Retail Book Industry in Nz Essay Example for Free

Retail admit Industry in Nz EssayThe aim of this announce is to analyse and outline the assembly line perspectives for chess opening a in the altogether free disgracetain investment firm in the Auckland region. The report analyses the authentic take sell fabrication and specific altogethery discusses a smart criminal record scabs viability highlighting the internal and external risks and opportunities as rise up as strengths and shortcomings. To assess the adjudge retail combative environment elements of SWOT and doormans Five Forces compendium tools were utilised (Needle, 2000).The major strengths of a impertinent book stigmatize which could be turned into a hawkish advantage argon the independency and local anaesthetic g overnance, birth with papers and closeness to guests. The major threats to and weaknesses of the sore venture atomic number 18 attribut sufficient to low bar meeting power with publishers (Needle, 2000), to lose of resources, and high commercialise competition.The reports conclusion is that any single and only(a) intending to enter the book retail mart by opening a new farm animal is advised to be mindful of the sedulousnesss risks and challenges in order to mitigate those on the one hand, and to fully capitalise on the opportunities offered by the industry by turning its strengths to a competitive advantage, on the oppositewise hand. Table of Contents Executive Summary2 Table of Contents3 1. Introduction4 2. Discussion5 2. 1 Competitive Environment5 2. 1. 1 Whitcoulls Group5 2. 1. 2 musical theme cocksure6 2. 1. 3 Dymocks8 2. 1. 4 Independent Book venders9 2.2 seek Assessment11 2. 2. 1 Low Bargaining Power with Publishers11 2. 2. 2 Lack of Resources12 2. 2. 3 Market rival13 2. 3 Opportunities14 2. 3. 1 independency and local governance14 2. 3. 2 Closeness to Publishers and Customers15 3. Conclusion17 References18 1. Introduction The given report is commissioned by Susan and Michael Clarke to be realised by 27 sublime 2009. The reports main objective is to provide an fencesitter analysis of the book retail industry including potential risks and opportunities of opening a new autarkical book stack away in the Auckland area.In order to assess the current business environment, the food market competitiveness in which a new proposed book repositing would be operating is analysed including such main industry pseuds as Whitcoulls, Dymocks and musical theme positively charged on the one hand, and a number of autarkic book stores on the some other hand. Elements of the Porters Five Forces (Needle, 2000) were incorporated to analyse the competitive environment of the book retail industry. The findings from the analysis of the competitive environment were then utilised to identify and analyse strengths and weaknesses of as well asopportunities and threats for the proposed new autonomous book store (Samson Daft, 2005). 2. Discussion Bookselling is a big industry in bris k Zealand. According to (Booksellers devise, 2008), starting from 2007 the annual books spending in parvenue Zealand has not gone below $1 billion. Books suck in always been perceived as a lucrative retail business due to high margins1 and book value that has not changed much over time ( vauntingly boys books, 2009). 2. 1 Competitive Environment there are two main classs operating in the New Zealand book retail market existence chain retailers and main(a) stores.Historically, the book retail market has always been dominated by a few book retail arrange occupying almost 90% of the book retail market, leaving the local unaffiliated book stores with no more(prenominal) than 10% of market share (Whitcoulls, theme Plus proceeding, 2007). The main book retail chains operating in New Zealand are Whitcoulls, Paper Plus and Dymocks. 2. 1. 1 Whitcoulls Group The AR Whitcoulls Group (Whitcoulls Group) is the largest retail chain in New Zealand presented by the Whitcoulls, Borders an d Bennetts Tertiary stores (Whitcoulls holdly picks, 2007).The group is also internationally operating in Australia and Singapore with more than 130 Angus Robertson and Borders stores ( cock-a-hoop boys books, 2009). After acquiring the Australasian and New Zealand businesses of the second-largest United States bookstore chain Borders2 (Whitcoulls Borders bid cleared, 2009) in 2008 the Whitcoulls Group obtained access to a high demographic serious books market niche (Whitcoulls widens, 2008). As a go, the Whitcoulls Group operates 90 stores across New Zealand (Whitcoulls finally picks, 2007) accounting for up to 45% of the bookretail market (Whitcoulls widens, 2008).Further to the animated dominance in all the CBD areas, Whitcoulls is planning to expand into small-town areas starting from Te Awamutu, Richmond and Ashburton (Booksellers machinate, 2008). The recent recession prompted the group to seek hail cuts by merging its Australasian retail operations support obligations into one division located in Australia (How the book care, 2009). The group is also encountering into opening the online selling operations in swaggering (Booksellers ready, 2008).2. 