Christian Retail 2018 Year in Review

Christian Retail 2018 Year in Review Bright Spots Amid Changes Analysis of $63 million in sales, 2.2 million consumer receipts, and 125 surveyed retailers reveals the leading trends of 2018 and identifies top strategies for Christian retail success in 2019. Bright Spots Amid Changes

2018 was quite a headline-making year for Christian retail. Between the trade organization shake-up then disappearance, industry-wide technology launches, marketing group leadership changes, publishing mergers and acquisitions, store closings and openings, and new releases that flew off shelves surpassing sales projections—the list of major Christian retail news stories is long. But stories don’t paint the entire picture. This report provides data and insights into the state of Christian retailing in 2018 and reveals key lessons retailers and brands can take away from them for the future.

Findings including: • Leading trends in product categories • Comparisons of bestsellers across channels • Analysis of 2018 Christian Retail sales • Shifts inretailer outlook • Trends in retail needs and marketing spending • Strategies for reaching new audiences

2018 Christian Retail Year in Review 3 06 Top 2018 headlines

08 Leading trends in product categories

14 Comparisons of bestsellers across channels

25 Analysis of 2018 Christian Retail sales

29 2018 Christian retailer survey results

30 Strategies for 2019 success

39 A note from Greg Squires

40 Methodology & sources

2018 Christian Retail Year in Review 4 “ ” GET IT LOCAL HACHETTE TOYS R US ABA INDIES ADD ACQUIRES CLOSES; 96 STORES TODAY RETAILERS GRAB FOR AND REPORT PROGRAM LAUNCHES WORTHY TOY SALES 5% YOY INCREASE* MUNCE ANNOUNCES NEW CHRISTIAN RETAIL ASSOCIATION LIFEWAY’S 2018 RAINER TO HEADLINES STEP DOWN PRINT BOOK AS CEO SALES RISE CBA

FOR 6TH SELLS, 46% OF CHRISTIAN RETAILERS B&N YEAR IN A ROW, DROPS STAFF * FIRES RELIGION OUTPACES AND GOES DARK BY 2%* UP OR FLAT CEO & SEEKS A BUYER

AMAZON MAILS AMAZON POTRATZ SELECTS DAIGLE TOPS STORE COUNT RISES NEW LEADER PRINT CATALOGS BILLBOARDS AT THE PARABLE GROUP TO MILLIONS OF HOMES TO 18 *SEE SOURCE ON PAGE 32 Industry leaders reflect back on 2018

“With the changes at CBA, we are glad to see greater “Independent Christian stores are lighthouses in their com- collaboration among the marketing groups this year. We munities—serving as important community centers, while believe this will unify the industry and have a positive connecting consumers with life-changing content. ABA has impact on the Christian bookselling channel.” seen a resurgence in independent bookstores as they have adapted to the changing retail marketplace. We’re seeing – Sharon Heggeland, Tyndale House Publishers similar results on the Christian retail landscape; Christian stores are adjusting to the “new realities” of retail in our “We were pleased to see the Get It Local Today program day and are finding success in serving their customers as go live in 2018. We are making it a priority to support the they move into the future.” program, which provides a meaningful way for publishers to drive foot traffic to local stocking bookstores.” – Chuck Wallington, Covenant Group

– Tom Knight, HarperCollins Christian Publishing “It was heartening to see that print books sales increased for the 6th year in a row. The truth is that people still love to read…and buy books!”

– Barry Berglund, Parables, Omaha, NE

2018 Christian Retail Year in Review 6 Leading trends in product categories

2018 sales data from U.S. Christian retailers across marketing groups, church stores, and other independents as reported to Parable- Connect yielded some key takeaways.

2018 Christian Retail Year in Review 7 Books and 2018 Market Share by Units 2018 Market Share by Dollars Bibles (Christian Retail) (Christian Retail)

% % Other 1 % continue Church Supplies 8% Church Supplies 8 Other 0 Movies 3% Movies 3% Music 4% Music 4% to be a % Cards 5 significant Books % Books Cards 35 38% portion of 16% Gifts 24% sales. Gifts Bibles 26% 20% Bibles 7%

Note: Identifiable sales data from U.S. Christian retailers across marketing groups, church stores, and other independents as reported to ParableConnect. Source: The Parable Group, Jan. 10, 2019 “Cards” also include Stationery in the category.

2018 Christian Retail Year in Review 8 2018 Bible Translation Market Share (Christian Retail) 40% NIV continues to hold its own 30% NIV 28.9% as the #1 Bible NLT 15.3% KJV 14.7% translation. % NKJV 11.9% 20 ESV 9.9% CSB 3.8% NIrV 2.2% 10% NASB 1.9% CSB market share MSG 1.5% doubled from 4% prior year. 3%

Note: Sales data from U.S. Christian retailers 2014 2015 2016 2017 2018 across marketing groups, church stores, and other independents as reported to ParableConnect. Source: The Parable Group, Jan. 10, 2019

2018 Christian Retail Year in Review 9 2018 Top Adult Book Category Market Share (Christian Retail) 40% Devotional sales Christian Living increased compared Devotionals 30% Fiction to prior years and Women reach bestseller lists. Bible Study 20% Biography Fiction continues to Gift Books Pastoral Helps 10% drive sales. It’s the Prayer third largest book Love & Marriage category and has 6% flattened out the

5% last 3 years.

