The New Zealand Book Retail Industry Analysis
| | | | | | | | | |Date: | 27 August 2009 |
The aim of this report is to analyse and outline the business perspectives for opening a new independent book store in the Auckland region. The report analyses the current book retail industry and specifically discusses a new book shop’s viability highlighting the internal and external risks and opportunities as well as strengths and shortcomings.
To assess the book retail competitive environment elements of SWOT and Porters’ Five Forces analysis tools were utilised (Needle, 2000).
The major strengths of a new book shop which could be turned into a competitive advantage are the independency and local governance, relationship with publishers and closeness to customers. The major threats to and weaknesses of the new venture are attributable to low bargaining power with publishers (Needle, 2000), to lack of resources, and high market competition.
The report’s conclusion is that anyone intending to enter the book retail market by opening a new store is advised to be mindful of the industry’s 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 other hand.
Table of Contents
Table of Contents3
2.1 Competitive Environment5
2.1.1 Whitcoulls Group5
2.1.2 Paper Plus6
2.1.4 Independent Booksellers9
2.2 Risk Assessment11
2.2.1 Low Bargaining Power with Publishers11
2.2.2 Lack of Resources12
2.2.3 Market Competition13
2.3.1 Independency and local governance14
2.3.2 Closeness to Publishers and Customers15
The given report is commissioned by Susan and Michael Clarke to be completed by 27 August 2009. The report’s main objective is to provide an independent analysis of the book retail industry including potential risks and opportunities of opening a new independent book store in the Auckland area.
In order to assess the current business environment, the market competitiveness in which a new proposed book store would be operating is analysed including such main industry players as Whitcoulls, Dymocks and Paper Plus on the one hand, and a number of independent book stores on the other hand. Elements of the Porter’s 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 as opportunities and threats for the proposed new independent book store (Samson & Daft, 2005).
Bookselling is a big industry in New Zealand. According to (“Booksellers ready”, 2008), starting from 2007 the annual books spending in New Zealand has not gone below $1 billion. Books have always been perceived as a lucrative retail business due to high margins and book value that has not changed much over time (“Big boys’ books”, 2009).
2.1 Competitive Environment
There are two main groups operating in the New Zealand book retail market being chain retailers and independent stores. Historically, the book retail market has always been dominated by a few book retail chains occupying almost 90% of the book retail market, leaving the local independent book stores with no more than 10% of market share (“Whitcoulls, Paper Plus proceeding”, 2007). The main book retail chains operating in New Zealand are...