News Analysis: Tesco takes on literary big guns

Sales of books soar over the summer months, and the seasonal trend has

not gone unnoticed by Tesco, which is seeking to tap into it with the
launch of a range of branded books that will be sold online and in its
750 stores.

The Tesco Book Club has been set up in partnership with publisher Random
House. The initiative will see the retailer produce a special edition of
one of the publisher's books each month, featuring additional content
and a branded bookmark (Marketing, 13 June).

Tesco's decision to move into publishing coincides with an overall rise
in UK book sales. The sector is worth more than £1.7bn, according
to Nielsen Bookscan, with sales of £30m in the past week
alone.

Tesco is already one of the country's biggest book retailers, but the
launch of a branded book club signals its intent to pile the pressure on
high-street rivals WH Smith, Borders and Waterstone's. 'We have a large
number of book customers who are looking to try something a bit
different from their normal reading selection,' says David Cooke,
category manager at Tesco. 'Our aim is to help make this choice easier
for them.'

Titles will feature the Tesco seal of approval on the cover and include
a letter of introduction from the Book Club team. The idea is to
introduce shoppers to more aspirational literature as the retailer
extends its range of titles beyond contemporary bestsellers and
celebrity autobiographies. The first book available is Innocent Traitor
by Alison Weir; this will be followed next month by Kate Atkinson's One
Good Turn. The scheme will be backed by point-of-sale and email
activity, and ads in Tesco Magazine.

The intention is for the Book Club to grow into a brand that shoppers
will rely on when choosing a book. 'We're confident that the Tesco
endorsement will drive paperback sales in-store,' says Claire Round,
marketing director at Random House. 'Consumers often need guidance when
selecting suitable reading matter.'

A book club created by Channel 4 talk show Richard & Judy has proved how
influential they can be, with sales of titles including Brick Lane by
Monica Ali and The Farm by Richard Benson rocketing after they were
featured on the programme. Similarly, in the US, talk-show host Oprah
Winfrey's book club has helped transform a number of obscure titles into
bestsellers since its launch in 1996. Despite a lack of celebrity
support, Tesco is seeking to replicate this success, capitalising on its
huge in-store footfall to drive sales of the titles.

Tesco will support its Book Club with a dedicated area on its website,
where it will showcase one title each month. It will also feature
information about the authors, consumer reviews and a selection of
further recommendations.

The supermarket's attempt to create a community of interest around its
branded books online will place it in Amazon's territory. The latter
offers 9m titles, as well as personalised reading recommendations;
despite posting a dip in profits in the three months to December 2006,
it expects to generate more than $13bn (£6.6bn) in revenue
this year.

With competition on this scale, retail analysts are questioning Tesco's
ability to make a success of its Book Club online. 'If Tesco is to have
any impact here, it needs to expand its offering beyond one novel a
month,' says Richard Perks, director of retail research at Mintel.

Tesco is no stranger to brand extensions, having diversified beyond its
core grocery market into CDs, clothes and electronics. It is also
exploring beyond the confines of consumers' houses with a £155.6m
bid for the Scottish Dobbies Garden Centre chain.

The retailer's ubiquity coupled with its buying power make it a force to
be reckoned with, and it has already demonstrated its ability to sell
thousands of books a week. But this latest scheme will require consumers
to have trust in the brand to inform purchasing decisions. 'The majority
of books sold in supermarkets are impulse purchases,' says Perks. 'Tesco
needs to position its Book Club carefully if it is to succeed in making
consumers think before they buy.'

With an annual media budget of more than £67m, Tesco has the
marketing muscle to make its club a success. Moreover, its partnership
with Random House will help it expand the range of titles on offer
in-store and use the web to develop a relationship with readers. Whether
it has the brand heritage to rival WH Smith, Borders and Waterstone's in
bringing literature to the masses is quite another matter.

- £30m worth of books were sold in the past week

- 200,000 unique titles were sold in the past week, up from 180,000 in
the same period last year

- £1.7bn worth of books were sold in 2006

- 3.8m books were sold in the UK in the past week.