Kristen McLean of NPD Bookscan joins us to discuss how book sales ended the year for 2022 and where she expects the U.S. market will head in 2023.
Kristen McLean of NPD Bookscan joins us to discuss how book sales ended the year for 2022 and where she expects the U.S. market will head in 2023.
Welcome to Westchester Words education, Ed. Tech and Publishing. In today's episode, I'll be speaking with Kristen McLean of NPD BookScan about where the market ended up at the end of 22, and more importantly, how things are looking to forecast for 2023. Kristin. Welcome to Westchester Words.
Kristen McLean:It's it's a pleasure to be here. Thanks for inviting me.
Nicole Tomassi:I'm glad to have you here. So, as I said in the introduction, we're going to first touch on how the year ended for books in 2022. And when you were on the Publishers Weekly webinar in the fall, you made a prediction that sales were going to end the year probably around five or so percent down against 2021. And as it turns out by the numbers released last week, it did end at about 6% down. So, do you want to talk about if there were any surprises?
Kristen McLean:So I think that the year actually up until November tracked pretty close to 2020 numbers in volume, so it was actually hanging in there, not at the 2021 level. So, just to remind listeners, 2021 was really the best year on record for the US. Book market. Our data goes back to 2004 and 2021 was really a high point. So we did expect 2022 to be down because it was going to be very, very difficult to meet the high numbers of 2021. Overall, I think the market was super stable. It ran about 3% below 2021 for most of the year. And then when it hit November, that's where things got a little funky because during the pandemic messages to the general public about supply chain issues and never was worried about being able to get their stuff shipped and they didn't work going into the stores, that forced the holiday period into an earlier launch. And in 2021 in particular, it took off very early in October. And when we see holidays start that early, so we were selling Christmas books and Halloween books simultaneously in October 2021, that generally means a very strong holiday. And in fact, holiday last year ran about 12% in front of 2020. This year holiday period, not only did it start later because people were not so worried about supply chain issues this year, but also I think the general public just was a little bit less focused on Christmas this year. And so the holiday season started later and the volume was also lower because of all the economic uncertainty that's been going on. So in fact, it didn't stick to 2020, it dropped below 2018, which is our lowest Christmas on record over the last five years. So it really lost a lot of momentum in December and gained a little bit at the end because we had a late Saturday, an extra Saturday this holiday season. But in general, that had the effect of bring us back to where we have been pretty much all year, which is -6% little better than that-5.8% for the year over year on a unit basis?
Nicole Tomassi:And was that driven by just there wasn't any particular standout title and new releases in the fourth quarter? Or do you really feel like it was economic factors and just fatigue from the midterms and all that?
Kristen McLean:Well, so all year long, adult nonfiction has been lagging. It it's the only area of of the the US market that was back to 2019 levels. So it's been soft all year. And we were thinking that it was possible that it was going to catch up a little bit in the fourth quarter because there were some very high profile books coming. Michelle Obama's book new book was out in November. Marie Kondo had a new book in November. Matthew Perry had a biography that was expected to be good. IDA Garden had a new book. Like, some of the anchors of fourth quarter were definitely in place for nonfiction, but it just did not meet expectations. Nonfiction wound up 10% below on a year over year basis. And those books, although they were fine releases by nonfiction standards, they didn't meet their expectations based on previous books, for instance. So overall, I think it was a mix of consumers spending less and also just not being very tuned in, particularly on the nonfiction side. And as we all know, that's the most valuable part of our business, right? It's the highest price points in front list as a consequence of that. The other thing that happened is that we lost three points of share of front list in December compared to last year. And that brought our overall front list share down by a point overall this year because of it. So we've just seen a trend away from front list new books this year also, which has been a pattern that started at the beginning of the pandemic but did not reverse itself this year in the way we thought might happen.
Nicole Tomassi:Let's turn now towards 2023, and certainly there are some prominent high profile titles coming out. For instance, the Prince Harry book that dropped yesterday and by all reports, at least in the UK, it's been a stellar seller. I mean, I don't know if we're going to see that happen here, but what are your thoughts on how is 2023 looking to shape up?
