Indian Book Retail Industry Essay

The Indian book retail industry is estimated to be over Rs 3,000 crore, out of which organised retail accounts for only 7 per cent. The industry is expected to grow by approximately 15 per cent a year. Book retail contributes only about 1 per cent to the overall retail industry. Text and curriculum books account for about 50 per cent of the sales. Second-hand books are also a big chunk of the book retail market. In the past few years, several large format book store chains have come up, such as Landmark, Crossword and Om Book Shop etc . More than 75 per cent stores of these large chains are in top eight cities. These Organized Book retailers are focusing on improved customer experience. Many book stores have also introduced coffee shops and provide a library-like atmosphere where customers can sit and read, while sipping coffee. Besides this online channel is also significant with players like Flipkart, Indiaplaza, Infibeam etc. With the printed word considered an endangered species in much of a rapidly digitizing world, India now represents one of the best book markets in the world. â€Å"There has definitely been a huge jump in the size of the industry in terms of book sales and the number of books being published,† said Mita Kapur, the founder of Siyahi, a literary agency, who says the number of books published in English is growing by 30 percent a year. Vikrant Mathur, associate director of Nielsen Book, India, said the volume of book sales grew by 45 percent during the first half of 2011. For the entire year, Nielsen, a global information provider, documented English-language book sales of 3. 28 billion rupees – about $62 million – from more than 12 million books sold. And that is probably only a fraction of true total sales, since Nielsen only measures about 35 percent of the total market. â€Å"Where physical books are concerned India right now is a very, very big market,† said Priyanka Malhotra, director of Full Circle Publications. â€Å"There is a whole younger generation coming up from BPOs who are starting to read in English, which is where a lot of new demand is coming from. † Online retail have also spurred growth in the industry. To summarize India’s book retail industry is broadly divided into 3 sectors : 1. Organized 2. Unorganized 3. Online The organized sector has big names such as : crosswords, OM book shop , landmark etc to name a few. On the other hand unorganized sector is huge and highly fragmented, with shops spanning from local book stores to road side book shanties to red light book sellers etc. This sector is also filled with piracy and pirated copies of original books (which is a serious threat to the sales of organized sector) Online sector is the newest of them all and has just started to takeoff in sales since last 3-4 years. The major advantage of such a format is the wide variety of offerings under one roof and ease of access for the users. Thus this is the fastest growing sector among all of them. The prominent players in this category are Flipkart. com, Infibeam. com etc. Unorganized sector (Golden book depot) Golden book depot is a typical book store among many in the unorganized sector of the india book retail industry. This store is loacated in the vicinity of our target organized sector store ( OM book shop) i. e.  Ber Sarai ( adjacent to IIT) in south Delhi. As can be seen in the photograph, this is a small shop , almost 1/10th of the size of om book shop and most of the products are available behind the counter, with only magazine stand placed just outside the store. As magazines as a category has most no of impulse purchase. On an average around 50-70 customers come to this book store, and this tore has a footfall conversion of over 85% which is very high as compared to the organized sector (OM book shop) . The reason for this behavior is that most of the products in these kind of shops are behind the counter and it doesn’t provide the luxury to the customer to stroll around and search and read a book as in the case of organized sector. Therefore almost all of the customers coming to these shops like golden book depot are aware of what they want and demand that directly from the shop keeper who then searches the book in the shop and hands over to the customer. Besides having a smaller area , less variety of books and behind the counter selling, the sales (in terms of no.of books sold) is still higher in golden book depot as compared to OM book shop . The reason for that being : 1. Availability of educational books , i. e. educational course materials and competitive exam preparation books. These books constitute the majority of the portion of these book shops in unorganized sector. These kind of books , especially course materials for various courses such as MBA, B. Tech, BCA etc . are not available at book stores like OM book shop. As they (Organized) focus more on selling of novels and leisure read books. 2. Many of the popular shops in unorganized sector offer a facility to bring the old books and exchange them with the new books at a discounted rate or return the old books at a discounted rate in form of cash return. This is a major reason why price conscious middle class Indian customers prefer unorganized sector over organized sector. 