4% Womens’ books climb 3 years in a row. 3%

Note: Sales data from U.S. Christian retailers across marketing groups, church stores, and other independents as reported to ParableConnect. 2014 2015 2016 2017 2018 Source: The Parable Group, Jan. 10, 2019

2018 Christian Retail Year in Review 10 Just under 1/3 of 2018 Top 10 Fiction Authors by Market Share (Christian Retail) all fiction sales come from these 10 Francine Rivers #1 7.83% authors. Retailers Karen Kingsbury #2 5.89%

who aren’t stocking Terri Blackstock #3 4.52%

complete series Joel C. Rosenberg #4 4.51%

and/or a larger Beverly Lewis #5 4.07% selection of titles Wanda E. Brunstetter #6 3.25% from these authors Tracie Peterson #7 are likely missing 2.43% sales opportunities. Colleen Coble #8 2.16% Sharon Garlough Brown #9 1.97%

Irene Hannon #10 1.88%

Note: Sales data from U.S. Christian retailers across marketing groups, church stores, and other independents as reported to ParableConnect. Source: The Parable Group, Jan. 10, 2019

2018 Christian Retail Year in Review 11 2018 Top 10 Non-Fiction Authors by Market Share (Christian Retail) New releases drive backlist Sarah Young #1 4.8% sales. Don’t miss Max Lucado #2 2.75% potential sales Joyce Meyer #3 2.13% by having limited Lysa TerKeurst #4 1.24%

Priscilla Shirer #5 1.24% selection of these

David Jeremiah #6 1.07% author’s backlist

Billy Graham #7 1.03% books.

Jack Countryman #8 0.93%

Gary Chapman #9 0.73%

Bob Goff #10 0.64%

Note: Sales data from U.S. Christian retailers across marketing groups, church stores, and other independents as reported to ParableConnect. Source: The Parable Group, Jan. 10, 2019

2018 Christian Retail Year in Review 12 Comparisons of bestsellers across channels

Some interesting takeaways can be found with deeper analysis of not only the Christian Retail bestseller lists, but also the NPD BookScan™ data. Here are some findings across product categories, release dates, and overall differences between Christian and mainstream bookstores.

2018 Christian Retail Year in Review 13 I Can Only Imagine Provident Love Does Thomas Nelson 1 Distribution 11 Bob Goff Publishers

I Can Only Imagine the Provident The Jesus Storybook Bible Zondervan Top 20 2 Best of Mercyme Distribution 12 Sally Lloyd-Jones MercyMe

Jesus Calling Thomas Nelson God Will Carry You Through Thomas Nelson Publishers Publishers Products 3 Sarah Young 13 Max Lucado

NIV, the Story Zondervan The Beginner’s Bible Zondervan 4 14 of 2018

Look Up Child Capitol Christian Jesus Always Thomas Nelson 5 Lauren Daigle Distribution 15 Sarah Young Publishers (Christian

Unshakable Hope Thomas Nelson War Room Provident Distribution 6 Max Lucado Publishers 16 Retail) God Hears Her Discovery House 10 Comics Walk Into A Church Crown Entertainment 7 Our Daily Bread Ministries 17

Jesus Always Small Deluxe Thomas Nelson Christmas Presence The Parable Group 8 Sarah Young Publishers 18 Lucid Artist

Everybody, Always Thomas Nelson The 5 Love Languages Moody Publishers 9 Bob Goff Publishers 19 Gary Chapman

Uninvited Thomas Nelson Awaken, Deluxe Edition B & H Publishing 10 Lysa TerKeurst Publishers 20 Priscilla Shirer Group Note: Sales data from U.S. Christian retailers across marketing groups, church stores, and other independents as reported to ParableConnect. Source: The Parable Group, Jan. 10, 2019 2018 Christian Retail Year in Review 14 Key Takeways - Christian Retail Bestsellers

Physical music and movies are not going away Devotionals Draw and Delight 30% of the Top 20 products sold at Christian Retail 25% of the top 20 and 15% of the top 100 were in 2018 were media (CD or DVD.) Looking beyond devotionals, dominated by Sarah Young. the top 20, there are even more media - 10% of the top 50 and 25% of the top 100 are CDs or DVDs. Bibles are always Bestsellers Despite the domination of streaming movies and While Bibles only represented 1 of the top 20 and music, both seem to be moving at Christian Retail. 8% of the top 100 bestselling products in 2018, that “We are not getting out of the physical game any is largely due to the numerous bindings surrounding time soon! When half the sales of many Christian a single title, somewhat diluting the overall best- artists are found in physical sales, this is still a sellers presence of the Word of God. Bibles viable, and vital, category.” still make up 20% of all identifiable sales. - Blake Davis, Capitol Christian Music Group.

