Daily Research News Online no. 2001 - Book, Music and Video Retailing in Europe

Book, Music and Video Retailing in Europe

November 15 2002

Latest research from Mintel analysing books, music and video retailing across France, Germany, Ireland, Italy, The Netherlands, Spain and the UK highlights the British as the biggest European spenders.

The UK has the largest music and video sectors in Europe, and also the highest rates of per capita spend at Euro 184 compared to Euro 158 in Germany, Euro 111 in France and over double of that of the two lowest countries, Italy and Spain.

Across the seven European countries under review, books accounted for around 59% of the combined market, music for 23% and video/DVDs for 18%. Germany is the largest market in Europe, accounting for some 31% of the combined market of the seven countries covered. However, with its love for books, music and films, the UK is the fastest growing country in Europe in terms of spending on books, music and video.

Rather than a threat to the industry, e-commerce actually presents a range of new opportunities for high street retailers. 'Although many of the store-based retailers have been slow to react, we feel that in the long-term, with their well-established brands and reputation, they are best positioned to take advantage of e-commerce as part of a multi-channel retail strategy' comments Richard Perks, Senior European Retail Analyst. However, growing access to the Internet, and improvement in PC technology are helping to fuel piracy in Europe.

Mintel's Retail Intelligence's consumer research finds almost 60% of British respondents having bought a book in the last year compared to only 40% in Spain and Germany. The British are topping the European bookworms league with some 21% of the adult population buying no fewer than 10 books a year. The French compete fiercely with a similar percentage whereas the rest of Europe lags behind with an average of just 13%.

According to Mintel, the British consumer book market was worth Euro 4,344 million last year, representing a growth of some 6% on 2000, and between 1997 and 2001 a growth of no less than 40%. 'Strong releases such as Harry Potter in the UK certainly helped to drive sales, although more discounters and the grocers selling best sellers at low prices are taking growth from the specialist retailers' comments Richard Perks.

The European music market has performed badly in recent years. Only Britain and France bucked the downward trend. In the UK spending on music reached Euro 3,472 m in 2001, representing year-on-year sales growth of about 5%, placing the UK at the top. Germany recorded the sharpest fall with a decline in sales of just over 10%. Latest indications, however, show that the UK music market actually declined in size during the first six months of 2002, indicating perhaps that the UK's period of growth maybe coming to an end.

Clearly, part of the decline in the European music market is due to the rapid proliferation in piracy and the increasing popularity of CD copying, or burning, and illegal song-swapping over the internet. According to trade estimates, almost 40% of all CDs and cassettes bought globally were pirated copies.

Despite decreasing sales, music remains important in most European consumers' lives. Between 40% and 50% of respondents in all countries agree with the statement 'Music is an important part of my life', a feeling felt particularly strongly in France (52%), where 38% of the population also likes to listen to new bands, compared to 27% in the UK. Britain ranks highly in the European league in terms of ownership (with 27% owning singles and 46% albums) and new purchase (with 14% purchasing singles and 28% albums).

The last year has seen the video market across Europe grow at level way above the growth in consumer spending in general. In 2001, Western European consumers spent a record EUR7.6bn on buying and renting videotapes and DVDs, an increase of 22% on 2000. Underlying this growth are the record-breaking DVD sales and rentals. Not only the biggest market in Western Europe, the UK also recorded the highest year-on-year growth in 2001 (+26,3%), almost twice the size of its closest rival, France. 'VHS sales have been cannibalised, but not enough to offset the growth of the sector in general', comments Richard Perks. Sales of VHS in the UK decreased by almost 10% between 1998 and 2001. 'DVD should continue to drive growth for a number of years, especially as DVD players come down in price, and separate price points for DVDs become established, such as budget ranges' continues Richard Perks. Only 12% of UK households have a DVD player so potential is still huge and strong releases, such as the Harry Potter and Lord of the Rings series, should accelerate sales in the future.

According to Mintel, the growth in mainland Europe may not be as rapid as in the UK. Indeed, consumers in France and Spain remain true 'aficionados' of watching films at the cinema rather than on television, with some 41% and 39% respectively agreeing with the statement 'I enjoy seeing films more at the cinema than on television'.

Over 66% of the French respondents also think that people rely too much on TV for relaxation. Mintel believes that this sentiment could impact adversely on sales of pre-recorded videotapes and DVDs in these countries. This feeling for 'true film going' is not so evident in the UK with only some 30% of British respondents agreeing with this statement.

Consumer research commissioned by Mintel's Retail Intelligence for this report reveals that WH Smith remains by far the most popular outlet in the UK when purchasing books. Some 22% of respondents shop most often at WH Smith for books. Waterstone's wins its second position with 19% of respondents. In the European league of books, music and video specialists, the British retailer WH Smith comes second behind the French retailer, Fnac.

Specialist bookshops remain the outlets most favoured by the British, with some 41% of respondents claiming to buy books most often via this channel. A third of adult like going into bookstores just to browse, proof indeed that bookstores as 'destinations venues' are becoming more popular. The provision of rest areas to browse through the books remains a key feature for many consumers. Some 23% of British consumers would like to see added or improved rest areas in bookstores.

However, the downside of this 'browsing phenomenon' is that a further quarter of the population read magazines and newspapers rather than books and one in five decide on book purchases before going into the shop, so downplaying the 'impulse buy' element which many stores hope to capitalise on.

E-commerce book, music and video sales have been growing rapidly since the latter years of the 1990s. Books, music and video products are ideally suited for sale over the Internet, thanks to their small size and low cost of postage. Although much has been made of the threat of e-commerce and Internet specialists, it is still a relatively a small channel of distribution and Mintel Retail Intelligence believes that for the high street specialists the Internet presents more of an opportunity rather than a threat. 'Certainly, pure-play specialists have emerged and are growing their market share, but we believe that only the strongest such as Amazon will be able to survive in the long term' comments Richard Perks.

Although it is impossible to know how big a sales channel for books, music and video the Internet will eventually become, rising penetration of the Internet, greater confidence in ordering online, plus the introduction of more digital downloads means that it will certainly grow in importance. According to Mintel Retail Intelligence's consumer research, over 40% of British consumers intend to use the Internet in the next twelve months, against 28% of the French and 19% of the Germans.