"Attention Shoppers: Building Opportunity Based on Customer Behavior Data” Mass retailers face the challenge of converting general shoppers to book buyers. In this presentation, Tara Catogge, an executive at the leading supplier of books to mass merchants, delivers a data-rich examination of category trends and provide examples of how data-based marketing tools can be used to attract consumers at point-of-sale. Tara also enumerates some of the challenges suppliers and retailers face together as they embrace a culture of collaborative, data-driven decision making.

1. Attention Shoppers: Building Opportunity
Based on Customer Behavior Data
LHE
Of Distribution Excellence

2. Attention Shoppers: Building Opportunity
Based on Customer Behavior Data
“…the brick channel for
printed books continues it’s
inevitable decline into
insignificance”
--Mike Shatzkin

3. Attention Shoppers: Building Opportunity
Based on Customer Behavior Data
“…the brick channel for
printed books continues it’s
inevitable decline into
insignificance”
--Mike Shatzkin

4. Combined, these retailers represent 25% of total US
GDP in 48,000 US locations (that’s a heck of a lot of foot traffic)
Mass Merchants Grocery Specialty
*
*
*
* *
* *
* *
Club Department Drug
*
*

5. 22,082 retail store locations shipped with 1,600 in-house
merchandisers
Sales Breakdown of Distributed Products
Units sold by Category Units sold by Channel
Series Romance
Young Adult Paperback DrugOther
Specialty
Hardcover 2% 1% Department
3% 5%
Grocery 0%
7% Kids Hardcover
27% 7%
Mass Market Distributors
Paperback 8%
20%
Club
8%
Mass
Merchants
Adult Hardcover 69%
Trade
22%
LHE
21%

6. Mass Merchant retailers have very high share of blockbuster
releases/series
TWILIGHT SERIES Market Share
(Avg = 20%)
BREAKING DAWN (HC) 45%
NEW MOON (TP) 50%
TWILIGHT (TP) 43%
ECLIPSE (HC) 46%
ECLIPSE (TP) 60%
TWILIGHT (TP) 67%
TWILIGHT (Movie Tie In) 72%
NEW MOON (HC) 34%
SHORT SECOND LIFE BREE TANN (TP) 49%
TWILIGHT (HC) 34%
NEW MOON (Movie Tie In) 74%
BREAKING DAWN (TP) 63%
NEW MOON (MASS) 75%
ECLIPSE SPECIAL EDITION 26%
ECLIPSE (Movie Tie In) 72%
ECLIPSE (MASS) 78%
TWILIGHT: THE GRAPHIC NOVEL 46%
RECENT TITLES MKT SHARE
DIARY OF WIMPY KID #5 40% LHE
AWAKENED: HOUSE OF NIGHT 52%
HEAVEN IS FOR REAL 25%
ENGAGEMENT IN SEATTLE (MASS) 83%
Life to date sales /BookScan/est. for Walmart

7. Ask the simple questions (that are really
difficult to answer)
1. Where is the opportunity to improve?
lower returns, increase conversions, improve supply chain
2. What questions do we need answered?
Ask the organization and rank the results
6 “Rights” by Sol Price
1. Merchandise—brand equity
authors, local interest
2. Time –maintain in-stock while
avoiding over-stock
3. Price – profitably priced to show a
value to the consumer "I guess I've stolen--I actually
4. Place – merchandising standards to prefer the word 'borrowed'--
maximize sales as many ideas from Sol Price
5. Quantity – just-in-time inventory to as from anybody else in the
maximize turns/GMROII business.“
LHE
--Sam Walton
6. Format (Right Condition) – paper,
audio, ebook

8. Ask the simple questions (that are really
difficult to answer)
1. Where is the opportunity to improve?
lower returns, increase conversions, improve supply chain
2. What questions do we need answered?
Make a list!
3. Are we currently making decisions based on facts?
“There are lies, damn lies, and statistics”
-Mark Twain
nothing will improve until you
change the corporate culture LHE