3. Perception in the minds of Indian customers that these small shops will offer the same product at cheaper rate than the organized sector shops, which have flashy interiors and huge shop floor. This perception is true also upto some extent as these shopkeepers in these small shops have the control over their margins and not guided by any company policy ( as in the case of OM book shop) that means these shop keepers can even squeeze their margins from around 10% to as low as 1-2% to attract or retain a customer by offering them the cheapest bargain. Organized sector (OM BOOK SHOP ) About Om Book Shop Retailer and Publishing House: Om Book Shop is a part of Om Books International, a leading English language trade publisher in the subcontinent, and is a prominent player in the Indian book industries. The book retailing chain has a significant presence across the Delhi-NCR region. Besides stocking books, movies, magazines and CD ROMs, Om Book Shop is also a major distributor of books of many leading international imprints. OBI began publishing in 1993. Collection: With a strong focus on children books and coffee-table books, the store has a diverse collection including books on Lifestyle, Nature and Wildlife, Fashion, Bollywood, Heritage and Culture, Management, Health & Fitness, Cookery, Architecture and Interiors, pictorial books for children etc. Children section is a major thrust area for the company and OBI publishes children’s titles under the Om Kids imprint: illustrated classics, mythology, folk tales, encyclopaedias etc. Loyalty programs and other salient features: Other salient features Om Book Shop currently holds about 50 thousand registered customers with the Om Book Privilege Loyalty Programme which offers points, discounts & other offers to its loyal customers. OBS aims to popularize the Gift -a- book idea across its stores and delivers services like Dial-a-book which allows the customers to shop from their homes; and the efficient and helpful staffs in the book stores assists them in finding the right book or the right gift for the right occasion. Overview: Product, Category and Store Product Category: ‘Books’ Retail Format: Category Specialists Customer segments: In terms of demographics, the Om Book shop customer can be a child/adult from any age group, gender, income class (reasonably well off) etc. Store: Om Book Shop is located in DLF Promenade Mall in Vasant Kunj. The store is located on the 2nd floor of the mall and the floor plan is provided in Figure1. The store is strategically located in a way that it falls on one of the 2 ways to the food court and movie theatre. Figure 1: Floor Plan of Om Book Store STORE PHILOSOPHY * Layout * Ambience/decor * Sale program * Loyalty Store layout structure Om book store has a very functional and efficient physical layout. Mall sq. foot area is very expensive so there seems to be an effort on part of the book store to utilize as much area as possible. Hence the layout may be a bit crammed for some customers. The bird’s eye view of the layout is as follows: K1 K2 K3 Graphic K Adv Cin/music Photo Sports Arch Interior Craft T20 F Ind F Sc F K Classic Rom F Languages (Dic//Ref/Hindi) Poetry(1) Classics(2) Travel Gardening Pet Wildlife OM KIDS (Activity) On the Ground OM KIDS (Story Books) MAGAZINES Cook Book Hor KR Envelopes Movies CD/DVD Biography NF Poi Hist Astro Psycho Philo Mili K NF (encyclopedia) Fiction (A-Z) BS BS BS BS BS BS BS BS BS BS ENTRY s mp p s P NA Cooking T 20 NF s Teenage F Health Indian Religion Management HBR Fashion/Textile Om Posters Om Posters Hobby/Work F= Fiction. NF= Non Fiction NA= New Arrival K= Kids bm Loyalty info om The front view of the store is a transparent glass window through which a passerby can easily see into the store. The poster’s on display from the front view are only of â€Å"OM publisher’s† in different categories like kids books, cook books, and biography (Amir Khan’s â€Å"I’ll Do it My Way†. The most popular and eye-catchy book categories are positioned near the entrance of the store. The largest selling categories, Children’s books, Fiction, and New Arrivals are placed in shelves that a customer encounters as soon as he enters the store. These sections also have the largest impulse buy and are therefore kept at the forefront. Om book’s self published books in the kids category is displayed in big piles on the ground straight in the line of path of a customer who walks into the store. Since the child often runs about choosing his/her own story books and activity (colouring/mask) books and heavily influencing the purchase decision of the parent so the children books of the OM publisher has been strategically kept within reach of the child on the ground to woo the him/her. Other publications in the same Children’s category have been kept on the shelf and in â€Å"sideway† display to decrease their exposure to the child/parent. Om Publication’s in any other category when placed on the shelf have been given a frontal full display to encourage sales. Management books being the next most popular category, they have been placed right after the popular categories when comparing in terms of â€Å"distance from entrance†. Categories pertaining to work or hobby like gardening, travelling, cooking etc / or specific topics of interest like astrology, philosophy, poetry, etc have been grouped towards the end of the store, furthest away from the entrance. This is because these categories can usually not create impulse purchase and so every customer need not pass through