2018 Christian Retail Year in Review 15 Frontlist vs. Backlist

Frontlist Backlist Sold at Christian Retail 15% 85%

Christian Products Sold Everywhere 45% 55%

Surprising Statistics Backlist Booming Frontlist Lacking 15% of the top 20 products in Christian It also shows that Christian Retailers One Christian publisher suggested Retail released in 2018. NPD BookScan™ are a major source for backlist breadth. that “Christian retailers tend to place (for products sold everywhere) reveals Nearly 52,000 unique book ISBN’s were low initial orders and stock lightly on that 45% of the top 20 Christian titles sold in stores in 2018. new titles. With low sell-in, publishers were released in 2018. It appears that adjust their print count, which can frontlist product are moving faster cause the product to be out of stock outside of Christian retail. when retailers reorder. This can become a self-fulfilling prophecy; if you don’t have the product, customers get trained to believe it won’t be there and look elsewhere.”

2018 Christian Retail Year in Review 16 Strategies for Improving Frontlist Sales

Data can help you identify top Front-of-store positioning is vital Special offers drive traffic. new releases. for new releases. Getting the customer in the store with Christian retailers can see comparative It communicates to customers that enticing offers on new releases and data on ParableConnect and discover your store continuously offers new priority backlist is crucial to driving all what’s selling inside and outside of CBA and interesting products. business. Become a destination for and see what they may be missing out these great finds to prevent customers on – especially frontlist product. from looking elsewhere.

To watch a demo of ParableConnect click here or visit: www.parableconnect.com

2018 Christian Retail Year in Review 17 Channel Comparison: Bestselling Books Top 20 Religion Books (NPD BookScan™) Top 20 Books of 2018 (Christian Retail) RANK TITLE AUTHOR PUBLISHER RANK TITLE AUTHOR PUBLISHER

1 Magnolia Table Joanna Gaines William Morrow & Company 1 Jesus Calling Sarah Young Thomas Nelson Publishers

2 Girl, Wash Your Face Rachel Hollis Thomas Nelson Publishers 2 Unshakable Hope Max Lucado Thomas Nelson Publishers

3 Homebody Joanna Gaines Harper Design 3 God Hears Her Our Daily Bread Ministries Discovery House

4 The 5 Love Languages Gary Chapman Northfield Publishing 4 Jesus Always Small Deluxe Sarah Young Thomas Nelson Publishers

5 Jesus Calling Sarah Young Thomas Nelson Publishers 5 Everybody, Always Bob Goff Thomas Nelson Publishers

6 Everybody, Always Bob Goff Thomas Nelson Publishers 6 Uninvited Lysa TerKeurst Thomas Nelson Publishers

7 Total Money Makeover Classic Dave Ramsey Thomas Nelson Publishers 7 Love Does Bob Goff Thomas Nelson Publishers

8 Uninvited Lysa Terkeurst Thomas Nelson Publishers 8 The Jesus Storybook Bible Sally Lloyd-Jones Zondervan

9 It’s Not Supposed To Be This Way Lysa Terkeurst Thomas Nelson Publishers 9 God Will Carry You Through Max Lucado Thomas Nelson Publishers

10 100 Days To Brave Annie F. Downs Zondervan 10 The Beginner’s Bible Zondervan

11 Anxious For Nothing Max Lucado Thomas Nelson Publishers 11 Jesus Always Sarah Young Thomas Nelson Publishers

12 Jesus Always Sarah Young Thomas Nelson Publishers 12 The 5 Love Languages Gary Chapman Moody Publishers

13 Embraced Lysa Terkeurst Thomas Nelson Publishers 13 Awaken, Deluxe Edition Priscilla Shirer B & H Publishing Group

14 Love Does Bob Goff Thomas Nelson Publishers 14 Starting Your Day Right Joyce Meyer Hachette Book Group

15 Capital Gaines Chip Gaines Thomas Nelson Publishers 15 Jesus Always Large Deluxe Sarah Young Thomas Nelson Publishers

16 The Magnolia Story Chip Gaines Thomas Nelson Publishers 16 Battlefield of the Mind Joyce Meyer Hachette Book Group

17 Boundaries Updated And Expanded Edition Henry Cloud Zondervan 17 Anxious for Nothing Max Lucado Thomas Nelson Publishers

18 There Is More Brian Houston Waterbrook Press 18 The Masterpiece Francine Rivers Tyndale House Publishers

19 Live Fearless Sadie Robertson Thomas Nelson Publishers 19 KJV Standard Lesson Commentary Standard Publishing Company

20 The Rock, The Road, And The Rabbi Kathie Lee Gifford Thomas Nelson Publishers 20 Ending Your Day Right Joyce Meyer Hachette Book Group