9. Results-Generating Business Analytics
• We all need to collect data (consumer, customer, category, channel,
format, genre, title) and mine that data to uncover patterns and
derive actionable insights
• Invest in analytics tools to understand trends
• Provide business, operational and financial insight to all parties in
the supply chain
• Collaborate, Cooperate and Redefine Competition
LHE

10. Talk to the Customer (not the database administrator
or business analyst)
SURVEY RESULTS  She is cash-strapped and wants a discount on her favorite author
OPPORTUNITY  “Right-size” the department through category to space analysis
On-Line Book Traditional Mass Merchants /
Primarily female
Shopper Bookstores Shopper Clubs Book Shopper
Female Book Shoppers 65% 58% 72%
Less discretionary
Income < $50k 43% 39% 47% spend
% of Purchases made
because of specific 59% 56% 75%
Author / Series Author (brand) loyalty
% of Books Purchased
32% 15% 34%
because of sale price
% of Purchases Fiction
66% 67% 84%
Category Value shopper
% of Fiction Purchases
Romance / Mystery or 27% 26% 44%
Thriller
Heavy Fiction
% of Purchases Impulse 55% 61% 78% Romance / Mystery /
Thriller buyers
LHE
Very impulsive
Bowker Consumer Pub Track – 2010 Full Year Results

11. How the Customer Learned about the Last
Book They Purchased
100%
90%
25.0%
80% 40.0%
70%
16.0%
Retail Browsing
60%
Personnal Recommendation
8.0%
10.0% Publicity
50%
8.0% Other
40% 15.0% Email
15.0% Online Sources
30% 5.0% Info From Authors Prior Book
4.0%
20% 17.0%
15.0%
10%
10.0% 12.0% LHE
0%
Walmart Target

12. Book Unit Share has not Moved Significantly (print to e) Among Those
that Purchase Books in Mass Merchants
% of Units Purchase
100%
90% 87%
84%
82% 82%
79%
80% 76%
70%
60%
49% 48%
50% 46% 46%
Nov-10
40% Feb-11
30%
20% 17%
14%
12%
8% 9% 10%
10%
LHE
0%
Print eBook Print eBook Print eBook Print eBook
Kindle Owner Amazon (non Kindle) Target Walmart

13. Shopper’s Marketing—Competing for Footsteps
Awareness Discovery Value
• Out of Department • Clear recommendations • Everyday Low Price
placement and brand (author)
awareness
• Price Cuts
• Events
• Repeat visits—tell them
what’s coming • Competitive pricing
• Fixture Signage
• Media Category • Develop new authors in
Advertising Mass Merchant channel
• Online influence • Consistent and directed
merchandising
• Wayfinding
Book Buyer Conversion

14. Improving the In-Store Experience Leads to Double
Digit Sales Increases
Price
Message
Way
Finding
30%
increase in
kids sales 5 – 12%
increase in
LHE
overall sales

15. Promote out of the Department—Increased Awareness
Leads to conversions
Lift During
25% Promotion Post Promotion
20% Pre Promotion Sustained Sales
15%
10%
% Change in $ Sales
5%
0%
-5%
-10%
-15%
-20%
-25%
2/27 3/13 3/27 4/10 4/24 5/8 5/22 6/5 6/19 7/3 7/17 7/31 8/14 8/28 9/11 9/25 10/9 10/23 11/6 11/20 12/4 12/18 1/1 1/15 1/29 2/12 2/26 3/12
Test Group Control Group

16. With limited retail space, and full-face merchandising, Mass Merchants
can drive large sales volumes on emerging and growth authors
Emerging Growth Brand Equity Authors
Lora Leigh Nicholas Sparks David Baldacci
Kressley Cole Kristin Hannah Janet Evanovich
Monica McCarty Linda Lael Miller John Grisham
Karen Marie Moning Lee Child Debbie Macomber
Elin Hilderbrand Robyn Carr Nora Roberts
Lori Wilde Susan Mallery Charlaine Harris
Lara Adrian Vince Flynn James Patterson
Lori Foster Harlan Coben Danielle Steel
Kerrelyn Sparks Cathy Maxwell Sandra Brown
Larissa Ione Mary Higgins Clark
XX% Average XX% Average
Tracy Anne Warren
Bookscan Bookscan Michael Connelly
LHE
Marketshare Marketshare
Clive Cussler

