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Technology killed bookstore chains. Can technology save indie bookstores?

31 July 2016

From The Seattle Review of Books:

It’s great when the received narrative gets disrupted, and Oren Teicher, the CEO of the American Booksellers Association (ABA), has heard more than his share during his long tenure at the independent bookstore trade group, where he’s been the boss since 2009 and in other positions before that. The story that is told, news cycle after news cycle, is that indies were always just about to be wiped off the face of the country because of a new challenge.

First, he says, it was that the B. Dalton and Waldenbooks outlets in every mall would kill local stores. Then, the big boxes like Barnes & Nobles and Borders. After that, the deep discounters like Crown Books. And onward to mass merchandisers like Walmart and membership stores like Costco. And, finally, along came Amazon, he says, followed by Amazon selling ebooks.

But after years of shrinking sales and locations, indie stores have seen a slightly accelerating tick upwards since 2009 in new businesses, more stores, a bigger slice of the retailing pie, and a growth in overall revenue. Teicher cites several reasons, but one of them is the same wave of technology that, the story was supposed to go, would drown non-chain stores once and for all.

. . . .

Indie bookstores have taken a truly big hit in the last 20 years, but the trends cited account for only a portion of the roughly 4,000 independently owned stores (including small chains) shrinking to under 2,000 by 2011. Two recessions didn’t help any independent retailer, bookstore or otherwise, and deep bricks-and-mortar and then online discounting certainly bit into sustainability for all kinds of retailers, even those that had been around for many decades — or more than a century. And skyrocketing real-estate costs since the last economic dive, especially in major cities, put a squeeze on stores that didn’t own buildings or have favorable landlords. “You can’t put the bookstore out in the middle of nowhere,” Teicher says.

. . . .

But it’s easy to miss in the “indies failing” story the fact that thousands of mall and big-box locations also closed, starting before the big decline in independents. Crown Books went early, by 2001, from almost 200 stores at its peak. B. Dalton had its most stores (800) in 1986, and shrunk over the next 25 years. Waldenbooks at one time had over 1,200 outlets; when it was sputtering in 2010, it had fewer than 300. Borders, its parent company, had about 500 Borders-branded locations before it shuttered in 2011, taking the rest of Waldenbooks with it.

One analysis, using Labor Department and other data, puts the peak number of bookstores at nearly 14,000 in the mid-1990s and at about 8,000 by 2012. Non-chain stores represent roughly one third of the closures.

. . . .

It’s important to put this in perspective, of course. The most recent comprehensive look at retailer market share is from Bowker’s 2013 U.S. Book Consumer Demographics and Buying Behaviors Annual Review. A chart from that report tells the story vividly. From 2010 to 2012, large chains’ percentage of consumer purchases dropped from 31.5 to 18.7 percent; online sales swelled from 25.1 to 43.8 percent. Indie stores’ percentage rose from 2.4 to 3.7 percent. (Book clubs had the other big loss, dropping from 11.5 to 6.1 percent of the market.)

Overall retail book revenue in the category has remained relatively flat for years when adjusted for inflation, especially in the “trade” category, which is general fiction, non-fiction, and religious, and excludes most materials aimed at education.

What’s most interesting is that after years of torrid growth, ebooks settled down and lost ground: the saturation point was apparently reached a couple of years ago in the mix of ebook, paperback, and hardback sales. The Association of American Publishers survey for 2015, released July 11, found ebooks were in the second year of slight decline in revenue and unit sales. Some of that change came as publishers were able to push an agency model.

. . . .

“There is nothing like the physical place to browse and discover titles that you didn’t know about,” Teicher says.

He has a four-legged stool on which he rests the current minor resurgence of local stores. “It’s disingenuous not to acknowledge part of our more recent success is directly, intricately tied to the shop-local movement,” he says. In some cities, bookstores have been rescued after losing a lease or after declining sales through crowdfunding campaigns, membership drives, or a wave of new sales from people who realized they were about to lose a store.

. . . .

Teicher says there are clouds on the horizon. Higher rents, noted earlier, are one of them. Higher wages are another. While Teicher says members want employees to make livable wages, the timing puts a crunch on small retailers more than big ones, in that labor forms a larger percentage of expense, and a small store needs a minimum level of staff that can be proportionately much higher than a store with 10 times the square footage. (Amazon reportedly lured bookstore staff to its Seattle store by offering higher wages, a rarity in the industry.)

Because booksellers can’t easily raise prices, between competition and the recommended list price appearing on nearly every book, there’s no room as in other retail segments and other industries to pass even on modest increases in expense. Only increased volume helps. But the most profitable ABA members have increased their share of non-book items, which often have much higher margins than books, sad to say. He says 17 to 19 percent of total sales at the most successful stores are something other than books.

Link to the rest at The Seattle Review of Books

PG says the OP was just as back and forth – the number of bookstores has crashed since the 90’s, but things are looking up everywhere.


