Waldenbooks opens new chapter with Preferred Reader program

Discount Store News, March 12, 1990

Waldenbooks Opens New Chapter With Preferred Reader Program

STAMFORD, Conn. -- Waldenbooks is turning up the heat on its competition with its new Preferred Reader program, designed to make the 1,555-unit book retailer the store of choice for people who buy books.

For a $10 annual fee ($5 during March), Waldenbooks is now offering 10 percent off every book purchase and a $5 coupon for every $100 of accumulated purchases.

In addition, Waldenbooks is offering members various customer services including rapid check acceptance, personalized mailings and a toll-free order number, among its enticements to sign up for the program.

The Preferred Reader program, which became effective March 5, is not available at Readers Market locations, which are the book departments that Waldenbooks operates for its corporate parent in many K mart stores.

For some of Waldenbooks' competitors, matching the program could be the equivalent of cutting their own throats as they try to match the industry leader and offer bigger discounts on books.

However, in order to stay competitive with Waldenbooks, B. Dalton Bookseller, with over 800 stores, and Crown Books, with 250 units, will, reluctantly, offer similar programs. Their moves will effectively eliminate Waldenbooks' competitive advantage and may even jeopardize their quest for enlarging its market share.

"This program is designed for our customers," said Ron Jaffe, senior director of marketing for Waldenbooks. "We're not trying to get into war with anyone."

For Harry Hoffman, Waldenbooks president and chief executive officer, the Preferred Reader program was designed "to provide customers with value-added services that will make Waldenbooks the preferred store for book buyers."

How successful that quest will be for Waldenbooks is unknown. B. Dalton Booksellers had been testing a preferred reader program of its own for over a year in 30 of its stores in Dallas. And its 24-unit Bookstop division has had a membership card similar to Waldenbooks for years. Both failed to produce convincing results, said Leonard Riggio, who co-owns and runs the company.

"If there was clear evidence it was successful, we would have rolled it out nationally. But we found you lose more in discount than you pick up in increased sales," said Riggio.

Crown Books said if Waldenbooks' new discount program really does provide added value to customers it will offer a program that provides "an even better value," said president Robert Haft.

A much smaller book retailer, Encore Books, the 48-unit discount book store division of Rite-Aid Drug Stores, will not react to Waldenbooks' new program, said Brian Weese, general manager.

Weese said Encore already discounts books at levels Waldenbooks is now implementing and won't lower prices further or add a preferred readers program of its own.

The crux of Waldenbooks' Preferred Reader program is its data-based marketing, said Jaffe. Waldenbooks will now store buying habits information on each Preferred Reader via a customized and bar coded membership card used in each transaction.

Personal information on the frequent customer, such as favorite topics, is also obtained when the customer registers for the program. All information is stored in Waldenbooks new computer system.

Waldenbooks developed its own software program to extract and store customer profile information, said Jaffe. The information will be used to track customer purchases and for direct mailings and special buying programs.

Exactly how much the new program will impact the bottom line at Waldenbooks Jaffe would not say. Nor would he comment on projected sales increases from the program. Yet, from just the annual membership alone, the payback could be tremendous.

Currently, Waldenbooks maintains a preferred readers list of 3.5 million customers. They are members of Waldenbooks' science fiction, romance, mystery, 60 and kids preferred reader programs.

With the official beginning of Preferred Readers March 5, Waldenbooks will offer only one preferred readers program. Existing members can convert their membership at no charge to the new program for the first year, or remain in their existing program. However, no new members to the old programs are being accepted, said Jaffe.

Only members in the 60 program become lifetime members when they pay the $10 fee.

Retail book sales for 1989 were estimated to be $9.6 billion, up from $8.6 billion in 1988, according to the Book Industry Study Group. For 1990, book sales through all general retailers is estimated to total $10.8 billion.