17. Buyer Selections, Book Club Picks and Spotlight Author programs are
helping readers discover new authors
• Wayfinding is necessary
for mass merchants to
attract bookstore
shoppers
• Mass merchants are more
successful in breaking out
new authors in mass or
trade
• Test programs have shown
an average 16% increase
in sales over control group LHE

18. 3 135446 12.99 14.95 22 12 10 2 22 14
4 135446 12.99 14.95 29 18 11 1 29 20
5 135446 12.99 14.95 45 18 27 2 45 31
12 135446 12.99 14.95 21 10 11 33 21 12
13 135446 12.99 14.95 10 5 5 4 10 4
18 135446 12.99 14.95 15 4 11 5 15 8
19 135446 12.99 14.95 34 16 18 12 34 22
24 135446 12.99 14.95 44 7 37 2 44 22
26 135446 12.99 14.95 48 12 36 1 48 28
43 135446 12.99 14.95 28 12 16 2 28 16
44 135446 12.99 14.95 13 4 9 9 13 9
48 135446 12.99 14.95 27 16 11 44 27 15
52 135446 12.99 14.95 14 11 3 5 14 6
55 135446 12.99 14.95 17 9 8 12 17 12
57 135446 12.99 14.95 13 9 4 3 13 8
61 135446 12.99 14.95 46 7 39 66 46 30
64 135446 12.99 14.95 32 30 2 79 32 21
67 135446 12.99 14.95 21 9 12 0 21 14
68 135446 12.99 14.95 17 9 8 2 17 11
69 135446 12.99 14.95 52 24 28 1 52 32
75 135446 12.99 14.95 8 7 1 1 8 3
76 135446 12.99 14.95 35 10 25 2 35 25
78 135446 12.99 14.95 40 10 30 1 40 25
79 135446 12.99 14.95 46 26 20 2 46 28
80 135446 12.99 14.95 20 10 10 33 20 15
82 135446 12.99 14.95 42 16 26 4 42 31
83 135446 12.99 14.95 21 6 15 5 21 13
84 135446 12.99 14.95 17 5 12 12 17 11
85 135446 12.99 14.95 46 12 34 2 46 28
86 135446 12.99 14.95 37 18 19 1 37 30
90 135446 12.99 14.95 13 10 3 2 13 8
92 135446 12.99 14.95 11 5 6 9 11 9
93 135446 12.99 14.95 27 13 14 44 27 17
95 135446 12.99 14.95 6 4 2 5 6 3
96 135446 12.99 14.95 36 11 25 12 36 19
100 135446 12.99 14.95 34 25 9 3 34 21
107 135446 12.99 14.95 34 6 28 66 34 20
108 135446 12.99 14.95 45 9 36 79 45 27
111 135446 12.99 14.95 15 5 10 0 15 11
120 135446 12.99 14.95 11 7 4 2 11 9
137 135446 12.99 14.95 43 8 35 1 43 28
139 135446 12.99 14.95 28 10 18 1 28 16
144 135446 12.99 14.95 28 11 17 0 28 18
145 135446 12.99 14.95 17 9 8 0 17 9
10,000 ft. high
146 135446 12.99 14.95 42 27 15 0 42 23