1. 2 Paper Plus The Paper Plus chain organism fully New Zealand-owned is the second-largest book retailer in New Zealand (New look, 2008). The follow operates as a claim system and has been around for more than 25 course of studys (New look, 2008). Historically Paper Plus has been a strong player in a stationary business3 whereas its role in bookselling was not taken seriously by the industry4. This is one of the reasons why Paper Plus is currently outperformed by Whitcoulls when it comes to bookselling (New look, 2008).However, Paper Plus has late arrest an aggressive player in the book retail market announcing an ambitious goal to become number one book retailer in New Zealand5. Paper Plus has recently refitted all their 105 stores as booklovers destinations ( thumping boys books, 2009) aimed at improving store layout and foundting more emphasis on books (New look, 2008). In the meantime, the television and radio celebrity Kerre Woodham was signed up as a frontwoman to do book reviews by troopsing the books and bubbles events (New look, 2008).The companys marketing blot is promote strengthened by participating in the Fly Buys programme and the agreement with New Zealand Post to host Post Shop and Kiwibank answers in Paper Plus stores (New look, 2008). As a result, the company manages to gain a competitive edge by not only targeting the niche of tralatitious booklovers but also those people who do not name a clear intention to spoil books but visit the shops for Post Shop or Kiwibank services. On the management side, Paper Plus has promoted a strong support policy to its franchise stores including in effect(p) training by the local support office6.In the meantime, Paper Plus has been focusing on the relationship with local publishers as well as has easily increa sed spending on advertising raising client awareness about its products7. This all has enabled the company to enter the recession with a very strong financial and marketing position. 2. 1. 3 Dymocks Dymocks is Australian-owned and has been around for over 130 years opening its first store in Auckland in 1994 (www. dymocks. co. nz). Dymocks operates as a franchise system running more than 80 stores in Oceania including six New Zealand stores located in the northward Island (www. dymocks.co. nz). Dymocks has been operating with the love of books concept having a reputation as a serious bookseller only without using up their product range to stationary, music and movies (How the book championship, 2009). The company offers their customers more of a contemporary book acquire come through the bibliophile Rewards Programme (How the book championship, 2009). The company focuses on the New Zealand books being historically in the top 10 sellers. Dymocks have been experiencing a sustaina ble growth opening four new stores over two last years with further plans to expand into the South Island (www.dymocks. co. nz). However, the recession has almost reversed this growth as Dymocks had to close three stores in two months two in Auckland and one in Wellington8. The main causes for these closures were very high rents, bad locations, no street frontage or through affair and high competition from Borders (How the book trade, 2009). In addition to this Dymocks had to resort to fundamentalise administration in Australia by closing its New Zealand support office.As such, out of the three main book retail chains, Dymocks has been weakened by the recession the most and is more concerned with a struggle to retain its existing six stores. 2. 1. 4 Independent Booksellers In contrast to the recession-linked problems faced by the book chains the independent booksellers9 do not seem to suffer any recession at all (How the book trade, 2009). Despite some loss of customers choosing to go to library instead of buying books, the recent recession helped books products gain a momentum in the gift market10.The books popularity and affordability merits attribute to the peoples preference of a acceptable book or dictionary gift over a $300 vase or duvet curtain (Booksellers ready, 2008). According to an industry expert11 it is because the book chains have not been putting sufficient hunting expedition and resources into the customer relationship side, while independent stores have managed to develop a very loyal customer base by their excellent customer service, professionalism and personal approach (How the book trade, 2009).As such, the independent book stores see the recession times as a reasoned opportunity to pull new customers from the book chains which due to their large size and lack of knowledgeable staff sack upnot compete with independent stores on the professional advice, recommendation and customer service sides (Boutique booksellers, 2009). The com petitiveness of the book retail market is further strained by online booksellers, which have experienced a considerable growth over the last few years in some cases almost doubling their sales each year12.Taking into friendship the competitive environment analysis above, the book retail market can be defined as highly competitive. Whitcoulls, Paper Plus and Dymocks were found to be the main competitors due to their market dominance on the one hand, and high bargaining power with book publishers on the other hand (Needle, 2000). 