The tranquil atmosphere created by bookshops, where corduroy-jacketed customers are allowed to sink into comfortable chairs with no apparent impetus to buy anything, gives the impression that bookselling is one of the gentler trades in the high street.

But bookshops are the artfully maintained façades for one of the most cut-throat industries in Britain. Bookselling is necessarily tough because there are no significant own-brand books or exclusive products so that customers can only be wooed through clever marketing and ruthless price-cutting.

The costliest example of the struggle for market share is the Harry Potter franchise. Asda’s offer of the paper-back of Harry Potter and the Deathly Hallows for £1 resulted in eight out of ten Harry fans buying their copy from the supermarket, but at an estimated loss of £3.50 per copy. Philip Stone, charts editor atThe Bookseller, suggests that the 29,700 sales cost Asda more than £100,000 in a week.

Other companies cannot compete. The second-cheapest offer is Asda’s online shop, which offers the book for £6.59 (including £2.73 delivery). Tesco’s online price is £7.23 (including £2.74 delivery), undercutting Amazon by 1p. Most other shops have set their price at £8.99.

Amazon, the online-only retailer, is a larger threat to traditional bookshops even than supermarkets. It sold 16 per cent of all books last year, according to research by HSBC. It was beaten only by Waterstone’s, which sold one in five books. W H Smith sold 13 per cent and Borders sold 8 per cent. Supermarkets accounted for 11 per cent between them, with Tesco in first place on 6 per cent.

Mr Stone said that independent bookshops fear that shoppers are treating them like libraries. “People are going into the shop to browse but then go home and buy the book online because it’s cheaper,” he said.

Chain bookshops and supermarkets have more muscle to negotiate better wholesale prices with publishers. Waterstone’s can obtain up to 58 per cent off the cover price. Discounts for independent bookshops are between 45 and 50 per cent.

Waterstone’s may also command up to £45,000 to display certain titles prominently during the climax of the bookselling year at Christmas. The fee guarantees a place at the front of all of its shops and appearances in the company’s newspaper and television advertisements. Cheaper options include a £25,000 fee for a title to be displayed as a “gift book” at the front of stores and at the till, and a £17,000 fee to be one of two titles that are promoted as “offer of the week”.

Anthony Cheetham, chairman of Quercus books, a small publisher, has criticised the high fees for “throttling the distribution of a wider range of high-quality books”. He said: “It’s not a system you can opt out of. If [W H Smith] offer you one of these slots and you say ‘no’, their order doesn’t go down from 1,000 copies to 500 copies. It goes down to 20 copies.”

Independent bookshops, which cannot run such lucrative campaigns, are fearful but not yet threatened with extinction. Last year 72 closed but 81 new ones opened, reversing what had seemed like an inexorable downward trend. In 2006 96 stores closed and only 64 opened.

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