I just got off the phone with a Salt Lake Tribune reporter asking questions about Deseret Book’s decision to pull its titles from Seagull Book & Tape. I expect an article tomorrow. But it sounds like neither company is coming clean with exactly what the dispute is all about.
The issue first appeared publically on Michael Cleverly’s blog which reported Deseret Book announcing the policy to its staff in late June. Robison Wells at then reported that Covenant Books, Seagull’s sister company, has told some of its authors about the situation, apparently to assure them that Covenant continues to sell its books to Deseret Book.
Most of the speculation on these sites assume that Deseret Book is taking this action to force traffic to its own stores, where it can charge higher prices and get that traffic to make other purchases. The claim is that Deseret Book objects to Seagull’s high discounts.
I don’t buy this argument. Not only is such a move a violation of the anti-trust law, I don’t think anyone who knows the industry well would think it will work. Are customers really looking specifically for the 120 to 140 Deseret Book titles involved so often when they are in Seagull stores that they would leave the store and go to Deseret Book’s store as a result?
A large portion of store sales (50% or more, if memory serves) are impulse sales. The customer sees something on the store shelves and purchases it. If it isn’t on the store shelf, it might as well not exist, and the customer either buys something else or nothing at all.
So, the result of Deseret Book’s move will probably be that Seagull Books’ sales will drop (by a large portion of its sales of Deseret Book titles), and Deseret Books’ own sales (to Seagull) will also fall. Who will get hurt worst? Probably Deseret Book, in my opinion. Deseret Book should get 50% to 60% of the cover price when it sells a book to Seagull, whereas Seagull nets the cover price, minus whatever discount it is giving customers, minus what it pays to Deseret Book! On a book sold at 20% off, Covenant has lost 20% or a little more, while Deseret Book has lost 50% or more!!!
Of course, not all those sales will be lost. Some Seagull customers will go to Deseret Book looking for that same book. Others will simply purchase other books on the shelf at Seagull. Regardless, this move will probably cost Deseret Book more than it costs Seagull.
So why do it? Deseret Book gives a clue in a letter from Vice President Keith Hunter, posted on Six LDS Writers and a Frog. He says, “Deseret Book and Seagull have a long-standing difference in views regarding how Deseret Book products should be merchandised, promoted, and treated.”
I wish I knew exactly what this means. It sounds like it is talking about how Deseret Book’s titles are placed in Seagull’s stores, although discounting might be part of it (I’d speculate that if discounting is part of the issue, then it has more to do with discounting making books look cheap somehow, than the discounts being unfair compared to Deseret Book — after all, Deseret Book is still selling to Walmart, etc.).
Is Seagull putting Deseret Book’s titles on the bottom shelf or something? Are they refusing to sell preferred space in the stores? (Most store chains sell end-caps and other shelf placement to producers. That display on the front table you saw going into Barnes and Noble could have cost the publisher $40,000 or more!).
Unfortunately, we don’t know what the exact issue is — at least not yet. Hopefully this Salt Lake Tribune publisher can get someone to spill the beans, or someone on one of the blogs covering this issue knows someone who can tell us exactly what’s going on.
Until then, its hard to say what will happen or even who is at “fault.” It could be either side — it could be Seagull is being unreasonable about merchandising Deseret Book titles — and it could be Deseret Book is being unreasonable in its expectations. Complicating the matter is both chain’s well-known tendencies to favor the publications of their sister companies.
I know I have been critical of Deseret Book in the past (and its likely I will continue to be), and my first reaction is to suspect that they are the problem. But I also know that Seagull hasn’t given independent LDS publishers the same kind of placement that it gives Covenant’s titles.
What is clear is that the LDS marketplace looses as a result. Some portion of those sales, in which consumers purchase Deseret Book titles at Seagull stores, will never happen. And the lost profits on those sales make Seagull less able to invest in other inventory and Deseret Book less able to launch, promote and distribute other titles.
Like almost every war, no one really wins.