Note: Sales data from all retailers as reported to NPD for 2018. Source: NPD BookScan™ Note: Sales data from U.S. Christian retailers across marketing groups, church stores, and other independents as reported to ParableConnect. Source: The Parable Group, Jan. 10, 2019 2018 Christian Retail Year in Review 18 If It’s Selling Elsewhere, Should Retailers Carry It? As Christian products sell in large quantities Further comparison of the NPD BookScan™ bestsellers in the general market, it raises these list to the Christian Retail bestsellers list raises some questions for Christian retailers: questions. Three titles by Christian authors reached BookScan’s top 20. None of those titles showed up on the top 200 Christian Retail list. Joanna Gaines (Magnolia Should retailers consider stocking and Table and Homebody) and Rachel Hollis (Girl Wash Your 1. featuring any of these top-selling products? Face) were favorites in general market bookstores, but absent from Christian Retail bestsellers. How should retailers evaluate what’s right “Christian retailers have been great purveyors of the for their stores and customers and remain content they provide to their consumers. This has 2. true to their values? created trusted places for Christians to shop and find resources to help them in their spiritual journey. At the How can retailers serve all customers same time, there have been best-selling titles that across a broad range of denominations? many Christian bookstores have decided to pass on 3. from their publishing partners that they didn’t think had enough Christian content to fit their store, resulting in Should retailers expand other wholesome missed sales and potentially lost customers.” categories such as cookbooks, business - Dan Van Gorp, HarperCollins Christian Publishing 4. leadership, classic books, etc?

2018 Christian Retail Year in Review 19 Comparison of Top 100 Lists Reveals Stark Differences

Children’s and fiction titles reach top 100 lists Without commitment to a category, sales suffer. 5-6x more in general market than in Christian Retail. As for the difference in children’s book sales, inventory is a key issue noted by publishers. Ken Lorenz of Harvest House Publishers said, “By and large, getting any kind of depth in kids’ books in independent Christian Retail is very hard. In ABA and the chains, I get depth; independents might buy two units of a title. That doesn’t let the consumer know it is worth their attention.” While going deeper is important, so is the breadth of the children’s product in the store. “Broaden the selection and make the kids’ department more welcoming to mothers and kids,” suggested another veteran publisher. “This area could help 30 differentiate Christian retail from general market retail. Kids, fiction and Bibles All Books Books Sold can be Christian retail’s biggest advantages if retailers give it focus.” Sold 6 at Christian Everywhere There are misperceptions about fiction. Retail 6 Cheryl Kerwin of Tyndale Publishing observes, “There is a perception that 35 Christian fiction does not sell in Christian retail any more, stores are convinced they’ve lost sales to online retailers and to the rise of eBooks so therefore they no longer stock it. That just isn’t true. One huge advantage to Christian fiction is how a novel can impact readers deeper than a general market fiction or nonfiction book could. The incredible novels in Christian fiction can be used by Fiction the Holy Spirit to stir the hearts of readers and convey a truth that will stay with the reader long after finishing the book. I think the importance of that message Children’s has gotten lost over the years and the Christian retailers that figure this out will succeed, those that don’t will lose their market share to the general market who is figuring this out and giving more shelf space to this category.”

2018 Christian Retail Year in Review 20 Each channel serves distinct customers. “Every channel has its strengths and customers, and every channel has its weakness,” notes Steve Oates, of Baker Publishing Group. He illustrated a scenario with, “…a Walmart and a Target across the street from each other— they will have pretty much completely different books offered for sale. They laugh about this when I ask them—they really do have completely different audiences and they can’t copy each other and have success. The same is true of CBA stores—they will naturally sell some things well and some things poorly even though they are servicing the same Christian market as other retailers around them.”

Product knowledge is key. Baker Publishing’s Steve Oates adds, “Fiction is a hard space for the Christian Retail stores to compete, and they often don’t add value in terms of knowing the books and what new authors would appeal to the people who are buying a particular author. This is a world where stores can add value, but they need to have real commitment and sophistication to do so, and most don’t. A key area where stores could build is in offering book clubs to gather people into a meeting area in their stores once a month. That isn’t going to happen at Amazon.”