2. 2 Risk Assessment Taking into consideration the above analysis of the book retail industrys competitive environment the following could be identified as risks and threats for a new independent book store.2. 2. 1 Low Bargaining Power with Publishers Upstream of the value chain (Samson Daft, 2005) a new independent shop would have a challenge to sign book publishers and authors in to obtain the rights to sell their books. The authors and publishers would likely be inclined to work with big retail chains or strong independent stores as being representative of interrupt channels for promoting and distributing the books. Bookshops would usually compete over the right to sell quality books in order to win the customers preference and loyalty.The industry experience shows that it is not the large stock but kinda a good book range and quality that enable a shop to be preferable by customers over its competitors (Boutique booksellers, 2009). Therefore, bearing in mind the tight economic conditions and high market competitiveness, a new independent shop would have a risk of not being able to obtain a competitive book range due to insufficient bargaining power with publishers (Needle, 2000). 2. 2. 2 Lack of Resources Opening a new store would require important spending starting from hiring or buying the store to paying professional staff competitive wages.The Dymocks example with closing two Auckland stores (one of which afterward only a few months after opening) showed how much a store location mistake can cost to a shop regardless of its reputation, product range and popularity (Refer 2. 1). Thus, a company wishing to enter a book market would face not only the challenge of funding to open a new store but also to be able match the location trade advantages with costs. The downriver of the value chain (Samson Daft, 2005) such as advertising and promotion as well as customer relations would also require significant funding.The Paper Plus and independent book stores examples show that investiture in advertising and building customer relationships are one of the most effective and powerful mode to sustain and further gain market share in the current competitive environment (Refer 2. 1). The independent stores achievement of being able to build loyal customer base is due to having professional sales people on floor capable of providing good service along with knowledgeable advice to the customers (Refer 2. 1).The refore, the lack of resources some(prenominal) material and human would be a weakness of a new shop when entering the book retail market populated with rich chain retailers and professional independent stores. 2. 2. 3 Market Competition New Zealand has a very high number of book shops per capita in comparison to other countries (Booksellers ready, 2008). Thus, a new book store would be entering the market which according to some industry experts is already overpopulated13 with such strong players as Whitcoulls, Paper Plus, Dymocks not mentioning about independent stores and online sellers experiencing a significant growth in recession (Refer 2.1).Whitcoulls has considerably improved its marketing position through acquiring the Borders operations whereas Paper Plus, being strengthened by combining its services with Post Office and Kiwi Bank, has put a comprehensive action plan in place to fight for number one bookseller in New Zealand. In the meantime, the independent shops are gain ing a recession momentum to strengthen their current position by capitalising on the inability of big chains to provide competitive books range, on the one hand, and assume level of customer service and support, on the other hand.Taking into consideration the above facts, the book market could be classified as mature where there is no unoccupied market niche (Samson Daft, 2005) remaining for a new book store to capitalise on. As a result, for a new store to become successful it forget literally mean fighting for other shops customers. The implication for a new book store is that it will be very hard to compete with the current industry players that have a very high customer loyalty and market reputation for providing exceptional customer service on the one hand and significant resources, aggressive advertising and market dominance, on the other hand.2. 