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Reading the avid book buyer
Selling a variety of entertainment media undoubtedly is one of Costco's specialties. with book titles in particular skewed slightly more upscale suited to the tastes of the discriminating, affluent consumer or business member.
Even with a very limited selection that represents a small fraction of titles found at a traditional bookstore experts agree Costco's ability to move books represents a real breakthrough for any author that gets into its stores. And while books may not be a large or extremely profitable department for Costco. for many reasons this is an important category. |
"They sell a lot of books. I'm sure if your book goes into Costco you're on The New York Times bestseller list overnight." said Ed Weller. an analyst for ThinkEquity Partners who covers Costco.
Weller said Costco's book assortment generally covers four categories: coffee-table books, reference, best sellers and children's titles. Collections and gift books are a key differentiation strategy, especially around holidays, such as a 12-book "Winnie the Pooh" collection that sells for $24.99 and a picture-heavy book called "'Mountains" priced at $10.99.
As opposed to traditional upright racks used by most book retailers. Costco merchandises books atop large tables, next to related entertainment media such as computer software and DVD movies. At a store in Piano. Texas. each table fit into a particular theme, such as best-selling adult titles, children's books, cookbooks or reference
"They sell a lot of dictionaries. maps. medical references and language books." said Weller. which ties in with the interests of the typical Costco member, a person who is likely more educated than the general population and probably also buys more books on average.
Upscale coffee-table books, cookbooks and wine guides receive prime positioning at Costco. again since this matches the Costco member's interests. The higher retails associated with these pricier books may compensate for the discounted price on all books.
Costco works with Advanced Marketing Services on selection and distribution of the book titles. Vicki Metzger, director of publisher marketing at National Book Network, said Costco's strategy differs from a typical book retailer in that the assortment changes more frequently and is much smaller, targeting its members' interests. National Book Network has placed books at Costco in the past, working through AMS.
"They have a minimum amount of dollar sales per SKU for club in order to keep the [title] on the shelf. They have to have huge inventory turnover because they discount everything so heavily," Metzger said of Costco's strategy. "Mostly they're looking for something of high value--something they can discount but will still have high value to the customer."
This same strategy of a very limited but targeted selection applies as well to a new program scheduled to kick off next year at Costco. For the first time, the retailer will begin selling single copies of magazines at all of its 345 clubs in the United States and Puerto Rico.
Source Interlink Cos. will provide a freestanding rack for each participating Costco to place up to 50 magazines in a high-traffic area. This compares to up to 500 magazines typically found at a supermarket, where half of all magazine sales in the industry take place.
"It will be a very specialized program with a limited number of titles pre-approved by Costco and adhered to," said Leslie Flegel, chairman and ceo of Source Interlink. Without going into specifics, Flegel described the selection as a combination of well-known magazines such as Time and specialized publications of interest to the Costco shopper.
Costco's addition of magazines follows a test at some of its Canadian clubs last year. Rival BJ's also sells magazines, while Sam's Club currently does not but has in the past.
Flegel said the new magazine initiative is not a checkout program but he did characterize it as impulse-buy related. To his knowledge, no other products other than magazines will be merchandised at the display, he said.
"Costco attracts a certain kind of customer, and this program is geared to their customer," Flegel added. "The title list will be the same in all the stores, but distribution levels may vary to the store." |
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