Kristen McLean:The Prince Harry book is going to be a very telling rollout for us. Like, I'm waiting to see the numbers like everybody else because unlike other seasons where we could really anchor ourselves in one part of the market, sending signals that it was going to be strong, for instance, children's books or fiction this year, I'm not seeing a lot of strong signals in any particular area of the market. Fiction was really strong in 2022 was the only area of the market that was in growth. So I do expect we're going to see some of that carry into 2023. TikTok book Talk the area of the sort of the book influencer part of TikTok was a really major driver in that growth this year. But I think the Prince Harry biography, autobiography is going to be a real bellwether for the year because based on what we saw this fall, I'm not sure it's going to meet its expectations, although I'm sure it's going to be a very large release. The biographies that we saw come out this fall, I would say did about half as well as they were expected to do. And it'll be interesting to see whether or not the Harry book is the same. Certainly getting a lot of press, which is not going to hurt it. But I'm not convinced. I have this feeling that consumers are looking for something new. They're looking to be delighted. There is a kind of air of cautious optimism when you look at things like the Consumer Confidence Index right now. So I feel like consumers are in a space where they might get excited about something new coming. But at the same time, the publishing market itself is pretty conservative right now. I expect 2023 to be a very conservative year in terms of investment in new content. We saw that the penguin Random House/Simon & Schuster merger did not move forward. That's going to have an impact, particularly on Penguin Random House. We're already seeing that happen. We've gotten signals from with some of the other major publishers that they're just taking a pretty tight line this year. They're batting down the hatches. They're expecting some negative numbers. They are talking about smaller orders for retailers this year. The consumer buy and then the retail buy. Those are two different things, right? So if retailers aren't ordering in the way that they have in the past, that makes publishers nervous. There is no such thing as the new normal right now. We're not going back to a more settled market like 2019. I think there are some really big question marks in front of us, what the consumer wants. The question how the publishers are going to deal with their own business challenges, to question how retailers are going to run their business. Because retailers have not necessarily the book space, but when we look at mass market retailers, they still have a lot of inventory but in their warehouses. So they are going to be a little bit conservative as they continue to promote all of that to get it out of their warehouses. So they're taking still a pretty conservative line. So I think it's just going to be a really interesting q One, q Two as we see how this all shakes out, do you think that's going.
Nicole Tomassi:To, in a way, accelerate the trend that was already there towards consumers reaching for backless content? Since there's like, I don't want to say a lack of front list, but if retailers are being more conservative in what they're bringing in, they may want to go with the steady reliable of an author's backlist.
Speaker B:So do you think that's just going.
Nicole Tomassi:To continue to drive that trend?
Kristen McLean:Well, I think when we talk about mass market, for sure that is the case because mass market retailers really love what I call core backlist. So backlist that has a very dependable sales record because they are all about trying to forecast how many turns a particular object is going to do on their shelves. I think they're going to continue to follow the trend that's been on Book Talk, which is towards romance, towards contemporary women's fiction. They're going to ride the wave right now of what's been happening this year. So I think we're going to continue to see those types of fiction themes. I do think interestingly. There's a little bit of a signal in the data that maybe horror is having a resurgence right now. So I think we are going to see some titles come back to the shelf around horror or gothic themes. But still there's a lot of backlash there as well and at the same time, just in the larger environment for retailers. What we find coming off the Pandemic is that retailers, both traditional chains, the indies and the mass market, they're making very calculated decisions about how to manage their business now. And particularly for the chains, they are now feeling much more liberated, I think, than they did before the Pandemic to steer their own ship, to make very specific choices, perhaps to invest more in Backlist than they might have in the past, to really try to drive their business. And we know Barnes and Noble in particular is really giving their local stores a lot of latitude in what they choose to carry. So I think that all of that works against Front List. Right? If you're trying to make sure you've got a steady, good business, you're much less likely to take risks or over invest in Front List right now. I do think the one place where Front List is really going to continue to be a differentiator is probably the indie market because those guys are coming off a great couple of years after they stabilized after the Pandemic. And if the chains are not investing in Front List, this is something that the indie stores can really do very well. And I think that publishers need to really make sure that they're building those relationships because that's going to be critically important for new books.
Nicole Tomassi:Yeah, especially with the growth of bookstores that we've seen through the Pandemic and up to now. I think Aba reported last year that it was the highest number of booksellers joining their association ever. So that's a good point to make. I'm curious and I realize this is not necessarily the area that you may be most familiar with, but do you feel like that there's been improvement on the production side in terms of printers and the paper issues that we were seeing at one point in time, particularly in 2021?