147 135446 12.99 14.95 20 7 13 0 20 10
151 135446 12.99 14.95 43 27 16 0 43 26
152 135446 12.99 14.95 40 8 32 0 40 28
3 135446 12.99 14.95 22 12 10 2 22 14
4 135446 12.99 14.95 29 18 11 1 29 20
5 135446 12.99 14.95 45 18 27 2 45 31
12 135446 12.99 14.95 21 10 11 33 21 12
13 135446 12.99 14.95 10 5 5 4 10 4
18 135446 12.99 14.95 15 4 11 5 15 8
19 135446 12.99 14.95 34 16 18 12 34 22
24 135446 12.99 14.95 44 7 37 2 44 22
26 135446 12.99 14.95 48 12 36 1 48 28
43 135446 12.99 14.95 28 12 16 2 28 16
44 135446 12.99 14.95 13 4 9 9 13 9
120,000 EXCEL ROWS OF DATA
48 135446 12.99 14.95 27 16 11 44 27 15
52 135446 12.99 14.95 14 11 3 5 14 6
55 135446 12.99 14.95 17 9 8 12 17 12
57 135446 12.99 14.95 13 9 4 3 13 8
61 135446 12.99 14.95 46 7 39 66 46 30
64 135446 12.99 14.95 32 30 2 79 32 21
67 135446 12.99 14.95 21 9 12 0 21 14
68 135446 12.99 14.95 17 9 8 2 17 11
69 135446 12.99 14.95 52 24 28 1 52 32
75 135446 12.99 14.95 8 7 1 1 8 3
76 135446 12.99 14.95 35 10 25 2 35 25
78 135446 12.99 14.95 40 10 30 1 40 25
79 135446 12.99 14.95 46 26 20 2 46 28
80 135446 12.99 14.95 20 10 10 33 20 15
82 135446 12.99 14.95 42 16 26 4 42 31
83 135446 12.99 14.95 21 6 15 5 21 13
84 135446 12.99 14.95 17 5 12 12 17 11
85 135446 12.99 14.95 46 12 34 2 46 28
86 135446 12.99 14.95 37 18 19 1 37 30
90 135446 12.99 14.95 13 10 3 2 13 8
92 135446 12.99 14.95 11 5 6 9 11 9
93 135446 12.99 14.95 27 13 14 44 27 17
95 135446 12.99 14.95 6 4 2 5 6 3
96 135446 12.99 14.95 36 11 25 12 36 19
100 135446 12.99 14.95 34 25 9 3 34 21
107 135446 12.99 14.95 34 6 28 66 34 20
108 135446 12.99 14.95 45 9 36 79 45 27
111 135446 12.99 14.95 15 5 10 0 15 11
120 135446 12.99 14.95 11 7 4 2 11 9
137 135446 12.99 14.95 43 8 35 1 43 28
139 135446 12.99 14.95 28 10 18 1 28 16
144 135446 12.99 14.95 28 11 17 0 28 18
145 135446 12.99 14.95 17 9 8 0 17 9
146 135446 12.99 14.95 42 27 15 0 42 23
147 135446 12.99 14.95 20 7 13 0 20 10
151 135446 12.99 14.95 43 27 16 0 43 26
152 135446 12.99 14.95 40 8 32 0 40 28
STATE BUILDINGS
6 STACKED EMPIRE
HIGH AS
1 DAYS DATA FEED IS AS
Organize the Data so it Becomes Useable