2018 Christian Retail Year in Review 21 Christian Retail Top 20 Kids Products of 2018 Christian Retail Top 20 Bibles of 2018

RANK TITLE AUTHOR PUBLISHER RANK TITLE PUBLISHER

1 The Jesus Storybook Bible Sally Lloyd-Jones Zondervan 1 NIV, the Story Zondervan

2 The Beginner’s Bible Zondervan 2 Premium Gift Bible-NLT Tyndale House Publishers

3 The Complete Illustrated Children’s Bible Harvest House Publishers 3 NIV Compact Bible Zondervan

4 The Action Bible Sergio Cariello David C Cook 4 Adventure Bible, NIV Zondervan

5 Friends with God Story Bible Group Publishing 5 NIV Compact Bible Zondervan

6 Good Good Father Chris Tomlin Thomas Nelson Publishers 6 NIRV, Free on the Inside Bible Zondervan

7 The Prince Warriors Priscilla Shirer B & H Publishing Group 7 Jesus-Centered Bible-NLT Group Publishing

8 Indescribable Louie Giglio Thomas Nelson Publishers 8 Single Column Journaling Bible-ESV Crossway Books

9 Bibleforce: The First Heroes Bible Janice Emmerson Thomas Nelson Publishers 9 Pew Bible-ESV Crossway Books

10 I’m Not a Scaredy Cat Max Lucado Thomas Nelson Publishers 10 Larger Print Bible-NIV Zondervan

11 Jesus Always: 365 Devotions for Kids Sarah Young Thomas Nelson Publishers 11 New Testament and Psalms-KJV B & H Publishing Group

12 Super Heroes Storybook Bible Jean E. Syswerda Zondervan 12 Deluxe Gift Bible B & H Publishing Group

13 Notes from Jesus Mikal Keefer Group Publishing 13 New Testament and Psalms-KJV B & H Publishing Group

14 Good Good Father for Little Ones Chris Tomlin Thomas Nelson Publishers 14 Premium Value Slimline Bible-NLT Tyndale House Publishers

15 The Beginner’s Bible: Timeless Bible Stories Kelly Pulley Zondervan 15 NIV, the Books of the Bible Zondervan

16 It Will Be Okay Lysa TerKeurst Thomas Nelson Publishers 16 Life Application Study Bible NIV Tyndale House Publishers

17 Jesus Calling: The Story of Christmas Sarah Young Thomas Nelson Publishers 17 Deluxe Gift Bible B & H Publishing Group

18 I Can Only Imagine Bart Millard Thomas Nelson Publishers 18 Deluxe Gift Bible B & H Publishing Group

19 Jesus Calling: 365 Devotions for Kids Sarah Young Thomas Nelson Publishers 19 NIV, Thinline Bible Zondervan

20 Jesus Calling: The Story of Christmas Sarah Young Thomas Nelson Publishers 20 New Testament and Psalms-KJV B & H Publishing Group

Note: Sales data from U.S. Christian retailers across marketing groups, church stores, and other independents as reported to ParableConnect. Source: The Parable Group, Jan. 10, 2019 2018 Christian Retail Year in Review 22 The

Christian Retail Top 20 Music of 2018 Christian Retail Top 20 DVDs of 2018 RANK TITLE AUTHOR PUBLISHER RANK TITLE PUBLISHER

1 I Can Only Imagine the Best of Mercyme MercyMe Provident Distribution 1 I Can Only Imagine Provident Distribution

2 Look Up Child Lauren Daigle Capitol Christian Distribution 2 War Room Provident Distribution

3 Christmas Presence Lucid Artist The Parable Group 3 10 Comics Walk Into A Church Crown Entertainment

4 Wow Hits 2018 Various Artists Capitol Christian Distribution 4 Merry Larry and the True Light of Christmas – VeggieTales Capitol Christian Distribution

5 Wow Hits 2019 Various Artists Capitol Christian Distribution 5 Courageous Provident Distribution

6 Worship :Now and Always Lucid Artist The Parable Group 6 Facing the Giants Provident Distribution

7 The Elements Tobymac Capitol Christian Distribution 7 Fireproof Provident Distribution

8 How Can It Be Lauren Daigle Capitol Christian Distribution 8 The Shack Thomas Nelson Publishers

9 Glorious Day Hymns of Faith Casting Crowns Provident Distribution 9 Flywheel Provident Distribution

10 Precious Memories Collection Alan Jackson Capitol Christian Distribution 10 Woodlawn Provident Distribution

11 Lifer MercyMe Provident Distribution 11 Case For Christ Pure Flix

12 I Know a Ghost Crowder Capitol Christian Distribution 12 Saint Nicholas/Toy That Saved Christmas – VeggieTales Capitol Christian Distribution

13 The Very Next Thing Casting Crowns Provident Distribution 13 23 Blast [Cba Exclusive Version] Capitol Christian Distribution

14 Chain Breaker Zach Williams Provident Distribution 14 VeggieTales Noah’s Ark - VeggieTales Capitol Christian Distribution

15 Wow Hits 2018 (Deluxe Edition) Various Artists Capitol Christian Distribution 15 Let There Be Light Capitol Christian Distribution

16 There Is More Hillsong Worship Capitol Christian Distribution 16 It’s a Meaningful Life/Christmas Sing Alongs – VeggieTales Capitol Christian Distribution

