The Consumer Book Market in Canada
- Measures of Market Size
- Share of Market for Canadian Firms and Titles
- Title Availability
- Market Effects
Measures of Market Size
The consumer market for books refers to books purchased at retail by Canadians for personal or professional use. As such, it excludes domestic sales of textbooks or scholarly titles, which are mainly sold through academic or institutional channels. While a global view capturing all book retail sales in Canada is often elusive, the country's consumer market for books can be measured in various ways.
Statistics Canada reports total sales for Canadian publishers of $2.15 billion in 2004, and total book sales in Canada of $1.37 billion. This figure does not completely reflect the size of Canada's domestic book market as it excludes some large sales volumes of imported titles (see discussion on following page). As the excluded firms do not report publicly, we cannot account for their sales with confidence. Further, 41% of the $1.37 billion in domestic sales reported by Statistics Canada is accounted for by educational texts (excluding scholarly titles). As such, while it contains much useful information on the Canadian book publishing industry, the Statistics Canada data do not provide us with a complete measure of the domestic consumer market for books.
More recently, Hill Strategies Research released a Statistics Canada-based report1 that calculated total consumer spending on books (excluding school books) for 2005 at $1.4 billion.
In 2005, BookNet Canada, a Canadian supply chain agency, implemented a point-of-sale data tracking system for retail book sales known as BNC SalesData. This system now gathers sales data from 647 retail outlets2 in Canada, with an estimated market coverage of 65–70% of retail trade sales for English-language books in Canada.
BookNet reports a total sales volume of $839,714,492 on unit sales of 45,976,827 for 20063. Taking BookNet's estimate of 70% market coverage into account, we can extrapolate this to an approximate value of $1.2 billion for 2006 consumer book sales in English Canada.
Given BookNet's limited coverage in the Quebec market (stores reporting from Quebec are limited to those reporting English-language title sales), we can further extrapolate this figure by factoring in retail sales for Quebec. The Institut de la Statistique de Québec (Statistics Quebec) reported total retail sales of books as $585,500,000 for 2006. Statistics Quebec figures also indicate that textbooks account for 20% of this total value. If we factor out these textbook sales from the overall sales volume for Quebec, this gives us an estimate of $468,400,000 for consumer book sales in the province.
Given the natural overlap between BookNet and Institut figures—statistics from both include sales by Indigo, Costco, and HDS outlets operating in Quebec—we will reduce this figure to a more conservative estimate of $385,000,000, giving us an overall 2006 value for Canadian consumer book sales of $1.59 billion.
This is perhaps the closest global market figure we can responsibly estimate, but it is still not likely to be a complete measure of consumer sales in this sector. The non-traditional channel, particularly outside of Quebec, will not totally be captured in these values and as we discuss in a subsequent section, the non-traditional channel accounts for an increasing proportion of market share.
Similarly, remainder and used books sales have figured more prominently in the domestic book market in recent years. These sales are not reflected in the other measures of consumer book sales presented here; nor can we estimate them with precision at this time. We should therefore understand the estimate of $1.59 billion given here to refer mainly to the domestic sales of new books to Canadian consumers.
Share of Market for Canadian Firms and Titles
Beginning with its 2004 survey of book publishers, Statistics Canada adopted a sampling methodology, as opposed to the population-wide survey it had employed in previous years. This change has implications for the ability to capture accurate market share data for Canadian firms and titles. The study sample is now drawn from those firms whose primary business is book publishing, as identified by the North American Industry Classification System. This methodology excludes two types of firms: (1) those whose primary business is something other than book publishing but that nonetheless have an active publishing program, and (2) those that are exclusive agents or distributors of other publishers' titles, but which do not have an original publishing program themselves. Consequently, the survey represents a significant, but not complete, picture of the Canadian book market.
The 2004 Statistics Canada figures indicate that Canadian-owned firms accounted for 41% of domestic sales by Canadian-based publishers (with Canadian subsidiaries of foreign-owned multinationals accounting for 59%). However, due to the methodological changes identified above, these figures likely overstate the share of market for Canadian firms, as some large distributors of imported titles (e.g., exclusive agents) are excluded from the survey sample.