19. 3 135446 12.99 14.95 22 12 10 2 22 14
4 135446 12.99 14.95 29 18 11 1 29 20
5 135446 12.99 14.95 45 18 27 2 45 31
12 135446 12.99 14.95 21 10 11 33 21 12
13 135446 12.99 14.95 10 5 5 4 10 4
18 135446 12.99 14.95 15 4 11 5 15 8
19 135446 12.99 14.95 34 16 18 12 34 22
24 135446 12.99 14.95 44 7 37 2 44 22
26 135446 12.99 14.95 48 12 36 1 48 28
43 135446 12.99 14.95 28 12 16 2 28 16
44 135446 12.99 14.95 13 4 9 9 13 9
48 135446 12.99 14.95 27 16 11 44 27 15
52 135446 12.99 14.95 14 11 3 5 14 6
55 135446 12.99 14.95 17 9 8 12 17 12
57 135446 12.99 14.95 13 9 4 3 13 8
61 135446 12.99 14.95 46 7 39 66 46 30
64 135446 12.99 14.95 32 30 2 79 32 21
67 135446 12.99 14.95 21 9 12 0 21 14
68 135446 12.99 14.95 17 9 8 2 17 11
69 135446 12.99 14.95 52 24 28 1 52 32
75 135446 12.99 14.95 8 7 1 1 8 3
76 135446 12.99 14.95 35 10 25 2 35 25
78 135446 12.99 14.95 40 10 30 1 40 25
79 135446 12.99 14.95 46 26 20 2 46 28
80 135446 12.99 14.95 20 10 10 33 20 15
82 135446 12.99 14.95 42 16 26 4 42 31
83 135446 12.99 14.95 21 6 15 5 21 13
84 135446 12.99 14.95 17 5 12 12 17 11
85 135446 12.99 14.95 46 12 34 2 46 28
86 135446 12.99 14.95 37 18 19 1 37 30
90 135446 12.99 14.95 13 10 3 2 13 8
92 135446 12.99 14.95 11 5 6 9 11 9
93 135446 12.99 14.95 27 13 14 44 27 17
95 135446 12.99 14.95 6 4 2 5 6 3
96 135446 12.99 14.95 36 11 25 12 36 19
100 135446 12.99 14.95 34 25 9 3 34 21
107 135446 12.99 14.95 34 6 28 66 34 20
108 135446 12.99 14.95 45 9 36 79 45 27
111 135446 12.99 14.95 15 5 10 0 15 11
120 135446 12.99 14.95 11 7 4 2 11 9
137 135446 12.99 14.95 43 8 35 1 43 28
139 135446 12.99 14.95 28 10 18 1 28 16
144 135446 12.99 14.95 28 11 17 0 28 18
145 135446 12.99 14.95 17 9 8 0 17 9
70,000 ft. high
146 135446 12.99 14.95 42 27 15 0 42 23
147 135446 12.99 14.95 20 7 13 0 20 10
151 135446 12.99 14.95 43 27 16 0 43 26
152 135446 12.99 14.95 40 8 32 0 40 28
3 135446 12.99 14.95 22 12 10 2 22 14
4 135446 12.99 14.95 29 18 11 1 29 20
5 135446 12.99 14.95 45 18 27 2 45 31
12 135446 12.99 14.95 21 10 11 33 21 12
13 135446 12.99 14.95 10 5 5 4 10 4
18 135446 12.99 14.95 15 4 11 5 15 8
19 135446 12.99 14.95 34 16 18 12 34 22
24 135446 12.99 14.95 44 7 37 2 44 22
26 135446 12.99 14.95 48 12 36 1 48 28
43 135446 12.99 14.95 28 12 16 2 28 16
44 135446 12.99 14.95 13 4 9 9 13 9
830,000 EXCEL ROWS OF DATA
48 135446 12.99 14.95 27 16 11 44 27 15
52 135446 12.99 14.95 14 11 3 5 14 6
55 135446 12.99 14.95 17 9 8 12 17 12
57 135446 12.99 14.95 13 9 4 3 13 8
61 135446 12.99 14.95 46 7 39 66 46 30
64 135446 12.99 14.95 32 30 2 79 32 21
67 135446 12.99 14.95 21 9 12 0 21 14
68 135446 12.99 14.95 17 9 8 2 17 11
69 135446 12.99 14.95 52 24 28 1 52 32
75 135446 12.99 14.95 8 7 1 1 8 3
76 135446 12.99 14.95 35 10 25 2 35 25
78 135446 12.99 14.95 40 10 30 1 40 25
79 135446 12.99 14.95 46 26 20 2 46 28