Kristen McLean:What I can say about that is I'm hearing less complaints about it. I don't think it's completely resolved. I think the issue of capacity, I mean, the fact that China is now super disrupted again with COVID and the fact that there was very tight capacity in other places is still making it so that print runs overseas are just taking longer. And it also means that we're still seeing publishers making a lot of I mean, I think to be in the supply chain in a publisher right now, it's like business jazz, right? You've got a book coming, and you have to decide where you're going to do the first print run. And then maybe you back it up with a second print run. That's print on demand or that's done more locally. Or you're doing more printing across multiple partners just to try to make sure that your books are in the right place at the right time. I think that we've gone from just the complete and total disaster that we had 2020 to 2021 to something that's a little bit more manageable but still is in transition from a supply chain point of view. And I do think that there's a lot of discussion in building capacity in North America, but that's not something you do overnight, right? This is like the investment that's required to build capacity and nearshore the supply chain operations will take a decade probably. So I think it's better than it was. But I think that that will also feed into some of the conservative business decisions you're making that we've been talking about for 2023.
Nicole Tomassi:And then even if you do build the capacity, it's do you have the people who can operate it?
Kristen McLean:Yeah. Do you have the people who can operate? Do you have the paper that you need? I think the paper is still one of the most critical questions. Right. A lot of paper supply was eaten up by shipping materials like boxes. That was something that we heard a lot of, about the amount of paper pulp that was going towards cardboard versus paper for printing. We do know that about 20% of the the peak of online shopping has moved back into stores over the last two years. So people are back in stores. There is definitely less shipping going on, but there's a certain amount of habituation that happened during the pandemic that's continuing. So shipping supplies still are in very high demand. So I think it's just a super complicated and pretty thorny issue that I think there's opportunity for printers and pod operations and just in time inventory management. There are opportunities, but we're still in a retooling period for sure when it comes to that study.
Nicole Tomassi:I have the privilege of working from home, and my office faces the street. And I can't tell you how many times every different shipping company is up and down the street dropping boxes off, including from Amazon. And I'm guilty of ordering stuff from Target, including books, because I don't want to go to the store. Yeah, I guess I'm part of the problem or part of the solution, I'm not sure which.
Kristen McLean:I think that most households will tell you that they order more now than they used to to be delivered to the house. And I do think that a kind of reconciliation between that and other concerns over sustainability that I think are on the rise over the next decade. Right. Things tied into environment, things tied into just global supply chain that people are concerned about those things and it's part of the larger climate conversation. But we haven't quite gotten to the point yet where individual households are really moderating that behavior. So for sure, people are definitely getting more delivered right to their front door.
Nicole Tomassi:Yeah, well, maybe those will be some climate books or how to be a more sustainable is that an area that maybe is primed for some growth?
Kristen McLean:I mean, I do think that people have these questions, and I would say that younger generations are more mindful even than the grown ups in the household. Right now I have a 15 year old in my house, and where I'm seeing it play out is in fashion. So I see my kid and other kids of that generation more interested in thrifting, more aware of the impact of fast fashion after the pandemic. Right. Like the amount of clothing that goes on bought and what happens to that stuff. So I do think we're seeing it play out in other ways in other industries, but I don't think people have really gotten to the point where they're thinking about it too much when it comes to books. Although I do know that in the supply chain, the publishing market, in the wider global publishing community, we've already had these conversations. Right. I think that was the point of our last webinar. So I just think it's going to take time to work itself through. But I do think on a global level, we're definitely moving in that direction in a way that was very different than when I look back before the pandemic.
Nicole Tomassi:And can you speak globally to how book sales did? I mean, I know the main focus is the US. But is there a similar story playing out overseas?
Kristen McLean:We no longer track the global market because our global business is now sitting with Nielsen. I don't have the specific figures, but I do know from other industries that we track, for instance, like toys and beauty, that overseas markets, particularly in Europe, are doing worse than the US market right now in terms of recovery on a lot of these discretionary categories. And things like energy costs, like the impact of the war in Ukraine on Europe and energy costs is really profound. So I do think that the recovery is happening slower in other global markets, although I don't have specific numbers for books.
Nicole Tomassi:Fair enough. And I do hear from publishers in the UK that Brexit is still having severe knock on effects all these years since that vote happened.