3 Opportunities This section discusses the main strengths of and opportunities for a new book store in the current business envi ronment. 2. 3. 1 Independency and local governance The centralisation of the stores support and governance is a common move for numerous in pursuit of cutting costs. However, experience shows that under the current level of competition store problems are timelier and more effectively resolved if there is local governance in place (How the book trade, 2009).The main competitors of the proposed book store are strategically and operationally managed from overseas14 making these shops quite inflexible and not quick enough to react to market changes as someone in Australia decides how many copies of a circumstance New Zealand book the stores should stock. In the meantime, the independent book stores have not felt the recession and are thereby able to respond quicker and serve customers needs dampen by preferring to have better books range over larger stock of out of date books (Boutique booksellers, 2009).Therefore, the independency of a new shop would put the company in a better posi tion in regards to timely reacting to industry changes and thereby avoiding unnecessary losses usually resulted from poor decisions made. 2. 3. 2 Closeness to Publishers and Customers Independent governance makes a proposed new book store closer to local publishers and customers. The New Zealand Book Publishers Association consisting of 95 local publishers is not satisfied with the current super market store running model used by the chains15.The main disadvantages are the comed books range printed as bulk purchases are made at cost of the books diversity16, the chains often abuse their bargaining power with publishers17 and the central display system with ineffective books categorisation18 (Big boys books, 2009). As such, the New Zealand publishers are naturally more inclined to work with small independent stores who will have less bargaining power but more flexibility of buying and distributing books.On the other side of the value chain, a new store would have an opportunity to c apitalise on the chains clumsiness and lack of personal touch when dealing with customers. The main lesson learnt from chains struggle in the current recession is that customer satisfaction and loyalty could on its own determine the book retailers commercial future. Independent stores, in turn, have put a particular emphasis in implementing effective customer loyalty programs and achieving loyal customer base.Therefore, despite the high market competition, there is a good opportunity for a new book store to win the book chains customers by oblation better books range, more professional service and personal approach. 3. Conclusion Taking into account the above analysis, the opening of a new independent book store can be classified as a Question according to the BCG strategic tool (Samson Daft, 2005).On the one hand, the independence, local governance, good relationships with publishers and closeness to customers could enable anew book store to become a successful venture, thereby s hifting to the virtuoso BCG section distinguished by quick growth and expansion.On the other hand, if the new venture has not managed to establish a strong market presence by providing sufficient funding, professional staff and maturation effective strategic relationships with publishers, entering the current highly competitive book retail market could result in a commercial failure. The book retail market can be classified as very mature and highly competitive.As such, it would be quite challenging for a new independent book store with limited resources, on the one hand, and the low bargaining power with the publishers, on the other hand, to compete with the book retail chains as well as with a number of other well established independent bookshops and online booksellers in the Auckland region. In the meantime, the fact that a new book store is going to be independent and locally run provides a competitive advantage of knowing its publishers and customers better and, thereby react ing to industry changes quicker and more effectively.The final success of the new proposed book store would be mostly dependent on its ability to cope with high market competitiveness and mitigating its weaknesses on the one hand and capitalising on its strengths and opportunities currently present in the book industry. References Needle, D. (2000). Business in context An world to business and its environment (3ed. ). London Thomson Learning. Samson, D and Daft, R. (2005). Management, 2nd Pacific rim edition.Australia Thomson Learning. Big boys books. (2009, January 1), The Press, Retrieved August 15, 2009 from www. stuff. co.nz/the-press/modus vivendi/150420/Big-boys-booksshare Booksellers ready to write new chapter. (2008, July 14), The New Zealand Herald, Retrieved August 15, 2009 from www. nzherald. co. nz/business/news/article. cfm? c_id=3objectid=10521367 Boutique booksellers boom.