Borders to Urge Review Of Pricing Policies
Retailer hoping for industry cooperation
by Karen Holt -- Publishers Weekly, 10/6/2003
Borders Group is hoping to open a dialogue with its vendors next year about the possibility of removing printed prices from book jackets.
"Bookselling is one of the few retail environments where the price is fixed by the supplier of the goods and not by the seller," said Borders spokeswoman Anne Roman. "This is not the most advantageous environment for any of the key parties. When the retailer can control pricing, we have the opportunity to use price as a lever to accomplish all kinds of positive objectives that benefit the publishers, customers and the retailer."
Roman said the company's emphasis for 2003 is working with publishers to make the supply chain more efficient, and that "we will move toward working together on the pricing issue with more of a focus next year." Borders maintains that if prices weren't set by publishers, the retailer would be free to price books strategically—perhaps offering titles by new authors at a lower price. The current system, in which the only way to control price is to offer discounts, encourages consumers to purchase a title only when it is discounted, Roman said.
The controversy over pricing isn't new. Booksellers, publishers and wholesalers have argued the issue for years. But the weight of the nation's second largest retailer pushing for change could finally force the question onto center stage. Across the Atlantic, the debate flared up last month when Borders U.K. managing director Philip Downer used his keynote speech at the Borders management conference in Bournemouth to blast the practice. "Publishers do not know what their books are worth," Downer said. In the U.K., the issue is expected to be a top priority for a new committee made up of representatives from the Publishers Association and Booksellers Association.
In the U.S., publishers are split on the issue. "I think it's a great idea to take the prices off the books," said Sourcebooks CEO Dominique Raccah. "We should have done it a long time ago." For Raccah, the advantages skew to the retailer. She said some booksellers—such as those in out-of-the-way locations—would be able to raise prices, adding much-needed padding to their thin margins. "I think this is a really important time in our industry's history to be paying attention to protecting the retailer," she said. "Their ability to hold onto their customers, to get them to buy more, is really important now."
But Peter Mayer, CEO of Overlook Press, said the change might encourage retailers to focus even more heavily on a small number of blockbuster titles, negotiating to buy them at higher volume, for less money, and perhaps selling them at a higher price. "I think it has some negatives not only for small publishers, but also for whatever are not the lead titles of the Random Houses of the world."
Industry consultant Mike Shatzkin pointed out logistical difficulties in changing the system. Retailers, for example, would bear the expense of setting prices and affixing the stickers. And since the vast majority of books on the store shelves would pre-date the change, it would take years to phase out the copies that have prices printed on them.
He also maintains that removing publisher-set prices might lead to something no one in the industry can afford—lower sales. "Confusion discourages sales," Shatzkin said. "The printed price on the book adds to consumer certainty."