80 135446 12.99 14.95 20 10 10 33 20 15
82 135446 12.99 14.95 42 16 26 4 42 31
83 135446 12.99 14.95 21 6 15 5 21 13
84 135446 12.99 14.95 17 5 12 12 17 11
85 135446 12.99 14.95 46 12 34 2 46 28
86 135446 12.99 14.95 37 18 19 1 37 30
90 135446 12.99 14.95 13 10 3 2 13 8
92 135446 12.99 14.95 11 5 6 9 11 9
93 135446 12.99 14.95 27 13 14 44 27 17
95 135446 12.99 14.95 6 4 2 5 6 3
96 135446 12.99 14.95 36 11 25 12 36 19
100 135446 12.99 14.95 34 25 9 3 34 21
107 135446 12.99 14.95 34 6 28 66 34 20
108 135446 12.99 14.95 45 9 36 79 45 27
111 135446 12.99 14.95 15 5 10 0 15 11
120 135446 12.99 14.95 11 7 4 2 11 9
137 135446 12.99 14.95 43 8 35 1 43 28
139 135446 12.99 14.95 28 10 18 1 28 16
144 135446 12.99 14.95 28 11 17 0 28 18
145 135446 12.99 14.95 17 9 8 0 17 9
146 135446 12.99 14.95 42 27 15 0 42 23
147 135446 12.99 14.95 20 7 13 0 20 10
151 135446 12.99 14.95 43 27 16 0 43 26
152 135446 12.99 14.95
3 135446 12.99 14.95 22 128 10
40 32 20 22 14
40 28
4 135446 12.99 14.95 29 18 11 1 29 20
5 135446 12.99 14.95 45 18 27 2 45 31
12 135446 12.99 14.95 21 10 11 33 21 12
13 135446 12.99 14.95 10 5 5 4 10 4
18 135446 12.99 14.95 15 4 11 5 15 8
19 135446 12.99 14.95 34 16 18 12 34 22
24 135446 12.99 14.95 44 7 37 2 44 22
26 135446 12.99 14.95 48 12 36 1 48 28
43 135446 12.99 14.95 28 12 16 2 28 16
44 135446 12.99 14.95 13 4 9 9 13 9
48 135446 12.99 14.95 27 16 11 44 27 15
52 135446 12.99 14.95 14 11 3 5 14 6
55 135446 12.99 14.95 17 9 8 12 17 12
57 135446 12.99 14.95 13 9 4 3 13 8
61 135446 12.99 14.95 46 7 39 66 46 30
64 135446 12.99 14.95 32 30 2 79 32 21
67 135446 12.99 14.95 21 9 12 0 21 14
68 135446 12.99 14.95 17 9 8 2 17 11
69 135446 12.99 14.95 52 24 28 1 52 32
75 135446 12.99 14.95 8 7 1 1 8 3
76 135446 12.99 14.95 35 10 25 2 35 25
78 135446 12.99 14.95 40 10 30 1 40 25
79 135446 12.99 14.95 46 26 20 2 46 28
80 135446 12.99 14.95 20 10 10 33 20 15
3 STACKED MT. EVEREST
82 135446 12.99 14.95 42 16 26 4 42 31
83 135446 12.99 14.95 21 6 15 5 21 13
84 135446 12.99 14.95 17 5 12 12 17 11
85 135446 12.99 14.95 46 12 34 2 46 28
86 135446 12.99 14.95 37 18 19 1 37 30
90 135446 12.99 14.95 13 10 3 2 13 8
92 135446 12.99 14.95 11 5 6 9 11 9
93 135446 12.99 14.95 27 13 14 44 27 17
95 135446 12.99 14.95 6 4 2 5 6 3
96 135446 12.99 14.95 36 11 25 12 36 19
100 135446 12.99 14.95 34 25 9 3 34 21
107 135446 12.99 14.95 34 6 28 66 34 20
108 135446 12.99 14.95 45 9 36 79 45 27
111 135446 12.99 14.95 15 5 10 0 15 11
120 135446 12.99 14.95 11 7 4 2 11 9
137 135446 12.99 14.95 43 8 35 1 43 28
139 135446 12.99 14.95 28 10 18 1 28 16
AS HIGH AS
144 135446 12.99 14.95 28 11 17 0 28 18
145 135446 12.99 14.95 17 9 8 0 17 9
146 135446 12.99 14.95 42 27 15 0 42 23
147 135446 12.99 14.95 20 7 13 0 20 10
151 135446 12.99 14.95 43 27 16 0 43 26
152 135446 12.99 14.95 40 8 32 0 40 28
1 WEEKS DATA FEED IS

