The last Harry Potter book will be a runaway bestseller but will likely not make booksellers and money, Reuters reports.
Millions of people will descend on stores for a copy of “Harry Potter and the Deathly Hallows” in July, but deep discounts mean many will struggle to turn a profit from the jamboree.
“Everywhere you go there is huge, ridiculous discounting by the chains,” said Graham Marks, children’s editor at the British-based trade magazine Publishing News. “They are literally not going to make one penny out of the book. It is stupid – just throwing money away … The world has gone mad.”
Online retailer Amazon.com (up $0.00 to $73.24, Charts, Fortune 500) and Wal-Mart Stores Inc. (up $0.00 to $50.08, Charts, Fortune 500) have slashed nearly 50 percent off the book’s $34.99 list price, forcing many independent booksellers to follow suit to stay competitive. Barnes & Noble Inc. (Charts, Fortune 500) and Borders Group Inc. (up $0.00 to $20.23, Charts), the world’s largest booksellers, are selling it at 40 percent off.
Such price cuts drive sales, but usually result in minimal profit margin, something Jefferies & Co analyst Tim Allen said typically happens on every bestseller. “It’s so discounted, there’s minimal, if any, gain,” Allen said. “Retailers try to make up the shortfall by marketing loyalty cards, which they hope will entice shoppers back into their store.”
Great news for consumers, if a bit odd. Turning the most popular books into loss leaders strikes me as an odd strategy but, presumably, retailers have found this an effective way to get people into the store to buy less publicized titles.
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