Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 17, 1991 TAG: 9103150909
SECTION: BUSINESS PAGE: E-4 EDITION: METRO
SOURCE: By ROGER COHEN/ THE NEW YORK TIMES
DATELINE: LENGTH: Long
But during the 1980s, with the spread of chains like Waldenbooks and B. Dalton in malls, the clubs abruptly faced a serious challenge. Bookstores were suddenly accessible to almost all Americans. Some retailers offered discounts that matched or sometimes even exceeded those provided by the clubs. And computerized inventories enabled many book buyers to order a vast range of literature by phone.
"The clubs suffered from the proliferation of stores and have been seeking to recover a coherent strategy," said Bill Lofquist, a publishing analyst at the Commerce Department. Simply offering a few cheap books as bait and then following up with a steady stream of selected titles was no longer enough.
According to the Association of American Publishers, book-club sales totaled $704 million in 1989, a meager annual growth rate of 4.3 percent from $522.9 million in 1982.
During the same period, store sales of hardback books surged to $1.74 billion from $770.8 million, or an annual growth rate of 12.4 percent.
But a tough decade has spawned a range of imaginative responses. Both the Literary Guild, owned by Bertelsmann AG of Germany, and Book-of-the-Month Club Inc., a unit of Time Warner Inc., are using new marketing techniques to shake off their sleepy images and do battle in a highly competitive environment.
"It's not enough to be a cultural service," said James Mercer, the president of the Book-of-the-Month Club. "We aim to get tough on marketing and merchandising, just as the chains have been."
The Book-of-the-Month Club recently revamped its regular brochure and introduced steep discounts on certain books for regular buyers.
It started a children's book club last year, bringing the total number of clubs it operates to eight, and Mercer said it might add two more clubs this year.
The new clubs, and acquisitions of older ones, reflect a trend toward specialization. For example, the History Book Club, acquired by the Book-of-the-Month Club in 1987, has performed exceptionally well.
Although the Book-of-the-Month Club does not disclose profits, it says revenue exceeds $200 million and membership has reached a record 3.7 million.
Similarly, the Literary Guild, the Doubleday Book Club and six smaller clubs owned by Bertelsmann intensified their search for new customers after they lost money in 1989.
Under Markus Wilhelm, a senior vice president for marketing, the Bertelsmann clubs appear to have made a strong recovery, returning to profitability.
Wilhelm said the overall membership in the clubs had risen to 2.5 million, from less than 2 million a year ago. He attributed much of this growth to a strategy of focusing on women for its two main clubs, the Doubleday Book Club and the Literary Guild.
"A year ago, I would not have been happy telling you what was going on," he said. "But we have been working on our data base, defining who the audience is, and concentrating on getting the right books to them. The results have been wonderful."
Among the company's new marketing techniques is a 24-hour entertainment and ordering service. Club members can listen to authors like Danielle Steele read excerpts that have been dramatized with sound effects and music.
And new specialized brochures have been started, including one called "Love, Sex and Erotica" that features such books as Gael Greene's "Delicious Sex," described as a "bawdy, naughty, yummy guide."
Smaller clubs run by companies like Newbridge Communications and Rodale Books have also successfully followed a strategy of specialization. They offer books dealing with subjects from gardening to computers, or aimed at professional groups like engineers or teachers.
"Recent years show that clubs may not necessarily be growth businesses, but if you run them correctly you can make a lot of money," said Robert P. Riger, a book-club specialist at Market Partners International, a publishing consulting firm.
Still, the clubs face one large potential rival: the "preferred reader program" introduced last year by Waldenbooks. "If I were the clubs, I'd be concerned," Riger said.
In just a year, the program has attracted 3.8 million people. For a $5 annual fee, they get 10 percent off any purchase and a $5 coupon for every $100 spent in a Waldenbooks store.
But of more concern to the book clubs is the fact that these customers have access to 100,000 titles through a phone-in number and receive both general catalogs detailing new books and, increasingly, mailings aimed at particular groups.
"We're doing a lot of experimentation in testing our ability to get product to customers, whether they are in our stores or not," said Ron Jaffe, the senior director of marketing at Waldenbooks.
With its customer list, analysts say, Waldenbooks could easily start a club-like service, offering the clubs' "negative option" system under which people receive books unless they state they do not want them.
Mercer of the Book-of-the-Month Club conceded that "potentially the `preferred reader program' is competition and we have to watch them." But he said the Waldenbooks program had not had any effect on the club so far.
by CNB