Unit: S&P Publications.
WSJ, Finance. (September 2007). Future Trends in Cards and Payments: Key issues, innovation and competition in Europe and the US in the Financial and Customer Markets. Business Insights: Wall Street Journal Publications.
Interest Rates. (25 September 2007). Wall Street Journal Online: Interest Rate Trends. 2007. Web.