At Borders, Mega Publishers Get the Keys to the Kingdom

Date: 1 Aug 2002 | posted in: Retail | 0 Facebooktwitterredditmail

Leading publishers will be involved in determining which books are carried at Borders Books stores under a new “category management” plan being phased in this year.

Under the plan, Borders is assigning each of 250 book categories—ranging from thrillers to romance novels—to one of the top publishers in that category. Borders will provide this “category captain” with detailed sales data for all titles in the category, including those of competitors. The publisher will analyze this data alongside its own research and prepare a plan outlining which titles should be stocked and how those books should be displayed and promoted.

Three categories have already been assigned. HarperCollins, a division of News Corp., will oversee the cooking and romance categories, while Random House, a unit of Bertelsmann, will be responsible for young children’s books. Borders expects category captains to fork over about $110,000, plus incur a variety of expenses associated with fulfilling their duties.

Such a cozy relationship between large publishers and Borders, which controls about one-quarter of all bookstore sales in the U.S., could undermine competition and devastate small presses, contends Marilyn Ross, executive director of the Small Publishers Association of North America (SPAN). “Is anyone naive enough to believe these behemoths will make a genuine effort to include the works of the little guys?” she asks.

As criticism mounts, Borders CEO Greg Josefowicz has tried to play down the role of big publishers, noting that the “fundamental truth of category management is that customers drive the process.” He insists that Borders will retain final say over which titles are stocked.

But experience in the supermarket industry, where category management first took root in the mid-1990s, suggests that, in practice, final say is rarely more than a rubber stamp. “In reality, the category captain has a vast advantage in information,” notes Albert Foer, president of the American Antitrust Institute. “Even if the retailer occasionally turns down or modifies the category captain’s proposal, the odds are that in general the category captain will prevail.”

A Federal Trade Commission report released last year outlined several potential antitrust problems with category captains, but the agency has no plans for further research or action.



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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance and directs its Independent Business Initiative, which produces research and designs policy to counter concentrated corporate power and strengthen local economies.