Weak dollar: Read all about it

By DEBORAH DIAZ

The truly committed already stretch to $50 for hardback fiction. Will they go past $69.95? Book prices are on the move, thanks to the ugly New Zealand dollar.

Start by adding $3 to $5 onto the standard price of a mass-market paperback, perhaps in time for Christmas.

It's the end of an era. Book prices have been stable for two to three years, with New Zealanders enjoying some of the lowest in the Western world.

A standard paperback costs about $19.95 and a larger paperback $29.95.

These familiar prices settled in after tariffs were removed from books in May 1998.

To remain competitive, publishers - under pressure from retailers who discounted books to claim market share - cut margins by 4 to 5 per cent to compete.

Yes, the open market's been good for book buyers, but the world's currencies are struggling against the mighty greenback and the pain starts now.

Paper prices and production costs are also on the up. Soaring oil prices are flowing through from distributors and cargo ships.

About two-thirds of books sold in New Zealand are imported, while half to two-thirds of locally published books are printed overseas.

Tony Harkins, managing director of publisher Penguin, explains: "With imported books, standard prices are rising overseas, while the exchange rate has gone down. New Zealand books printed offshore are under the same pressures. Even those printed here are in a similar position as papers, inks and technology are all imported."

It is, says Random House managing director Michael Moynahan, a double whammy.

Fran Stanley, general manager of retailing for Blue Star (the company which owns Whitcoulls, London Bookshop and Bennetts stores) says publishers are talking seriously about adjustments, though when and by how much is harder to tell.

"Publishers don't generally give us a lot of warning. It can happen overnight."

It will be interesting to watch how the market handles the upward pressure.

Competition between retailers and consumer resistance will push back.

New Zealanders don't like paying more than $20 for a paperback, creating a ceiling for mass-market product. We're also attached to numbers that end with 95c.

Tony Moores, business manager (NZ) at Paper Plus, says aggressive discounting, which can shave 10 per cent off margins, is likely to continue.

Harkins says: "If you do a straight conversion from a UK price and add GST, you usually get a number significantly above the current New Zealand market price. There's much debate as to why. It's clearly what retailers believe people will pay.

"You can't entirely say it's because of one factor or another. All sorts of things are involved. The market is dominated by major retailers using prices as a promotional tool. That's why the latest Harry Potter, which had a recommended price of about $45, went down to $20."

Tony Moores: "I think it's a psychological barrier rather than a real one, and some prices have gone beyond that already. The key thing is whether people perceive value for money. If it's an airport or a beach read, they might part with $20, but not $30. Paperbacks and kids' books are especially sensitive."

Committed book buyers have always stretched beyond. Diehard fans have to have the latest sports or rock biography. At Unity Books, manager Jo McColl ponders how the fans would respond if the latest Margaret Atwood climbed by $10 in price, to $59.95. And who will buy fiction at $72.95?

"You'd have to really, really want it."

Pressures were showing even before the dollar hit its all-time low.

Penguin's second print run of the Janet Frame biography, Wrestling with an Angel, retailed at $59.95, rising from $49.95 in the first print run to cover rising production costs.

Fergus Barrowman, of Victoria University Press, says things have been "poised rather trickily."

The boutique publisher is about to release a biography of Nola Luxford, Angel of the Anzacs. Production costs have risen by 10 per cent in nine months (other publishers report a similar increase), but he is already committed to the original advertised price $39.95.

"Margins have been slender, and it's not going to become easier," says Barrowman.

It's not just New Zealand. In the United Kingdom standard paperbacks are moving from £5.99 to £6.99. That roughly adds $3 here before you factor in the New Zealand dollar's fall against sterling. A £5.99 book translates to $24.06, with GST, a £6.99 book to $28.

Michael Moynahan says, "The UK prices will hit prices here. It's been sporadic as far as Random House goes - we've been trying to do it gradually, but the industry can't continue to absorb increases."

Price increases affect the size, range and flavour of the books on the shop shelves. Production costs have already turned the public against hardback books in the past few years.

At Unity Books, McColl is making decisions about what to bring in for Christmas. Hardback novels which would have retailed at $59.95 are translating to $72.95 under the wounded dollar.

"I won't bring in as many," she says.

Fergus Barrowman: "This year we have found the large booksellers to be more cautious in their buying. They don't want to take the risk."

Opening orders are smaller. Booksellers buy more only if a book sells well, leaving gaps between runs. Potentially that can result in a greyer, less various business. "My impression is that new books are not as prominent in stores as they used to be."

Publishers and sellers agree that the books to suffer the most are the serious and the specialist. History and poetry aren't the stuff of a Mother's Day blockbuster. But Hodder Moa Beckett managing director Kevin Chapman says even the "seriously successful" Men in Black almost didn't get a second run.

"A reprint should be more profitable than the original book, but we seriously considered not printing it because the costs had gone up."

The publisher trimmed its programme a year ago.

"The general feeling was we were overpublishing, due to a lot of things, but the subsequent drop in the dollar has shown it to be the right decision."