Another 300 bookstores set to go, but further chapters remain in saga: IBISWorld

There were 4430 bookstores in Australia during the 2004-05 financial year. Now, there are just 2921 bookstores owned by 2700 companies, and industry forecaster IBISWorld isn’t optimistic for those that remain.

According to a new report by IBISWorld analyst Claudia Burgio-Ficca, industry revenue will decline 8.1% during the coming financial year, with annual revenue declines moderating after that. By 2018-19, the forecaster believes annual revenue falls will stabilise to just 3.8% a year.

It’s been a perfect storm for booksellers over the past five years, Burgio-Ficca says. On the one hand, retail generally has had a challenging time, battling low consumer sentiment and lacklustre spending.

The industry is also facing structural change, with a rising breed of online-only booksellers operating with leaner business models, broader catalogues and lower prices forcing the industry to cut costs and become far more competitive.

Discount booksellers haven’t helped either. IBISWorld notes that discount department stores have increasingly been making bulk purchases of books, and then offering them at bargain-basement prices to customers during key selling periods such as Christmas. This limits the ability of bookstores to profit from the flurry of gift-buying at the time.

“Bookstores have fought to stay afloat,” Burgio-Ficca says. “A host of issues have plagued the industry.

“As a result, profitability has trended downwards.”

Despite the presence of big-name brands like Dymocks and Collins Booksellers, bookselling is a small business industry. The top four players together hold under 40% of the market share, and barriers to entry are relatively low.

But it’s not all doom and gloom. Despite catering to a far smaller share of the market, speciality bookstores have performed better.

“Niche bookstores such as those specialising in languages are projected to remain in demand, and face relatively little external competition,” Claudia Burgio-Ficca says.

Discount bookstore chain allbooks4less.com.au was placed into administration in July. As the figures show, it’s far from the only bookstore to face such a fate.

This article first appeared on SmartCompany.

 

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