The share of domestic sales held by Canadian-owned firms is a significant market characteristic in its own right, but even more so given the relationship between ownership and production of Canadian-authored titles. Statistics Canada title output figures show a high correlation between ownership and publication of Canadian authors, with Canadian-owned publishers accounting for roughly 77% of new Canadian-authored titles published in Canada. That said, a number of foreign-owned publishers in Canada also maintain an active publishing program of Canadian authors.
Canadian-authored titles represent 80% of the portion of Canadian book sales covered by the Statistics Canada survey. Similarly to the figures for Canadian-owned firms, however, the exclusions in the survey scope mean that this figure is likely to be overstated4.
As of 2007, BookNet Canada's BNC SalesData system tracks sales performance for more than 675,000 unique titles available to the Canadian retail market. Statistics Canada indicates that overall title production in Canada, for both Canadian-owned and foreign-controlled firms, grew by 40% from 1998 to 2004.
The number of total new titles published in Canada provides an important performance benchmark for the national publishing industry, and indeed, the growth in title output over time can be taken as an indication of strength in the sector.
The significance of title output numbers, however, should also be assessed in the context of consumer demand. Title output, as described in the table above, grew by 40% from 1998 to 2004, while the combined sales volume of publishers in Canada grew by only 11% (after adjusting for inflation)5 during the same time period.
The net effect is that a growing number of books are contending for the attention of roughly the same number of book buyers, a situation that is amplified by a number of the other trends discussed in this study, such as the growth of used and online book sales.
The estimate of the consumer market given here—$1.59 billion in 2006—is as interesting for what it doesn't measure as what it does. As noted earlier, a number of aspects of the domestic consumer market are hidden from statistical view at the moment, including some book sales in emerging non-traditional channels, used book sales, and sales of remaindered stock. However, the increasing availability of such stock to Canadian consumers, combined with a demonstrable increase in new title output, dramatically increases the supply of books in the Canadian marketplace.
Caveats aside, the various measures of market size available to us indicate modest sales growth in the domestic market. Much of this growth appears to be driven by inflation over time, as opposed to growth in unit sales.
This relationship—between a marked increase in title output and overall supply, and relatively flat unit sales—suggests that both the average sales per title in Canada and average print runs in many title categories have been falling in recent years. This observation is supported by anecdotal reports and proprietary data sets contributed by study respondents.
We believe these patterns create the following market effects:
- More new titles are available to Canadian consumers, as is a wider range of product and price options, including used and remaindered stock.
- Used and remaindered books compete with new books for consumer attention and retail shelf space. At the same time, Canadian publishers increasingly encounter higher costs of sales, having to pay for co-op advertising, placement fees, and other promotional costs to secure retail space for new titles.
- A title's placement and promotion within retail outlets is a highly important selection filter for book shoppers faced with a huge range and volume of available books. Many respondents noted during the study, “There are too many books [competing for a fixed amount of buyer and reader attention].”
- Fewer economies of scale are available to Canadian publishing firms, as they grapple with declining average unit sales per title. This is especially significant for smaller publishing houses, which produce the majority of Canadian-authored titles as well as literary titles and books that are culturally significant but often marginally profitable.
1Consumer Spending on Culture in Canada, the Provinces and 15 Metropolitan Areas in 2005, Hill Strategies Research, February 2007.
2 82% of these are accounted for by Indigo, Costco, and HDS (Hachette Distribution Services) outlets.
3 In fall 2007, BookNet Canada published a detailed summary of BNC SalesData in its first annual review entitled BNC Research: The Canadian Book Market 2006. Copies of the report can be ordered through the BookNet Canada website at http://www.booknetcanada.com.
4 In comparison, the 1996 Statistics Canada survey—the most recent year in which the data included exclusive agency sales (thus providing a more complete picture of the overall Canadian market)—estimated the market share of Canadian-authored titles (both educational and trade) at 47%.
5 Statistics Canada, Bank of Canada.