20. Assign Attributes to the Data
Onix Coding to Capture “Title DNA” (get it right the first time!)
Sorted data relates to space productivity and category trends
“Control Tower” makes sure data tables are populated correctly
Regression and Correlation Analysis is a powerful tool to spot trends (you
can run multiple regressions by loading the Data Analysis Add-On for Excel)
LHE

21. Customer Relationship Management
• Non-linear Regression—
new data points create new
demand outcomes that
feed the supply chain
• Systems Communication—
retailer demand forecasts
need to drive print
quantities so stock is
available at the right time
• Returns—If we’re all
making analytical decisions
based on the same demand
forecasts can we get rid of LHE
the old returns model?

22. The Future of Books in Big Box
Retail (If past events are any indication)
1. Books will Remain an Important Margin Category for Retailers
• Consolidation with electronics and media
LHE

23. Despite tremendous unit growth, the Digital Music Industry represents only 39% of the dollar
sales. Digital Unit Growth has hit a Plateau 7 years after the iTunes launch. Mass Merchants
are still a significant portion of Physical Album Sales
Digital Unit (Physical Album) Market Share
Dollars only 39%
$14.0 $ share 100%
9% 7% 6% 6% 7% 6% 8%
13% 11%
90%
$12.0
$0.1 $0.2
$0.9 80%
$1.6 40% 36% 36% 33%
$10.0 35% 38% 40% 41%
70% 34%
Sales $ (Billions)
$2.4
$8.0 60%
$2.6 50%
1% 3% 5% 8% 12%
$6.0 18% 25%
$11.3 $11.5 $2.7 29%
$10.5 40% 36%
$9.4
$4.0
$7.5 30%
$5.5 52% 51% 48%
$4.3 20%
45% 41%
$2.0 36% 33% 29%
10% 23%
$-
Year of Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 0%
iTunes after after after after after after 2002 2003 2004 2005 2006 2007 2008 2009 2010
iTunes iTunes iTunes iTunes iTunes iTunes
Chain Outlets Non Traditional (On-Line) Mass Merchants Independents
Physical CD (Full + Single) Download (Full + Single + Mobile)
RIAA & Nielsen SoundScan

24. The Future of Books in Big Box
Retail (If the past is any indication)
1. Books will Remain an Important Margin Category for Retailers
• Consolidation with electronics and media
2. Juvenile Space will Increase Significantly Leading into Fall
• Category is growing YOY and Returns are Decreasing
• Mass Merchants have a very high market share in Young Reader and Young
Adult categories
• Mass Merchants will continue to dominate share of novelty, movie tie-in
and event driven publishing events
LHE

25. As Adult Categories Continue to Shift Toward eBooks
More merchandise space is Devoted to Juvenile
100%
3.1% 5.7% 5.6% 3.5% 3.7% 3.8% 3.8% 3.8% 3.6%
90% 16.0%
16.7% 17.5% 19.4% 20.3% 21.4% 22.4% 23.5% 24.7%
80%
70%
31.8%
31.8% 31.1% 31.0% 30.7%
60% 30.4% 30.1% 29.8% 29.5%
% of $ Sales
50%
9.1%
40% 9.7% 9.8% 9.3% 8.9% 8.4% 8.0% 7.6% 7.2%
30%
20% 40.1%
36.1% 36.0% 36.8% 36.4% 36.0% 35.7% 35.3% 35.0%
10%
0%
2007 2008 2009 2010 2011e 2012e 2013e 2014e 2015e
LHE
Hardcover Mass Market Paperback Trade Paperback Kids YA
Historical – BookScan + non reporting chains, $’s extrapolated
Projection – Levy estimate

