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The chain, SA's largest trade book retailer, is being sold by its parent company Times Media Group, which has decided to focus on its core media assets. (It owns the FM, for one.)

A national cultural asset of sorts, Exclusive Books began as a single store opened by Pamela and Philip Joseph in 1973 in Pretoria Street, Hillbrow. The store quickly became a favourite for book lovers, as Jonathan Ball, CE of Jonathan Ball Publishers, reminisces.

"Hillbrow in those days was extremely vibrant. It was like London's Soho. There were boutiques, music outlets and lots of restaurants. Their store was extremely successful. People could go in there with their shopping and browse," he says.

Another store was opened by the couple in Cape Town before they sold their business to Premier Group.

The Josephs moved to the UK, where they established Books Etc, which was sold to Borders UK and then to Waterstones.

On the home front, Exclusive Books became a division of CNA Gallo, later renamed Millennium Entertainment Group Africa (Mega), eventually making its way into the book division of Times Media Group, known in earlier incarnations as Avusa and Johnnic.

Exclusive Books, with close to 50 outlets around the country, has no direct bricks-and-mortar competitor - CNA, with more toys and stationery, is only partly a rival. But this advantage has not been enough for Exclusive Books.

Investments to equip itself in the face of a rising e-book market, coupled with high costs and a slowdown in discretionary spending, have weighed heavily on profit.

Patrice Rassou, head of equities at Sanlam Investment Management, says Exclusive Books has been a "difficult" business to run.

News of sale causes some instability

"Like most retailers, it has its place, but I think it has got too big in terms of space and too widespread. As a focused offering it would make sense, but its range is way too big. In addition, with the Kindle and iPad, e-books are a huge threat to the business model. Exclusive Books online never got going, so it had its lunch eaten by Naspers-owned Kalahari," he says.

The company's e-book website, Exclusives.co.za, which cost around R30m, was seen as a grave error, given that it was trying to take on the monolithic online bookstore Amazon, which has been dominating the e-book market with its Kindle e-reader.

The news of Exclusive Books' sale has caused some instability in the book sector.

Pan Macmillan SA MD Terry Morris says any uncertainty is unsettling. "Exclusive Books is a major, and in most cases the largest, customer for all publishers. It focuses on range and buys across the genres, so the health of its business is of concern and vital to our own businesses," she says.

The disposal of Random House Struik, also on Times Media Group's "for sale" list, is likely to be straightforward.

"I think it's a safe assumption that Random House UK would see the benefit of owning 100% of the shares of a successful commercial business it is already deeply involved in," says Random House Struik MD Steve Connolly.

German media group Bertelsmann and UK-based Pearson this week completed the merger of their trade book publication arms, Random House and Penguin, to create a new publishing giant, Penguin Random House.

It is understood that Exclusive Books will be sold through an auction process.

Wanting a real bargain

CNA, owned by unlisted Edcon, and industrial group Bidvest are believed to be among the interested parties. Both companies have said they don't comment on market speculation.

Kagiso Asset Management research head Abdul Davids says the Exclusive Books retail format would suit a departmental format retailer like Edcon, while the prime retail footprint would be attractive to most other retailers.

Rassou says Edcon "would not be able to throw money at such an acquisition".

"Bidvest CE Brian Joffe is a hard negotiator, so I expect him to want a real bargain. Also, Naspers got burnt in Brazil in print media and I can't see them buying a dying business when their focus is e-commerce," Rassou says.

One industry expert says Exclusive Books is being restructured to make it attractive enough for sale.

"Exclusive Books was very top-heavy when it came to resources and costs. There is a lot of pressure from 'upstairs' to slim down costs because they just want to get rid of it. There has been a mass exodus of staff in the head office and a lot of internal politics. Some store managers have left too. Staff are scared and uncertain," he says.

The beginning of the retailer's new chapter is imminent, and most are hoping its new owner will know and love books.

"The best buyer would be someone who has an understanding of the book business and sympathy for book retailing. The wrong kind would be someone who would want to bring in and incorporate toys and stationery and change the focus of the business," Ball says.

Much like their global counterparts, booksellers and publishers operating in SA are adapting their businesses as they face many challenges.

The biggest seems to be the emergence of digital reading, which many predict will lead to the death of print.

According to David Walter, research and development analyst for Nielsen BookScan, book sales around the world are in general decline. In 2012 they were down 9,3% in the US, 3,4% in the UK and 8,8% in SA.

Very simply, the proliferation of digital reading devices means people are choosing to access content in a different way. While purists may cling to the sensory comfort of hard copy, the new medium does bring the benefits of convenience and affordability. For every 100 print books sold through the site, Amazon last year sold 114 titles for its Kindle e-reader device.

Publishers need to embrace digital

Realistically, for publishers, the e-book is just another format of the book and a different distribution channel, and to stay relevant they just need to release digital versions of everything they produce.

"I think there will be a levelling out of the enormous growth we've seen in ebooks in the short term, following the same pattern as in the US and UK. The big question is how a younger generation who have grown up with digital devices will interact with books and whether that will be on digital platforms or in bookshops with the print versions in the future," Morris says.

In SA's consumer books market, consulting firm PwC forecasts that e-books will account for 8% of the consumer market in 2017, up from 2% in 2012.

Vicky Myburgh, entertainment and media industries leader for PwC Southern Africa, says that though e-readers and tablets have gained more acceptance in the middle and higher-income market segments, the majority of the population don't own such a device or have access to broadband.

"The impact of e-books on the SA market overall will remain limited in the next five years," she says.

Perhaps fears over digitisation sending the printed format to an early grave were exaggerated and the tactile experience of holding a physical book is to be relished for some time to come.

The local publishing industry faces more tangible baddies in the form of SA's high illiteracy level and school book problems. Despite the large number of learners in the schooling system, the education sub sector, which accounts for about 64% of the publishing market, worth about R1,5bn annually, is dwindling because of the lack of a cohesive national policy.

Source: Financial Mail, via I-Net Bridge