From Publishers Weekly:
Last week at Winter Institute 14 in Albuquerque, N.M., five of the past presidents of the American Booksellers Association sat for a panel discussion moderated by ABA CEO Oren Teicher, focusing on where the industry is at the moment and where it is headed. The conversation echoed several others at Winter Institute, where it became clear that the ongoing collaboration between publishers and booksellers to reduce the cost of goods and streamline delivery times is central to the profitability of many booksellers.
Michael Tucker, ABA president from 2009 to 2011, and president and CEO of Books Inc., headquartered in San Francisco, with 11 stores in California, acknowledged that this key relationship is “in a better place” than it had been during the period following the settlement between the ABA and the publishers and bookstore chains for anti-trust in 2001. For several years thereafter, tensions in the industry were high. “The challenge was to open up a dialog with the publishers,” said Tucker.
Gayle Shanks, co-owner of Changing Hands Bookstore with locations in Tempe and Phoenix, Ariz., concurred that the relationship and the general bookselling environment has improved, but she also offered a cautionary note: “When I have to take out a case of books to replace them with tea towels or socks so i can meet the minimum wage increase or put in new floors, that worries me.” She said that young booksellers in particular are vulnerable. “They say [the economics] don’t pencil out.”
. . . .
Several times at Winter Institute Teicher and others pointed out that sales in the indie channel have been improving overall, with sale up some 5% in 2018. That said, there are still issues, particularly among the bottom third of bookstores, which are averaging a net loss of 8% per year, according to the most recent ABACUS data presented by the ABA earlier last week. One supposition is that profits are rising due to an increase in sales of non-book items and smaller footprint stores are struggling to raise profitability as a result of their inability to stock as many of these higher margin items.
Mitchell Kaplan, president of Books & Books, headquartered in Coral Gables, Fla., who held the ABA presidency from 2004 to 2006, said that the path to profits leads through community work. “We need to look at what the challenges are for small business today, whether that is rent, bad landlords, or a main street that is falling apart. We need to figure out for our communities how to sharpen what we do.” He pointed to the grants the city of San Francisco recently extended to small businesses, including a handful of booksellers, as one possible model.
Link to the rest at Publishers Weekly
where it became clear that the ongoing collaboration between publishers and booksellers to reduce the cost of goods and streamline delivery times is central to the profitability of many booksellers.
Don’t bookstores just return everything that doesn’t sell anyway? Seems to me all the risk is on the publishers here.
Hardly. Take the monthly overhead of the store and divide by the number of linear inches of space that can hold product. Pretend it comes out to $1.00 an inch. If a book sits in that inch for a month and doesn’t earn it’s $1.00, that’s $1.00 into the red. Conversely, if a book sits in that inch and earns it’s $1.00, that’s breaking even. If the book makes more than it’s $1.00, it starts paying for the losers. Enough of those and you might start making a profit.
All returns gets you is the ability to offload the losers without having to take a loss in capital outlay.
And that’s why statues of Yoda, toys, and puzzles muscle their way onto the shelves.
But not all shelving in the store is created equal. The stuff at the front with the best sellers will turn over stock very quickly and pay its way. The stuff at the back with the deep catalogue may break even or not pay its way. The stuff at the back is there to attract heavy readers who when they do come to a book store spend big. That is to say Amazon’s target audience. Once Amazon siphons off the heavy readers , the deep catalogue shelves look more and more like a place to sell teddy bears and the book store ends up selling the only same best sellers as Costco or Wallmart. At that point no one has a reason to go to a book store.
That was indeed the Borders and B&N business model.
And it broke exactly that way.
However, there is still tons of money to be made selling “everywhere books” to casual readers and niche books to specialty markets. The challenge there is that it requires a lot of focus and hard work to reach those consumers.
It requires understanding the specific market being targeted, doing actual marketing locally and online, and knowing how to run a business on a day to day basis. It requires new or at least different approaches to bookselling. Not all booksellers get it.
As the ABA report points out, not all booksellers are zombie bookstores. Some booksellers are in trouble, some are treading water, and some are doing fine.
The ABA doesn’t help matters, though, when their reports fail to distinguish between the different kinds of booksellers on their rolls. The retail climate for used book stores is very different than the climate for airport newsstands or for museum gift shops or special interest/genre specific destination stores.
Above all the climate for well run stores is very different than it is for the “stock it and they’ll come” hopefuls. The biggest change that online has made to retail is that product availability alone no longer guarantees traffic.
Before online, consumers had no choice but to seek out booksellers and pay whatever was demanded or do without. To a large extent bookstores’ sold access more than anything else. Nowadays access is literally free for public domain ebooks and near zero for commercial books. A majority of the distressed booksellers are simply operators unwilling or unable to adapt to the change in consumer attitudes.
And that isn’t a problem unique to books or even the times. Business models have faded and been superseded over and over through the decades. The result is always the same: some players adapt and evolve, the rest perish.
The business world has always been a Darwinian world.
This is particularly interesting because not only does ABACUS data represent only a subset of bookstores, it is self-selected – the ABA has to nag it’s members to supply them with financials so they can compile this report.
So the ABA is a subset of all bookstores, and of this subset, this is a subset that is willing to share their financial statements, and of that sub-subset, fully 1/3 are losing an average of 8% a year.
Becky Anderson said the margins for indies is just too slim, particularly compared with competitors. “Something has to change,” […] “We’re not here to make the big bucks, but we want to be able to make a living.”
But are margins or landlords or main streets (which another quote raised) really the problem?
They’re part of the problem.
So are video games, cable tv, video streaming, live sporting events, camping, fishing, Caribbean cruises…
People have a lot of ways to allocate recreational spending and most of the alternatives don’t sit around, passively waiting to be showered with money like the bookstores with “the 8% problem”.
“He pointed to the grants the city of San Francisco recently extended to small businesses, including a handful of booksellers, as one possible model.”
Such grants are temporary, one-time fixes to a continuing dilemma. They will do nothing in the long term. And counting on a governmental “helping hand” is a fool’s dream, even in SF, let alone elsewhere.
Book selling — along with all other areas of commerce and communication — is undergoing disruption caused by the Internet (and NOT solely Amazon’s “fault”). This will continue unabated; the challenge is adapting and surviving, or pining for the status quo ante and dying.
San Francisco boggles my mind. There must be so much money floating around out there.
This bookstore has a “sponsorship program” with 300 people each paying $100/year so this bookstore can remain open. The owner planned to close after being confronted by an awful 2016 and with an incoming higher city mandated minimum wage on the horizon.
The store has also been loaned $2.1 million dollars so they can buy their own building. Can’t find the link about that right now but here’s one from around the launch of the campaign. They’d “only” raised $500,000 by that point, with another $300,000 in sight.
Also, this comic book store (also in San Francisco) has a Patreon collecting over $2,000 a month. They’re aiming for $3,000 and I wouldn’t bet against them getting it.
Doesn’t seem like a sustainable business model to me, but there you have it.
I’ll agree, although to Borderlands credit they have tried to make their sponsorship program actually worth something…
http://borderlands-sponsors.blogspot.com/p/sponsor-benefits-and-privilidges.html
Considering the neighborhood some of those items are attractive. Use of the bookstore as meeting space, access to office equipment, package acceptance (that appeals to me), exclusive events and parties, yadda.
All retail is having to face up to the internet challenge. Are we going to start giving out grants to every retail enterprise that seems worthy, that is “part of our cultural heritage”? I don’t see that as a reasonable model. Businesses engaged in business to make a profit need to make that profit. If they cannot, propping them up with handouts is not the answer.