E-reader 'not dead', says analyst, after Waterstones exit

GfK says form factor has a future despite 37.5 per cent drop in sales this year

Waterstones' reported decision to cease stocking Amazon Kindles is a sign the e-reader market is mature rather than in terminal decline, according to analyst GfK.

According to The Bookseller, Waterstones is pulling Kindles from its shelves in response to "pitiful sales" and to accommodate a rebound in the sales of traditional paperbacks and hardbacks.

Carl West, supply chain director at analyst GfK, predicted Waterstones will not be the last high street giant, or manufacturer, to flee the market but expressed confidence that e-readers are not in terminal decline.

"The e-reader has hit maturity but I don't believe it's dead," he said.

In the report, Waterstones' managing director, James Daunt, likened the device to an "inexplicable bestseller" that suddenly falls out of fashion and leaves retailers stuck with unwanted stock.

According to GfK, UK sales of e-readers fell 35.7 per cent in volume and 24 per cent in value sales in the first eight months of 2015, year on year.

Although an analyst quoted in the Bookseller story suggested that e-readers "may turn out to be one of the shortest-lived consumer technology categories", West argued the product does have a future.

"There is still desire for this type of product. It is lightweight, has a long battery life and its biggest selling feature is the ability to see in sunshine, which tablets still struggle with," West (pictured) said.

"I think you'll see some of the A-brands and non-core brands pulling out of the segment - and you'll see the same with retailers. That will leave you with a couple of brands that will do steady volumes at an increased average selling price (ASP) - the market will go back to a premium-type product."

E-reader ASPs are £15 higher than 12 months ago, West said, but he added that resellers and retailers operating in the sector will have to settle for slowing sales as it matures.

"The fundamental issue is this is now a mature market, with quite a bit done online by direct players," he said. "The replacement cycle is quite long on these devices - three, four or five years - and unless it's broken or stolen, or been gifted, there's not a huge impetus to replace."

Jeremy Davies, co-founder of analyst Context, said Waterstones had got its strategy spot on.

"When e-readers came along, they were an absolute threat to Waterstones and it embraced the enemy," Davies (pictured) said. "They were quite right to do that and ride that wave. Now people want to get back to books and I imagine the board at Waterstones will be saying 'well done, guys'."

After growing 60 per cent in Q1, 2014, e-reader sales through distributors in Europe shrank by 0.2 per cent in Q1 2015 and were broadly flat in Q2, according to Context data Davies cited.

"This is exactly the way consumer technology goes," he said. "It is a boom-and-bust category."