these segments/aisles. People who do buy these books are targeted shoppers and will anyhow walk to the back end of the shop to pick up his/her book. These categories are not as popular as the others and have loyal customer following. The impulse buy accessories are lined along the passage on either side from the entrance to the cash counter. It is further seen that the counter is placed at the other end from the entrance to ensure that a customer has to walk through all the impulse purchase offerings before he/she can buy the book. The products on offer in this so called â€Å"impulse accessory† shopping segment are: pens (parker and waterman), magazines, cookbooks, horoscope books, key rings, bookmarks, marble-paper/wrapping paper, and bestsellers in each category. It can further be noticed that the best seller section just prior to the cash counter is dedicated solely to Om publication. Additional aspects of the Store Layout The layout is no doubt very functional keeping in mind the profit maximization philosophy of the store and the main agenda of pushing its own publication to the shopper. However the spacing of shelves is crammed with little walking space, hardly any sitting space (only 2-3 stools), and only 1 book stand. The entire focus is on 1 product offering i. e. books. Unlike competitors in the organised sector like Landmark, it is not focussing on the entire shopping experience, (no coffee, no other items on offer like stationary etc, no sitting space). Store Ambience and Decor The bookshelves were made of engineered wood like particle wood. This created a unique and rich traditional effect. Plastic or metal bookshelves were not used since they do not look expensive and give a modern feel, which was not something the book store wanted. Furthermore the particle wood was coloured a light shade of brown to give a bright and roomy/spacious look to the store. However the bookshelves were placed too close and for a particular section of customers who prefer the comforts of abundant seating arrangement, coffee facility, and walking space (as provided by Landmark), the sheer functional design of the store might be interpreted as a crammed. This might not work well for a particular segment of customers whose involvement with the shopping experience is as high as, if not higher than the involvement with the product itself. Furthermore the store works on the philosophy that it will focus on selling books alone and not encourage customers to spend hours just reading in the store. This is unlike some of its contemporaries like Landmark that encourage customers to sit and read inside the store. Hence at OM book stores some customers may complain that the staff hover close to them and make them feel uncomfortable if they stay too long. The store plays light and slow English instrumental music to suit the taste of the higher-strata of people who usually visit the Promenade Mall and create a relaxed atmosphere in the store. Instrumental music is played since a song with wordings would disturb the concentration of a customer reading the epilogue/back-cover of a book. This gives a contemporary feel to the store. Store Sale Programs The store’s maximum profit comes from its Children’s section. Hence the sale period coincides with the summer and winter vacation in schools in Delhi. December to Mid-January and May to June are the respective winter and summer sales. The store is also receptive to mall trends in sale. Since almost every other shop in the mall had a sale in July, so the store too announced a sale to cash in on the increased footfall to the mall during the sale-period. There was no Flat Sale offer. Discount amounts were graded on the basis of demand. Books with high demand had low sale; New Arrival, Top 20 Fiction/Non-Fiction, general Fiction, and bestsellers had only 10% discount. The store felt that irrespective of the price these books would sell and so gave negligible discount on them. However on the kids section the discount was higher, around 20%, and even higher discounts on children’s books published in-house by Om Publications. This is because the store believes that parents during the sale period buy in bulk and a higher sale would induce them to buy more and yet it would not affect your margins. Furthermore parents are price conscious when buying for little kids since the books cannot be added to a collection later on and mostly become irrelevant in a short time after the child has outgrown them. The sale on OM publication was the highest because they already had the highest margins on it due to the absence of a middleman, and therefore could easily afford a large discount on those books. By touting the large discounts they aim to attract consumers to their publication and yet make the largest profit on the same sales. The books with the largest discounts (say more than 50%) were displayed in piles on the floor. This was due to the belief that even if the books weren’t displayed at eye-level, even then the mammoth sale amount would encourage the shoppers to make the effort of bending down to pick up the book. To publicise the sale big red stickers were pasted on the glass walls of the store which can be viewed by the casual shopper passing by the store. Inside the store the discount for each section was mentioned separately through stickers and pointers. Store Loyalty Program A book is generally a product category where the consumer’s involvement with the product (i. e.the book itself) is much higher than his involvement with the store. Even if a person might have store preferences, yet his/her loyalty lies with the book and not with the store. Hence a consumer would not really care much as to whether he bought his/her book at OM Book stores or at Landmark, which is a stones throwaway. Thus in order to boost retention of loyal customers Om book stores has come up with a loyalty program, a privilege card holder concept which is as follows: * 1 point for every Rs. 10 purchase. * Minimum points for redemption are 500 points. * 1 point equals Rs 1 reduction in bill amount. 