This year's London Book Fair is taking place at a time of unique change. The shift from the printed word to the downloaded text is accelerating; chains and standalone bookstores are closing down around the world; and the very future of the book "entity" is being challenged by commentators and industry sages.

It's the worst time to try and predict the future, but despite this uncertainty, the trade is not without optimism. The future will be different, exciting and full of opportunity – if only we could be certain what those opportunities will be.

We can, however, be reasonably certain that, while the market for ebooks (and econtent in all its forms) will grow exponentially, the demand for classically published books will not collapse as radically as the markets for CDs (or for road atlases or software manuals). The market will find room for both formats, with a different physical/digital weighting in each category. However, I would expect the value of the physical book market to shrink by more than 30% over the next five years.

So, where will these physical books be bought? The biggest risk is to the traditional, deep range specialist stores. As new channels (the usual suspects, online and supermarkets) took their share of sales through the mid to late noughties, it became progressively more difficult for store chains to maintain an economically viable backlist that met customers' general needs. With the supermarkets taking a larger slice of the bestsellers, and the internet mopping up the long tail, the bookshops' range became more and more piebald, and too many retail execs started to describe backlist as "wallpaper".

This doesn't presage the "death of the bookshop"; rather, I anticipate an evolutionary phase, as we pass from big, general stores to more specialised outlets. In capital cities and college towns, good bookstores can flourish, thanks to the profile and concentration of the population – but it will be easier to make a living servicing the 100,000 people of Cambridge than the 3.5m spread across metropolitan Birmingham.

The independent store that knows its customers, and has the right pitch in the right town, can survive. This is not an opportunity to get rich, however; independent booksellers will have to adapt their offer, and not be precious about the route they take, or the diversification they embrace. They'll need an online presence, and a willingness to mix new and second-hand books, and other product categories.

In his recent address to the Association of American Publishers (AAP), Barnes & Noble (B&N) chairman Len Riggio painted an uplifting picture of a future in which bestselling mass market titles had transferred substantially from physical to digital formats, causing the mass merchants (supermarkets) to scale back their space and commitment to books. Although supermarket space is flexible (it would increase at Christmas), the limiting of this channel would be good news for specialist bookstores.

I believe that there are significant opportunities to sell more physical books out of non-traditional outlets. Stores such as Urban Outfitters/Anthropologie, Conran Shop and the Royal Horticultural Society sell fluid ranges of the titles that their customers will want to buy this season, at a full mark-up. There is an opportunity for many more non-book retailers to participate in this space, selling desirable, giftable books (with content least susceptible to digitisation) at full margin to customers who are seeking to accessorise their homes and lives.

Similarly, while the range of children's apps and content streams will continue to multiply, there is an untapped opportunity to create browsable children's book offers – whether in focused, book-led stores, or as part of a broader kids offer.

Online sales of physical books will continue to grow. Recent research1 indicated that Amazon has about 80% of the UK's online book sales – but no one can seriously participate in the book market without having an online solution. I would recommend avoiding the obvious frontlist-led offer in favour of a more distinctive editorial voice – but I recognise the cost of this commitment, and would advise booksellers to keep their online offer as simple and focused as possible.

At this early stage in the development of ebooks, we are shooting in the dark as we try to identify the ultimate size of the market, and to understand the channels those "books" will be sold through.

The music market is much further along this cycle than bookselling. The parallels are far from absolute – books are used in many different ways, and come in many different formats, whereas music is simply sound; fidelity vs portability. In the US, the paid-for recorded music market (including downloads) has shrunk dramatically, from $73 spend per head in 2000 to $26 per head in 2009 (at constant pricing)2. Record shops are on their last legs globally.

The music business imploded in slow-motion across a decade, with plenty of mis-steps and no prior experience to draw upon. Where has all the activity gone? In part, to illegal downloads. But absolute consumption has also fallen, simply and dramatically, as music consumers have found other ways to spend their time and money – gaming, phone apps and online gambling are three examples of entertainment categories that barely existed when recorded music was at its peak.

The book trade has a better opportunity to predict and shape its market evolution, and to plan accordingly. Various individual entities – publishers, Nielsen, B&N, Amazon, Apple etc – have some insight into the behaviour of download purchasers, but there is insufficient objective data in the public domain, and no consensus at this time on the shape of the download market, and the behaviour of customers.

The range of challenges within epublishing is huge – pricing; formats; copyright control and piracy (particularly in the growth economies); "traditional" publishing vs self-publishing (the wave of stories about self-published Kindle millionaires has a whiff of dotcom bubble about it); marketing and the "browsing experience"; and the power and wealth of Apple, Google etc.

Nevertheless, bookselling has reinvented itself many times over recent decades – chains and superstores may, like book clubs, have had their day in the sun. The reinvention will continue. Publishing in the new world will be radically different – the changes will be greater and more global than those created by (say) the growth of paperbacks, the amalgamation of houses, or by the end of price maintenance. Redefining the nature of the book redefines the roles of both bookseller and publisher. I firmly believe that however future developments work out, there is a crucial role for both. Enjoy the Fair!

Philip Downer is a retailer and consultant, and the owner of CBT Trading Ltd. Formerly CEO of Borders UK, he blogs on the book trade and general retail at