Breakfast Booksellers 2004Canadian Bookseller’s Association

John Pierce– Vice President, Retail Merchandising, PTG

Market Update• Bad news: Book sales down 14.36%

quarter over quarter through Q1 2004• Good news: Worldwide PC shipments

are projected to grow by just over 11% in 2004 and 2005 before slowing to roughly 8% through 2008.

• Good news: Growth in IT spending will continue over the next five years with total expenditures in this market expected to reach roughly $275 billion by 2008.

Market Update (Shameless Plug)

Market Q1 '03 vs. Q1 '04 -14.36%

Pearson Technology Group

-3.39%

John Wiley & Sons -18.42%

Microsoft Learning -4.27%

O’Reilly and Associates -6.65%

Osborne/McGraw Hill -33.18%

All Other Publishers -29.11%

Bookscan Top 3000 Comparisons end of March 2003 vs. end of March 2004

Six Quarter Sales

$-

$50,000.00

$100,000.00

$150,000.00

$200,000.00

$250,000.00

$300,000.00

The Market Cycle

The Consumer Today

2004 Trends• The Digital Lifestyle

— Public Wi-Fi hotspots will continue to proliferate, nearly doubling worldwide to almost 85,000, while WLAN adoption in the enterprise will remain limited due, in part, to security concerns.

— Consumers will continue to merrily embrace new technologies like camera phones, DVD recorders, and broadband, challenging traditional media and consumer electronics suppliers in the process.

— Digital photography is the largest growing consumer category worldwide. Digital cameras sales will near 53 million units in 2004 and sales will continue to grow 15% a year to 82 million units by 2008.

— Apple sold 2 million iPods in 2004 Q4 alone and more than 70 million songs via their iTunes Music Store.

— Juniper Networks predicts that 26 million MP3 players will be in use by 2006

2004 Trends• The next generation of video game consoles is

expected in 2005/2006, but Sony and Microsoft have already laid the groundwork for the future, which involves network-connected gaming.

• Multiplayer network-connected gaming is still a hardcore gamer activity, but with the majority of people under 30 brought up on video games, interactive entertainment will be the norm rather than the exception over the coming decade. Expect 11% CAGR through 2007.

2004 Trends• More than 50% of CFOs say an appropriate level of

security for information and electronic applications is a critical technology issue for their companies, with companies spending an average 8% of their Information Technology (IT) budget on security.

• The overall intrusion detection and prevention (IDP) market is poised to reach $1.3 billion by 2007. In Q4 2003 the total network security market grew eight percent sequentially and grew 15 percent in 2003 over 2002

2004 Trends• Within the next two years, Open Source Databases

(OSDBs) will reach technical parity with their traditional counterparts in key areas, creating opportunities for users to lower the costs of application deployment dramatically, particularly for new projects.

• VoIP takes off, as equipment market grew 21% in 2003 and is projected to grow 305% to $5 billion in 2007.

• Growth of XML and Web Services remains strong, however conflict over what platform to use has hindered consistent growth

• Expect WindowsXP to remain strong, as market waits for “Shoehorn” and ultimately “Longhorn”

Hi

How

Are

You

Fine

2004– What’s Hot, What’s Not?

“In” “Out”

Networking Security, Infrastructure, VOIP, Wi-Fi, Home

Storage, WLANs, Optical, Engineering

Graphics CS Suite 3D, Flash, DTP

Programming

C#, Java, VB.NET, ASP.NET, Patterns, UML, VB 6, Web Services

Some software engineering, Scripting, C Programming, rest of .NET

Certification Cisco, A+ Pretty much everything else

Applications Gaming, Quicken, Gadgets

Everything else

Operating Systems

Windows XP, Mac OSX, Linux

Unix, Older Windows

OS/Databases

Open Source, SQL Server

Big iron, Oracle

What does this mean?

Merchandising &Mix Management

Bookscan Category Review

Merchandising• Tech store, with area to provide for user group

meetings, in store demos, and author chats.• Computing– plan-o-gram for non-technical

stores; utilize very clear, very simple POP to help orient consumers (examples later in this presentation)

• The “hey, buy me” program, to help consumers make decisions rapidly.

• Loyalty card program for tech consumers

• Publisher “value based” display opportunities

Merchandising- Tech Stores

• Signage– Hanging banner over computer book section– Buttons for Staff– “Where is Computing?” poster front of store; perhaps

little computer decals on the floor showing the way to the computing section

• Top Sellers Bay (with signage)• Classics Bay (with signage)• Digital Lifestyles Bay (with signage)• Visual Quickstart Guide Bay (with

signage)• Certification Bay (with signage)

Small Market Merchandising

• Headers by Section– Basics– Small Office/Home

Office– Web/Graphics– Taking it to the

Next Level (prog, etc.)

– MacintoshExam

ple

Sect

ion

Merchandising- Gaming

• 18 pocket rack, with optional six pocket “mini-guide” sidekick

• Posted placard with top 20 game sales(weekly)

What does this mean?

Customers

Customers

• Traffic– where is it coming from, where is it going to, and what type?

• Why aren’t you capturing them, if you are not?

• What is your customer’s pain?• What is the unique value that

you bring, and how are you telling people about it?

What are you doing to

capture new customers?

Questions?