17 Adore: Christmas Songs of Worship Chris Tomlin Capitol Christian Distribution 17 Question Of Faith Pure Flix

18 Burn the Ships For King and Country New Day Distributors 18 Stray : A True Story Pure Flix

19 Wonder Hillsong United Capitol Christian Distribution 19 Little Drummer Boy/Star of Christmas – VeggieTales Capitol Christian Distribution

20 Only Jesus Casting Crowns Provident Distribution 20 Do You Believe Pure Flix

2018 POS sales showed a decrease compared with 2017. However, compared with the decreases seen in the past few years, things appear to be moving the right direction. Stores who regularly sent print promotions to their customers out-performed the industry. Response tracked upwards of 16%+. In addition, a larger percentage of retailers ended the year flat or up compared with this same analysis in 2017. (See graph on page 27)

2018 Christian Retail Year in Review 24 Year Over Year Sales Trend Same store sales 0% may be down but 2016 2017 2018 2018 -1% PROMOTING are trending in the STORES* -2% right direction. -3%

-4% “We segmented stores across the industry -5% and those who regularly invested in mailed

-6% promotions saw a significant difference in year-over-year sales, compared with the -7% Promoting stores industry as a whole. The value of print out-performed their peers. -8% promotions is not declining. If anything, *Those who regularly sent print promotions it’s gaining strength. If there are fewer items -9% to their customers in the mailbox, those who choose to use that -10% avenue will win. That’s why everyone from Best Buy to Amazon are moving (or moving back) into print.” Note: Sales data from U.S. Christian retailers across marketing groups, church stores, and other independents as reported to ParableConnect. Source: The Parable Group, Jan. 10, 2019 - Erik Ernstrom, The Parable Group

2018 Christian Retail Year in Review 25 Sales Trend Date Range Receipt Count Sales Despite receipt counts being down at Christian 2018 Y-O-Y -3.8% -3.0% retail, sales did not decline as much. Once customers get in the door, they are finding 2017 Y-O-Y -5.6% -3.6% what they’re looking for and spending more on 2016 Y-O-Y -5.6% -6.0% average than they have in the past, which is a bright spot. This drop in receipt count vs sales 2018 Promoting Stores -2.1% -0.2% demonstrates again the need to attract new customers to our stores.

Sales Trend: Christmas 2018

Attracting customers during Thanksgiving Date Range Receipt Count Sales week is becoming increasingly competitive and challenging. Sale events continue to start Thanksgiving Week: -7.0% -3.1% weeks prior to Thanksgiving. On the flip side, Black Fri/Sat: -9.1% -6.8% Christmas season traffic as a whole fared better than Thanksgiving week, representing that Christmas season: -3.9% -2.9% (Thanksgiving week through Christmas) retailers still have significant opportunity to capture sales in the weeks leading up to Christmas. Note: Sales data from U.S. Christian retailers across marketing groups, church stores, and other independents as reported to ParableConnect. Source: The Parable Group, Jan. 10, 2019 2018 Christian Retail Year in Review 26 Percent of stores Up or Flat compared with the prior year Percent of Christian Retailers who experienced a sales increase from 2016 to 2017, or from 2017 to 2018. “I’m encouraged to see more % 46 stores flat or up this year % compared to While some stores are 33 healthy, there are some prior years.” who are struggling in today’s competitive retail landscape. – Greg Squires, See pages 34-36 for ideas and practical recommendations The Parable for retailers. Group

2017 2018

2018 Christian Retail Year in Review 27 2018 Christian retailer survey results

In October 2018, a consortium of leaders across the Christian products industry (from marketing groups to tradeshow organizers to industry publications) conducted a Christian retailer survey. 125 Christian retailers responded and provided key takeaways regarding their needs, educational priorities, challenges, sales trends, category trends, and overall outlook and sentiment.

2018 Christian Retail Year in Review 28 Sales Volume of Survey Responder

$1M+

% under $250k $750k-$1M 8.9 % 125 16.9 39.5% Christian 11.3% $500k-$750k % retailers 23.4 Store Size of Survey Responder

of all sizes $250k-$500k 7500+ sqft <1500 sqft participated. 10.5% 24.2%

3000-7500 sqft 31.4% 33.9%

1500-3000 sqft

2018 Christian Retail Year in Review 29 Takeaways from the survey

% Succession planning or business exit strategy 18 as a need. What top 3 educational priorities were retailers most interested in? 60% New location or store size as a top 2019 priority. 1. Marketing to new and existing customers 63% Industry future as a top concern. 2. Inventory management 69% Cash management & margins as a top concern. 3. Discovering and When asked about their feeling towards the future: ordering new products

"Healthy, strong “Concerned – 61% future" or "Steady— 39% uncertain about we will carry on" future viability.”

