Simon Segal
CNA-GALLO’S dominance of South Africa’s retail book industry will soon be challenged by two new players, one of which is opening the country’s largest book store at the end of October.
The CNA-Gallo group, through its 302 CNA outlets and 10 Exclusive Books shops, accounts for some 75 percent of South Africa’s general book sales. The bulk of the remaining sales is through Naspers’ mail-order company.
By the end of this year this will have changed. Firstly, three former senior Exclusive Books employees, two of them directors, will open three Facts & Fiction bookstores plus a book warehouse.
Managing director Anthony Ward says the plan is to open two shops and one warehouse every year.
The second new book chain, BookMart, is jointly owned by former Premier Group general manager and independent businessman Benjamin Trisk and Mathison & Ashley, owners of OfficeMart and SoftwareMart. They plan to open four bookshops this year in existing OfficeMart stores. Trisk says 24 OfficeMart stores will have BookMart outlets in them by the end of next year.
Kate McCallum, of the Publishers’ Association of South Africa, estimates that South Africa’s retail book market has annual sales of around R1,1-billion. Of this R600-million is in educational/school books, R200- million in academic books and R300-million in general books. The new chains will take on CNA and Exclusive Books in the general books category.
But what are the new operators offering and why should they succeed?
Ward claims they are improving both the range and depth of stock of both the CNA and Exclusive Books. By cutting on fixtures Ward promises to be an average five percent to 10 percent cheaper than the competition.
The factory warehouse in Woodmead will be even cheaper, by as much as 20 percent, than the suggested retail
Ward’s flagship shop in Sandton Square will carry some 30 000 titles in stock worth R2-million. By comparison, Exclusive Hyde Park, at present South Africa’s largest bookstore, is thought to have around 25 000 titles. His other two stores, in Pretoria and probably the Rosebank Mall, will carry fewer titles.
Much depends on the financial strength of the new company to sustain what will no doubt be heavy competition from CNA-Gallo.
Facts and Fiction has five shareholders, including the three founders and one London-based backer. There are no high-profile names involved. Ward does not rule out a future corporate backer. In the meantime they have secured funding from Nedbank.
In addition to its R2-million stock, the Sandton Square shop will cost around R1-million to fit out. The other two stores and warehouse will cost some R500 000 each and carry R1-million worth of stock.
Ward aims at an annual turnover of R20-million to R30- million from selling 400 000 to 600 000 books.
Exclusive’s undisclosed annual turnover is thought by publishers to be R50-million in its last financial year. A 50 percent to 66 percent mark-up translates to a 40 percent operating margin, a 10 percent to 12 percent profit before tax and a five percent to six percent profit after tax.
Trisk says each BookMart will carry some 600 to 700 titles. BookMart’s niche will be business titles and magazines to suit OfficeMart’s aim of providing a single shop for office equipment. OfficeMart managing director Winky Ringo promises “discounts of as much as 40 percent on the recommended retail price. We are happy with margins of 15 percent.”
Exclusive Books managing director Fred Withers says is that his company will continue to grow organically “from our solid base”. Exclusive Books has just bought Sheldons bookshop in Eastgate.
“Competition is not liked but accepted as normal business,” says Withers.