Magazine article Marketing

Book Club Arm Sets Up High Street Shop

Magazine article Marketing

Book Club Arm Sets Up High Street Shop

Article excerpt

Reed and Bertelsmann to undercut book retailers like Dillons with their own chain

Two of Europe's top media owners are believed to be poised to take on UK book retailers in their own backyard this week.

Sources say book club BCA, owned jointly by Reed International and the German media magnate Bertelsmann, is considering a chain of retail outlets to compete head-on with WH Smith, its Waterstone's subsidiary and Pentos' Dillons. It is interviewing now for a manager to oversee the new operation.

Talk is that BCA -- which dominates the 100 m [pounds] UK book club market with an 80% share -- plans to pilot three stores 3500 sq ft and stocking 5-7000 titles. Discounts on new books and bestsellers will severely undercut anything else currently on the high street.

If they prove viable within six to nine months they will be rolled out across the country, sources claim. Phase two of the project is to widen the merchandise to include videos, music and computer software now sold through BCA's 20-plus club brands.

BCA chief executive Graham Williams will not confirm details. "We have no plans to launch more," he says, referring to the one book club centre below its HQ just off London's Oxford Street. But he adds that BCA's corporate strategy meetings "talk about testing shops".

Bertelsmann already runs book club shops in France, Germany, Holland and Italy. But there, as Williams points out, markets are more fragmented, without the UK's concentration of retail power.

If its UK plan is successful it could force WH Smith to discount in its market leading 504-strong chain suggests one City analyst. "And that is what would really raise the competition stakes."

BCA stores would still operate as clubs in the sense that customers would have to become members. But prime sites would provide BCA with high-profile exposure to new members who could walk in off the high street.

Joining involves buying say five books at between 50p and 1.50 [pounds] and then pledging to remain a member for at least six months. They would buy not less than three books within the first year (or shorter period if appropriate).

Also, the company has a database of 2.5 million customers who are bound to be loyal for at least six months -- who can be mailed with promotions and incentives to visit. "The opportunities for direct marketing are superb," says an insider. …

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