2018 Christian Retail Year in Review 30 More survey results More survey results Retailers report that one of their greatest needs is marketing Active Participation in Marketing Activity to new and existing customers. Most Email Marketing 63% stores recognize their aging customer bases

Print Catalogs 56% and the need to reach new and younger audiences, but only Paid Online Ads 50% a few retailers have active and measurable efforts towards doing so.

2018 Christian Retail Year in Review 31 Cash management and margins Q: As a small Industry future business owner, Keeping up with technology and trends Financials (P&L, etc.)

what are your Staff (retention, engagement, training) top concerns? Business exit strategy Privacy (consumer, staff and yours)

0% 25% 50% 75% 100%

Bibles Q: Which product Gifts Books-Non-fiction

categories have Children’s the greatest future Books- Fiction sales potential? Movies Music

LOW HIGH 2018 Christian Retail Year in Review 32 Marketing to New & Existing Customers Q: Which Discover and Order New Products educational topics Inventory Management Using Data to Increase Profits would interest you Financial Management

at either a convention Succession Planning or via webinar? Employee Care 0% 25% 50% 75% 100%

Cash to bring in more inventory

Q: What are your Better and More Engaged Staff

current needs? Different Store Footprint

Newer/Different POS

Different Store Location

LOW HIGH

2018 Christian Retail Year in Review 33 Opportunities and Strategies for Retailer Success in 2019

Drawing from the 2018 data, analysis, and industry veterans, here are some ideas for Christian Retailers to consider implementing in the year ahead.

2018 Christian Retail Year in Review 34 Avoid being too conservative on big releases. Consider revitalizing your fiction category; it sells. Small initial orders can impact forecasting, print counts, and Take a look at your fiction section to ensure that you have the top long-term sales potential. authors well represented.

When a new title releases, bring in complementary backlist. Regularly check series to make sure there are no holes.

“Upwards of 24% of Amazon’s current retail revenue comes from Consider shelving your fiction section by genre to make sure your customers who first tried to buy the product in-store.” customers can find what they’re looking for.

– Greg Buzek of IHL Group “We have seen a consistent shift back to the printed book and our fiction consumers have not stopped wanting great Christian fiction Review your inventory mix. content. Stores would be wise to put additional focus back on their Evaluate frontlist versus backlist balance and depth. fiction area.”

Assess areas to improve such as fiction, children’s, and general – Dan VanGorp, HarperCollins Christian Publishing market bestsellers. Recognize that CDs and DVDs are still selling in “Over-stocking may be necessary in selected categories so we don’t Christian retail. lose that sale. I understand cash flow is always tight but if you don’t have it, you can’t sell it.” Consider whether you’ve pulled back your media section too far. Make adjustments as necessary. To capitalize on sales, position – Carl Ashizawa, Logos Bookstore of Hawaii ancillary products around top sellers.

CBA retail sustained excellent momentum in the physical music category. When you want to influence someone’s life or provide encouragement with the Christian message, you can’t send them a download card or get them a streaming subscription. You have to get them something they can hold in their hands.” – Rich Serpa, New Day Distribution

2018 Christian Retail Year in Review 35 Find new customers in a broader regional market. Reach new audiences through digital marketing. With fewer stores nationwide, your regional reach might be larger Half of surveyed retailers are not advertising digitally (search and than you think. social media).

Customers are looking for Christian gifts; requests for these products Find someone who can help you run affordable and targeted have reportedly increased in Barnes & Noble since Family Christian local campaigns. Stores have closed. Invest in proven marketing programs. “Heat maps show me where my customers come from. This helps me discover where I could expand my marketing. If I have existing customers Print catalogs continue to drive more dollars than other forms who are making the drive to shop in my store, there are most likely of advertising. others in that same area who don’t know about me – but would also Email marketing continues to be measurable, affordable, and shop my store if they did. Whether I’m going to use digital advertising pays for itself. or putting an ad in that city’s coupon clipper, it’s a more efficient use of my marketing dollars to know where to target.” “Mailing catalogs to our customers is a tangible way to see our – Craig Hall, Arrowhead Parable Christian Store, Johnson City, NY advertising dollars in action. We see the results instantly—both positive and negative. Our sales take a hit if a catalog is delayed even a day or two. But when the catalog hits the homes, we have customers walk through our door with the catalog in-hand, asking for items that are featured. Radio, TV and other forms of nebulous advertising are needed. But catalogs help us sell more products than we normally would. As an example, we sold 17 units of a particular mug during the Christmas season. And in the first two weeks of January, two of the slowest weeks of the year, we’ve already sold 18 of the same mug—because it’s in our catalog.” – Benny Gilliard, Cross Way Christian Supply, Easley, SC

2018 Christian Retail Year in Review 36 Test and try new things. Be proud to be a bookstore. Hiring someone full-time to manage churches could pay for itself Remember that more than half of sales are Bibles and books. many times over. Your local community values you and needs you. If you have space, consider a used book section. According to the survey, 60% of stores reported new location or store size as a concern. “Real estate developers are actually willing to give deals to some If you have the spare space, consider putting it to use. of the independent bookstores because the independent bookstore is a mark of authenticity. You know, we often think about anchors “There is an opportunity for creating margin dollars from used books. as being - a traditional mall, you want to have a Sears or a J.C. Many stores have the space for a used book section. It’s worth testing Penney. But in these city centers, local community growth areas and trying new ideas.” where we’re seeing actually quite a large expansion, bookstores – Dave Lewis, Baker Publishing Group is actually one of those components.” – NPR’s The Indicator podcast Consider more events in your store.