Kristen McLean:In our experience, European markets follow the US market by a couple of years anyway, just generally in trends. But I think that the economic challenges, the political challenges in Europe right now are pretty significant.
Nicole Tomassi:Yeah, they are definitely much deeper and it's going to take them longer to climb out of that for sure. I want to try to end this on a more positive note. So is there any ray of light that we can look to for 2023? Where's the positive?
Kristen McLean:Yeah, I just want to just take us back. The metaphor that I use for 2021 is that we've scaled Everest as a market, right? Like it was the high point. It's really important to just keep in mind the fact that we're coming down off a peak. And when you come down off a peak, you're going to have negative numbers. But we are still as a market overall, quite a bit above where we were in 2019. We finished the year 12% ahead of 2019, 4% ahead of 2020. So we still just finished our second best year on record. But the psychology has really shifted and I think the uncertainty in the consumer market is what's making everybody really edgy. And I think we are in a period of adjustment because we've just been through this historic upheaval, right. Globally, I think that when you go through something, that the behavior shift that happens and the economic shift that happened because of the pandemic. It's going to take us a little while to really understand the full impact of that. But when you look back historically over these periods in human history, oftentimes these are also opportunities for reinvention. And I think that we're in that period now. I think that there's opportunity for innovation even though we are in a really conservative business environment. I don't think consumers are feeling that way so much. Like if things continue the way they are right now, I think consumers are actually going to be like there are signs of optimism for consumers. There are signs of people wanting to be delighted, wanting to experience something new, wanting to travel again, wanting to reinvest in family. So there are opportunities out there. There are some publishers that are growing because they are very nimble and they're able to move quickly and really pay attention to opportunities. And I also think that the publishing market is such a stable, mature market that we struggle when we need to retool a little bit and that's kind of what we're doing now. But the net gain is we've got more bookstores, we've got more participation in independent retail, which we're seeing in both the books and the comic market. We are seeing younger generations come into both the writing and the publishing side of the business. That's all very optimistic. And also I would be remiss for not mentioning we're talking about adult non fiction being down. But what's going on with fiction over the last couple of years is pretty amazing, right? We were up 25% in fiction last year. We just closed up another 9% this year after a bunch of years of seeing fiction have modest declines. So I think that's exciting. And there are other examples out there of things that are happening between fans and authors, like what happened to Brandon Sanderson's Kickstarter this year. He raised $42 million or something for his new books directly from his fans. That is interesting. And that also the relationship between that has driven areas like manga in the US. To real heights over the last few years. Things like the connection between streaming video and reading, that's a very strong connection. Those are new and interesting things. So I would just encourage people to keep an open mind, expect some more negative numbers. This year. We are going to have to retrench a little bit. That's what I think it is. I think it's a reset. I don't think it's a there's lots of signs of life and exciting new patterns, but we have to adjust. We were a bit over publishing going into the pandemic, and now we're in a period of reset, but there's lots of opportunity. And I think on the other side of it, it's going to be pretty interesting to see what happens.
Nicole Tomassi:So to use a gardening metaphor, we're kind of pruning back so that we can grow healthier and stronger.
Kristen McLean:I think that's exactly right. I think that's exactly right, yes.
Nicole Tomassi:Okay, well, let's hope for lots of healthy green shoots in 2023. Kristen, I want to thank you so much for joining me today and sharing your insights. Maybe we'll check back with you later in the year to see if those healthy shoots have emerged.
Kristen McLean:Sounds good. Thank you for listening to this episode of Westchester Words. If you're looking for previous episodes or want to read additional content that has been shared by some of our guests, please visit our website, westchesterpublishingservices.com and westchester educationservices.com. For an international perspective, check out our sister podcast, westchester Words UK and International, available on the Westchester Education UK website, westchester. Co UK or wherever you stream podcasts. We'd love hearing from our listeners and welcome your emails at westchesterwords at westchester. Edsvcs.com. Tell us what you enjoy hearing on.
Nicole Tomassi:Our podcast or suggest topics that we. Can cover in future episodes. Speaking of future episodes, I look forward to having you join us for the next episode of Westchester Words when we'll be having another engaging conversation about a topic of interest to the education, edtech and publishing communities. Until then, stay safe, be well and stay tuned.