60-70% of walk-in customers were privilege card holders and the store already has 4500 privilege card holders. The scheme is a moderate success. Store Timings | 11 A. M to 10 P. M ( For Mall)11 A. M to 8 P. M ( For standalone shop not the store we studied)| Working days| All 7 Days of the week| Peak days| Saturday and Sunday| Peak hours| Evenings post 6:00 pm| Staff| 10-12 members including the manager. Manager stands behind the counter at one of the two cash registers. He is accompanied by 2 staff members whose work is to: 1. Use the second cash register for quick transactions during peak hour to prevent long queuing period 2. To get a book for a customer if he/she directly comes to the counter and asks for a specific book. | Floor Staff responsibilities| * Taking care of the specific three to four sections assigned to them. * keeping a track of inventory * Filling the requisition form for the replenishing of stock * Guiding the customers if required * Sticking the barcode behind each new book before placing them on the shelf. | Shifts| There are no shifts; each staff member works throughout the day from 11:00 AM -8:00pm (fixed) and from 8:00pm-10:00pm (variable) depending on the rush. Hence post 8:00 pm the retained staff is paid on overtime basis. | Showrooms (strategic positioning)| NCR – 5 in malls and 2 stand aloneMumbai – 1 stand aloneThe store we studied was in the Promenade mall beside DT cinemas movie ticket counter on the 2nd floor. | Revenues| 1. 5 to 2 Lakhs on weekdays3 to3. 5 Lakhs on weekendsChildren, Fiction – highest selling category (80% of sales)| CONSUMER BUYING BEHAVIOUR The product category is such that it involves Limited-Decision Making by the customers. The reasons for purchase of a book from the store can be: * Buying for self- Leisure * Buying for self Knowledge * Buying for Others- Regular * Buying for Others- Situational. The greater the motivation to make an optimal decision, the more likely an attribute-based choice will be made. Thus, attribute-based processing is more likely for an expensive book purchase than it is for an inexpensive magazine. The easier it is to access complete attribute-by-brand information, the more likely attribute-based processing will be used. A variety of situations influence which choice approach is most likely. A book bought with the intention of a gift purchase is assigned more importance than a purchase for oneself. Thus, gift purchases would be more likely to produce attribute-based decision processes. Time pressure is a major determinant of choice process used, with increasing time pressures producing more use of attitude-based decisions. Thus, we can identify 3 major clusters of customers that visit Om Book Shop. Category I: DEDICATED READER This is the kind of person who feels complete with a book in his hand. For him, the behaviour is governed by his choices alone and it is solely his decision. He is always trying to find the time to get back to his book. He is convinced that the world would be a much better place if only everyone read more. His primary information search happens within the store only. Category II: LITERATE GOOD CITIZEN This is the kind of person who usually buys a book after reading it review by a critic or an expert. Such a person does more information search before coming to the store. For our respondent group, the most dominant sources for this information were reviews and Bestseller lists published in newspapers, magazines or online blogs and sites likes Amazon. com. Category III: FAD READER This is the kind of person who only reads the popular books/ latest bestsellers so he can be up to date on what other people are talking about and be seen by others as someone who is well read. He often reads for the social credit he can get out of it. His primary information search is more through his friend circle or his group of colleagues from whom he might hear the latest ‘fads’ in terms of books. Such a person could also go in for information search in popular newspapers/magazines or the shares on social media websites. From the interactions with a few customers at the Store, we could find out the following: Social Class| Effect on Book Purchasing Behaviour| Contended Upper-Middle class| Preferences:†Popular fiction† is their favorite category. Read fewer authors. Might read books in vernacular. Purchases: most of them prefer borrowing from friends/library, buy books once in a while. Prefer buying during sales unless the book means a lot to them. Communication: they are most exposed to TV and then the Internet. Reviews from friends also propel them to buy popular books. | Aspiring Upper-Middle Class| Preferences: Like reading a variety of books. They read popular fiction, romance, thriller, and also