(2009, August 13), The Dominion Post, Retrieved August 15, 2009 from www. stuff. co. nz/dominion -post/wellington/2743304/ Dymocks official website. www. dymocks. co. nz. How the book trade is turning a page. (2009, June 13), The New Zealand Herald, Retrieved August 15, 2009 from www. nzherald. co. nz. ezproxy. auckland. ac. nz/business/news/article. cfm?cid=3objectid=10578175pnum=2 New look for friendly book chain.(2008, June 21), The Dominion Post, Retrieved August 15, 2009 from www. stuff. co. nz/business/497996 Whitcoulls Borders bid cleared. (2009, January 1), NZPA, Retrieved August 15, 2009 from www. stuff. co. nz/business/130168 Whitcoulls finally picks up NZ Borders stores. (2007, June 07).The New Zealand Herald, Retrieved August 15, 2009 from www. nzherald. co. nz/business/news/article. cfm? c_id=3objectid=10514932 Whitcoulls, Paper Plus proceeding by the book in Borders buy-out. (2007, November 22), The New Zealand Herald, Retrieved August 15, 2009 from www.nzherald. co. nz/shopping/news/article. cfm? c_id=318objectid=10477609 Whitcoulls widens its Borders in $137m de al. (2008, July 7), The Dominion Post, Retrieved August 15, 2009 from www. stuff. co. nz/business/477324 1According to industry experts books margins vary from 40% to 50% out of correspond price (Whitcoulls, Paper Plus proceeding, 2007). 2The group AR Whitcoulls group acquired 30 Borders stores as well as exclusive rights to the Borders trademark in New Zealand, Australia and Singapore worth $NZD137 million (Whitcoulls finally picks, 2007).The New Zealand Borders operation acquired included five stores three in Auckland and one in each Christchurch and Wellington (Big boys books, 2009). 3 The recent achievement of Paper Plus is being recognised as the top seller of greet cards (New look, 2008). 4 Historically only six out of 105 Paper Plus stores were positioned as serious booksellers (New look, 2008). 5 The companys growth strategy is supported by the strong financial position improved from the loss of $401,000 in 2007 to profit of $748,000 in 2008 (New look, 2008).6 Paper Plus has purchased a new 500 square metre store in Aucklands Sylvia lay to be used for training the franchisees how to implement an effective store layout and design to boost books sales (New look, 2008). 7 Whitcoulls admitted in the past that their loss of market share was directly caused by Paper Plus increasing its advertising spending (Big boys books, 2009). 8 The Auckland Smales Farm franchise store and the company-owned Queen Street store went into liquidation in May and June 2009 and Wellington Lambton Quay shop closed in May 2009 (How the book trade, 20).9 The most popular independent book stores include Unity Books (Auckland and Wellington), Scorpio (Christchurch) in Christchurch, Vic Books (Wellington), Dear Reader (Auckland), The Booklover (Auckland) and of Cambridges Wrights Bookshop (Auckland) (Big boys books, 2009). 10 According to the owners of The Childrens Bookshop, a book shop in Kilbirnie, last year the store has experienced a 12% increase in revenue mainly driven by the parents preferring books for gift for their children (Boutique booksellers, 2009).11 Tom Beran owning independent stores in Grey Lynn (Dear Reader) and Takapuna (The Booklover) (How the book trade, 2009). 12 For example, the New Zealand online seller www. fishpond. co. nz starting in 2004 expanded to Australia in 2006 and in 2007 was recognised in the Deloitte/Unlimited Fast 50 list noting the fastest-growing companies (How the book trade, 2009). 13 According to Dymocks CEO, Don Grover the New Zealand bookselling market is already over-supplied (Booksellers ready, 2008).14 Among the book retail chains occupying 90% of the market only Paper Plus is locally supported, whereas Whitcoulls and Dymocks are both(prenominal) owned and governed by Australian companies (Big boys books, 2009). 15 That was evidently expressed in the open opposition from the Book Publishers Association of Whitcoulls bid to purchase Borders stores as they know that it will result in a decrease of the books r ange bought by the chain (Big boys books, 2009). 16 For example, a book offered by a small publisher could be of a particular interest to smaller towns readers.However, a local chain store is unable to make a purchasing decision instead having to sell the books decided in the support office across the Tasman (Big boys books, 2009). 17 For example, Whitcoulls is viewed by the industry as a tough negotiator with inflexible buying policies demanding from publishers at least 50% discount (Big boys books, 2009). 18 Compared to chain stores that cannot add or change the central display system, the independent stores have much more flexibility in deciding how their stock should be grouped and displayed on the floor (Big boys books, 2009).