26. The Future of Books in Big Box
Retail (If the past is any indication)
1. Books will Remain an Important Margin Category for Retailers
• Consolidation with electronics and media
• Some space loss, but not retailer profits
2. Juvenile Space will Increase Significantly as Endcap Space for Adult
Fiction Shrinks
• Category is growing YOY and Returns are Decreasing
3. Market consolidation has historically been good for Big Box retailers
when they can show a value
LHE

27. Similar to music, video, and greeting cards Mass Merchants can get a
bigger piece of a shrinking pie by 2015
100% 2.5% 2.4% 2.3% 2.4% 2.1% 2.2% 2.2% 2.2% 2.1%
90%
18.7% 19.5% 19.6% 19.9% 19.3% 20.0% 21.7% 23.0% 23.8%
80%
70% 16.0%
17.6% 20.1%
24.0%
31.9%
60% 36.7%
% of $ Sales
40.4%
44.4%
50% 48.8%
40%
30% 62.9% 60.5% 58.0%
53.7%
46.7%
20% 41.1%
35.7%
30.4%
25.2%
10%
0%
2007 2008 2009 2010 2011e 2012e 2013e 2014e 2015e
LHE
Retail (Bookstores) On-Line Mass Merchants / Clubs Specialty / Grocery / Drug
Historical – BookScan + non reporting chains, $’s extrapolated
Projection – Levy estimate

28. Excluding the Borders Liquidation, Recent Mass Merchant
Market Shares are Close to Prior Year
100% 2.0% 1.9% 2.2% 2.4%
2.6% 3.0% 2.7% 3.0%
90% 16.1% 15.9% 17.9% 17.8%
20.0% 22.1% 19.9% 21.3%
80%
70% 25.6%
31.9% 22.9% 25.6% 25.0% 22.6%
21.8% 24.5%
60%
50%
40%
30%
56.3% 54.5% 54.3% 53.1% 54.8% 54.7%
50.2% 51.2%
20%
Impact of
10%
Relatively Borders
0% Unchanged Liquidation
LY TY LY TY LY TY LY TY
January February March April
Retail (Bookstores) On-Line Mass Merchants / Clubs Specialty / Grocery / Drug

29. Based on market shifts we estimate print books will still be
over $5.5 billion in 2015
Print eBooks
Books
2010 to 2015 -44% +324%
$12,000 45.0%
$323 39.6%
$96 $161 40.0%
$862
$10,000
$1,768 35.0%
$2,599
$3,171
$8,000 $3,488 30.0%
Book Sales (millions)
eBook Market Share
$3,662
25.0%
$6,000
$10,923 $10,963 $10,884 20.0%
$10,024
$8,520
$4,000 $7,668 15.0%
$6,902
$6,211
7.9% $5,590 10.0%
$2,000
2.9% 5.0%
0.9% 1.5% Print Books
$5.5 Billion
$- 0.0%
2007 2008 2009 2010 2011e 2012e 2013e 2014e 2015e
Total Market Print (Trade Channel) Total Market eBooks eBook Market Share
LHE
Historical – AAP & BookScan (Trade Channel excludes Scholarly,
K-12, University Press)
Projection – Levy estimate

30. The Future of Books in Big Box
Retail (If the past is any indication)
1. Books will Remain an Important Margin Category for Retailers
• Consolidation with electronics and media
• Some space loss, but not retailer profits
2. Juvenile Space will Increase Significantly as Endcap Space for Adult
Fiction Shrinks
• Category is growing YOY and Returns are Decreasing
3. Market consolidation has historically been good for Big Box retailers
when they can show a value
4. Economics of book retailing need to adapt to a new value benchmark
We must abandon the archaic business models of the past
(push strategy) and adopt compatible demand planning and LHE
analytics tools (pull strategy)