lots of red classics, classics and mature serious books. Often read books due to peer pressure. The time they can devote to reading is very little because they are usually time-constrained. Purchases: Prefers borrowing books to buying them. Communication: Internet and TV is relatively high, followed by the newspaper. They often read books that are suggested by their friends. Being seen reading particular books gives them a social esteem and acceptance among their peers. | Upper Class | Preferences: prefer a variety of books from contemporary novels, to classics, red classics, neo-classical books, non-fiction and business related books. Hardly read romantic fiction and don’t blindly go for bestsellers. Purchases: convenience is important. If the book is available instantly with a friend they will borrow, else they will buy it without delay, whichever is faster. Communication: Highest exposure to and influence of net (online reviews and blogs) and newspaper. A close friend/colleagues suggestion might matter. They do not read to fit in with their peers. | Upper-Upper class| Preferences: A preference for mature intellectual serious reading and contemporary novels. No â€Å"cheesy romantic novels†. However since Sumedha is a housewife she admits that at times she also likes reading thrillers (fiction). Read a variety of authors. Reading books is a popular leisure activity in this class. Purchases: They purchase the book they want to read, never borrow. Communication: Newspaper, Blogs, online reviews, magazines matter. TV doesn’t play any role and nor do peer group tastes in books. Friends don’t influence their purchase. | Some interesting finds about what customers believe about book reading: * Strongly believed that if parents read book then usually the child inculcates the habit of reading books too. * Felt that girls read more than boys. * Felt that people pick up the habit of reading books in school. * Felt that books influence the internal self. * Felt reading books is an enjoyable activity. * Fiction is the most popular category. * Bestsellers and classics/novels are the next preferred category. * Non-fiction, philosophy/religion/supernatural, business/law books, and books on specific topics of interest are least favoured. RECOMMENDATIONS STORE BASED RECOMMENDATIONS: When we map the Customer decision making process to the Store philosophy and operations we see that OM book store fairs well on certain aspects and do poorly on others. These have been described in greater detail below: Strengths: * Promoting their own OM Publication Om Book stores layout and staff are clearly successful in attracting a majority of the customers to their own publication by strategically placing these books in certain ways. For eg: they have placed OM publisher’s children books on the ground within easy grab opportunity of children who majorly influence the parents buying decision. And this section is placed straight in line with the entrance, i. e. any customer entering the store will be bound to enter this section. However children’s books of other publishers have been placed on the shelves. Further the way the books have been displayed influence buying impulses. Even on the shelf display the store practices discriminatory display policy. They mostly display other books sideways, while at least 1 copy of each of their books have a frontal display. Further to cash in on impulse purchases they have stocked the bestseller section closest to the payment counter and the bestseller section at the mouth of the entrance is stocked only with OM publications. * Cashing in on Impulse Buying. Impulse buying can occur in 2 categories, either in the main category i. e. books, or in the accessory category i. e. pens, magazines, marble papers, key rings etc. Impulse buying can mostly occur in the Fiction, New arrival, Bestseller and Kids section. Hence these sections are kept in the front and a customer walking into the store is bound to encounter these sections because he will be forced to walk into these aisles. Further the right side of the aisle leading from the entry to the payment counter is lined with the best sellers in the respective branch aisle. Hence even if a customer isn’t a management book loyalist, he will still get an exposure to the top selling bestsellers in the management category, and this might interest him enough to buy the book. The categories which are specific to a hobby/work/topic of interest and have low chances of impulse buying have been pushed to the back end of the store so that every customer wouldn’t have to face the hassle of walking through them, which is also unnecessary since impulse buying scope in these sections is very low. A category loyalist would never mind walking up to the category and so there is no loss in customer sales. Impulse buying in knick knack accessories has been promoted by lining the left side of the main aisle from the entrance to the payment counter with pens, magazines, recipe books, horoscope books etc. Bookmarks have been placed on the payment counter. * Very High Discount books displayed on the ground This was a clever move because it saved space, and even though the books weren’t displayed at eye-level or reach level; the prominent low prices would make the customer bend down to pick up the book. Areas that need Improvement * In store shopping experience The lack of sitting availability, coffee