“Events are essential to the health of a bookstore and its relationship with churches. It creates a ‘3rd place’ to gather and discuss issues of our faith. I’ve seen the effectiveness of regular events in bookstores that give the time and effort towards them. One key to success is empowering customers to co-host and invite their friends and neighbors and thanking those customers with a gift.” – Sue Smith, Baker Book House Want more Christian Retail industry updates? Click here or visit www.parablegroup.com

2018 Christian Retail Year in Review 37 A Note From Greg Squires

Our industry is changing—but there are bright spots. Though a sub-set We are stewards of what we’ve been given, and we long for our Master to of retailers have concerns about their future, there are healthy stores say, “Well done, good and faithful servant” (Matthew 25). Let’s trust God that are paying their bills and have a steady and faithful base of with our future, let’s be faithful with the few things He has given us, and customers. Though Christian retail sales are down 3% overall, there enter the joy of the Master. are more stores with sales increases and a positive outlook than prior Friends, I hope you are encouraged by this report. There are opportunities years. Though some titles didn’t meet expectations, there were right in front of us. Bookselling can at times be a tough business but it’s delightful surprises in all categories that drove traffic to stores and a good business and a meaningful ministry. It’s encouraging that people helped lift sales. are reading and they’re demonstrating that they still buy print books. In times like these, we need to recognize we are better together. Our job is to have the items they need and make them easy to find. Our I’ve been so encouraged by Baker’s 2018 book Rooting for Rivals, How job is to make our stores an inviting place to come and engage with a Collaboration and Generosity Increase the Impact of Leaders, Charities, product that could change their life. Our job is not to be Amazon, but and Churches. I’ve personally seen how collaboration increases impact to be what Amazon is not – personal, thoughtful, and relational. when ideas are shared openly, and organizations find ways to support Thank you to all of you who contributed to this report, offering your each other. See how the authors pose these questions: honest response to surveys and insightful comments on noteworthy “What distinguishes generous, openhanded leaders is how they answer news and directional data. I believe it is an example of how collabora- these two worldview questions, ‘Do we believe in a world of scarcity tion and generosity bring about impact for God’s Kingdom. or abundance?’ and ‘Is our focus on our clan or the Kingdom?’ These questions change the way we look at the world and directly impact the May His blessings abound, way we serve.” Greg Squires The book prods deeply and personally into seven vices, which keep us President from being openhanded with “our” things – strategic plans, nuggets The Parable Group of intel, or competitive differentiation - that we believe give us an advantage. But it forces us to ask whose kingdom we’re building for and where our trust truly lies.

2018 Christian Retail Year in Review 38 Methodology & Sources For additional information regarding this report: Sources for 2018 headlines 1. Where otherwise not specified, sales data sourced from ParableConnect. 2018 Christian Retail Survey 2. Sales among ABA member stores are up nearly 5 percent over 2017 Greg Squires https://www.bookweb.org/news/retail-sales-bookstores-october-109339 [email protected] 805-329-4001 3. PW report on print books through Oct 2018 https://www.publishersweekly.com/pw/by-topic/industry-news/bookselling/article/78257-print-unit- 2018 Christian Retail Year in Review Data sales-up-in-2018-to-date.html Erik Ernstrom 4. Amazon mailed millions of print catalogs in 2018 [email protected]

https://www.cnbc.com/2018/11/06/amazon-begins-mailing-printed-holiday-toy-catalog.html 805-329-4005 5. Lifeway’s Rainer to Step Down as CEO 2018 Christian Retail Marketing and Products https://www.nashvillepost.com/business/people/article/21019907/lifeways-rainer-to-stepdown-as-ceo Randy Ross 6. Why The Number Of Independent Bookstores Increased During The ‘Retail [email protected] 805-329-4018 Apocalypse’ NPR’s podcast The Indicator https://www.npr.org/2018/03/29/598053563/why-the-number-of-independent-bookstoresin- PR & Communications creased-during-the-retail-apocalypse Sally Ross 7. Out of Stocks, Out of Luck: How Retailers Alienate Customers and Lose [email protected] Billions Due to Poor Inventory Practices; Greg Buzek; IHL Group; May 2018 805-329-4020 https://www.radial.com/sites/default/files/out-of-stock-solutions.pdf

2018 Christian Retail Year in Review 39