20 Comments to “Technology killed bookstore chains. Can technology save indie bookstores?”

  1. Title be a question, they should know better by now …

  2. And a $15 mandated minimum wage wage doesn’t help much, either.


    • I saw that one. The first increment is $0.50 an hour.

      That means, if you have 2 employees on 2 shifts in the store, each day, an extra $16.00 in labor expense, each day.

      That’s enough to be a “tipping point” that shoves the store out of business? Really? If that’s the case, they’re just not doing enough business. I call BS. I think they already don’t make any money and are using it as a reason to close up shop.

      • How many have we seen closing because they weren’t bringing in enough? It seems too many of them are already running on a shoestring for the love of running a bookstore. And while $16 a day doesn’t sound like much, that’s $5840 a year they can’t use for other things — like buying books to sell.

        “That’s enough to be a “tipping point” that shoves the store out of business? Really? If that’s the case, they’re just not doing enough business. I call BS. I think they already don’t make any money and are using it as a reason to close up shop.”

        It indeed could be the ‘tipping point’, forcing them to admit they can’t do it anymore.

        • If they can’t afford to pay their staff a living wage I, quite frankly, don’t see them as having a viable or socially worthwhile business and have no problem with them closing shop. Either they pay or or their employees receive support from the government, and in the long run I’d rather they pay.

          • not every job is supposed to pay enough to support a family (your ‘living wage’)

            There is supposed to be this thing called an entry level job where students and teens can get starteds.

            besides, $15/hour isn’t enough for someone to live on on their own in San Francisco, while it’s almost a professional level income places that have much lower costs of living.

  3. Fun fact: nineteen of the 51 ABA members in VA aren’t indie bookstores.

  4. He lost me when he listed the decline of ebooks as a hopeful sign for indie bookstores.

    ‘Cause, ya know, they haven’t.

    • Eh. It’s a really long piece, and that’s just one detail. The rest is worth reading.

      • It is an interesting piece. The ebook thing is just one detail. It’s not a small detail.

        In the US ebook unit sales are approaching half of all genre fiction sales. They are not declining outside of AAP reports. By and large indie bookstores have no way to sell ebooks. If they do, they have no competitive advantage over purely online sellers. Being thankful this very difficult problem isn’t as big as it seemed because ebooks are beginning to fade is a very very big miss when the are not fading. The writer of the piece prefaced the misinformation by writing “What’s most interesting”.

        Mr Teicher has a four legged stool on which he rests the minor resurgence of local bookstores:

        1: The shop-local movement.
        Books are not local. The writers, publishers, and printers are not local. The clerk behind the counter is, but they could sell anything. Maybe even local goods.
        Mr Teicher says Amazon is pretending to be local with their experimental Seattle store, but it’s not a real bookstore. Why is unclear, but for Mr Fleishman, the writer of the piece, it seems to be because the books are shelved face out.

        2: Publishers and bookstore suppliers are providing local bookstores with better service and faster delivery than before and offering some previously out of print titles as print on demand.
        This is entirely dependent on a third party’s actions. Nor does it represent a competitive advantage for local bookstores. Mr Teicher himself says it reduces the advantage of online retailers. By stockpiling books in its own warehouses (shelving the books as it were) Amazon’s more efficient fulfillment service can still get the book in the customer’s hands faster than the publisher can get it to the bookstore. That’s not even counting the customer’s time going to the store twice or the notable absence of the local store’s competitive advantage of customers being able to find unknown titles by browsing the physical shelves.

        3: Passionate bookstore staff that handsell books.
        Only works if the bookstore has the book on the shelf. I also question the optimism in the phrase “providing exposure to titles that would otherwise languish.” How many copies of these languishing titles does the bookstore have? How many bookstores have these titles? How quickly can they restock the shelves when John tells Mary and Mary tells Sally and Sally tells George and George tells Pip and Pip tells John ’cause Pip didn’t realize John started the chain? How many sales in what period of time does it take to break a good languish?

        4: Cheaper and more efficient back-office software and computer equipment.
        Setting aside the rather bizarre glee that this is hoisting the tech innovators on their own petard, this is good. And has been around for years. And is available to everyone. And can be purchased and whether one has a good business plan, a bad business plan, or no business plan at all.

        • When you put it that way his ‘four legged stool’ doesn’t look none to sturdy, in fact I’m not sure it would hold the weight of a pair of ebooks.

        • Passionate bookstore staff trying to survive on minimum wage may experience a pattern of declining passion over time.

          • The last time I went to an indie shop (Books&Books in Westhampton), I bought a Jude Devereaux for my sister-in-law. The employee sitting beside the cashier saw the cover and scoffed in front of me.

            That’s why I shop at Amazon.

            • I hope you told them that was your intention. Any bookstore employee that disparages readers choices like that does the entire industry a disservice.

            • That’s the reason I don’t like buying books in indie bookstores. And the reason I don’t care too much if they close down. I often buy books, but now it’s online.

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