counter, spacious movement space might annoy certain segments of book purchases who want to have a leisured nice shopping experience in-store. These customers might want to sit and evaluate the books and go through them. Om book stores would lose out on this segment of customers who wish to get a â€Å"feel† of the book to stores like Landmark and Crossword where furthermore the staffs does not hover around you if you have been in the store for too long. * Online/Flipkart shopping. In all cases where the publisher is not OM Publisher, the prices in the store would be definitely higher than prices on Flipkart since the latter has no middleman margin loss. It is often seen that OM book store purchases from Flipkart hence they can never sell at the same low online price. Further the variety online would be greater and have the benefit of home delivery. Most young or tech savvy customers are moving to Flipkart. The home delivery problem can be solved if the company decides to offer this service to privileged loyal/high potential customers by making them aware of the online purchase option on the OM books store website. They should promote the website. * Neglecting some Book categories The stores strong focus and monumental variety keeping priority in the kids, and fiction category often make certain customers, who are interested in specific work/hobby/topic of interest related categories, feel that the collection in these categories is unsatisfactory. As a solution they could either stock more books in these categories, or if it is not in line with their aim/policy, they can attract customers by giving marginally greater discounts on these books than their competitor stores. * Lack of Clear Sale communication It was often found that though the header of a category column bookshelf read 10% or 20% it still stacked books with higher discounts like 50% and up. This will make the store lose out on prise sensitive sale crazy customers. Additional Recommendations: * The store needs to decide on its vision, mission, and focus and align its product offering and ambience accordingly. If it still wants to differentiate as a non-commercial book stop then it can continue with its current policy and live with losing out some of its customers. Store space limitation is a problem in this particular store for it to provide a Landmark-like offering. * The store should specifically target the loyalist who will in any case come to the book store and purchase all that the book store has to do is to keep the books of their interest. The book store can also take advantage of the Social Conscious nature of North Indians. So they can provide seating within the book stores and so that the consumers can come and sit over which will give them a sense of good feel as they will be recognized by others as an intellectual person. It can also start service like home delivery for consumers like Rajiv who don’t have time to come and buy books although he like to buy them from book stores. * They should try to convey the value of the product. If he’s successful in conveying the value of the product then the marketer i. e. book shop can make the Marwari Baniya loyalist. They should also come out with sales once in a while so that the value buying consumers come in and along with the books giving value they also pick up other books which are not on sale i. e. promote impulse buying behavior. This will increase the customer traffic and also help in increasing revenues. For Bengalis since book reading is a culture so we should have book stores at as many locations as possible and also the marketer should try to make his book shop more popular among the group as they would buy books anyways so if the unaided recall is high then the consumers would go to the books stores. The book stores should also be at strategic locations where the crowd is more * As we can infer, that the person who is highly involved in purchase, will sit in the book shop for a longer time and browse. The book shop staff can go to such person and suggest him some of the latest books which might have come or ask him about his preferences and suggest books accordingly. * Another area which can be tapped is of low product involvement category like people buying for others they are the consumers who spend less time but are generally confused as to what they should buy so the shop staff should help these people in selecting the books and also add relevant suggestion wherever necessary. In this way the person might actually end up buying more than initially thought. SEGMENT BASED RECOMMENDATIONS: DEDICATED READER For the Dedicated Reader, as has been re-iterated time and again external influences do not work for him and if anything he only shirks off popular culture. Self-actualized people have realistic perceptions of themselves, others and the world around them. Thus promotions and marketing efforts have no influence on this category. She/he doesn’t need to be persuaded to read and neither does she/he need any felicitation or acceptance for picking up a book to read. This category needs to be communicated that Om Book Shop (OBS) is a place where she/he will find all the categories of books and that availability r variety is not going to be a problem. The ad pitch to him must re-iterate the points of variety and availability in all categories of books. Since, this category enjoys reading and wants to make an experience.