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Why Are New York’s Bookstores Disappearing?

4 March 2019

From The Guardian:

Like payphones, typewriter repair shops and middle-class housing, bookstores are a vanishing presence in New York City. In 1950, Manhattan had 386 bookstores, according to Gothamist; by 2015, the number was down to 106. Now, according to a count by the city’s best-known bookstore, the Strand, there are fewer than 80. Book Row, a stretch of Fourth Avenue between Union Square and Astor Place that once housed almost 50 used and antiquarian bookstores, now claims just one: Alabaster Bookshop at Fourth Avenue and 12th Street. (Plus the Strand, which relocated a block away in 1957.)

. . . .

The Strand, the city’s largest independent bookstore, owns its building, which insulates it from some of the economic pressures faced by its peers. But when a city commission recently proposed landmarking the 11-storey Renaissance Revival building, it was cause for panic, not celebration. Owner Nancy Bass Wyden is lobbying against the proposal because she says it will make maintenance costs prohibitively expensive.

“I just want the city to leave me alone,” Wyden tells me. Her grandfather Fred Bass founded the store in 1927. Her father, who started working at the store when he was 13, saved for years to buy the property, she said, precisely to avoid the fate that befell the rest of Book Row.

“I have been told that I have no chance,” Wyden says, but she couldn’t live with herself if she didn’t fight it. She could make more money renting the bookstore’s three-floor space to other commercial tenants but has no plans to do so, nor to sell the building. As landmarking only applies to physical architecture, a new status for the Strand wouldn’t protect it from becoming, in her words, a “bank or a Lululemon, like the Scribner building”.

. . . .

Some sociologists believe that reading is becoming a minority, elite activity – the “province of a special ‘reading class’”, as the writer Caleb Crain put it in a 2007 New Yorker article – and that society is effectively returning to the situation before the advent of mass literacy. In a follow-up piece last year, Crain argued that the statistics continue to “paint a fairly grim picture of America’s reading habits”.

But the biggest culprit, at least in New York, is the same seemingly unstoppable force shuttering small businesses across the city: rising rent. Rent is a particular concern for bookstores because they operate on low margins but require large storage space.

Bookstores “have weathered many economic challenges over the decades, but there is nothing they can do when the landlord triples or quadruples the rent, or simply refuses to renew the lease”, Jeremiah Moss, author of Vanishing New York: How a Great City Lost Its Soul, tells me. “Every time I step into a bookstore in the city, it is packed with people who are browsing and buying books. In a truly fair market, this would be sustaining success, but there is nothing fair about the current market.”

Link to the rest at The Guardian

PG did not include the portions of the OP which blamed Amazon for the plight of bookstores.

Certainly, Amazon is a factor, but PG suggests the major factor for bookstores inside and outside of New York is that they are low-margin businesses as the OP mentioned. That was the case before Amazon as well as today.

Walmart, the world’s largest retailer, generates an annual net profit margin of about 3% year in and year out. In rough terms, out of the sales that Walmart makes during a typical month, the company’s only profit is equivalent to the sales it makes on the last day of the month. All the sales that occur during the rest of the month are spent on salaries, cost of goods, rent, utilities, returns, shrinkage (shoplifting, employee theft), taxes, etc., etc.

Of course, Borders filed for bankruptcy protection and was liquidated in 2011.

Since the beginning of 2010, Barnes & Noble has been profitable in 9 calendar quarters and reported a net loss in 27 calendar quarters.

PG did a little online research that disclosed the average net profit margin for an independent bookseller is 2-2.5% percent. On an annual revenue of $1 million, that represents $20,000-$25,000. According to The Washington Post, Politics and Prose, a highly-successful independent store in Washington, D.C., generated $6.8 million in revenue in 2009, with $173,000 in profit that was split between the store’s two co-owners.

PG suggests that if you want to help out the owner of an independent bookstore, just give some money directly to her/him instead of buying a book.

If you buy a book for $10.00, the owner will receive a profit of 20 cents. If you give the owner $10.00, the owner will receive the same amont of money she/he would receive if you purchased $500 worth of books.

Additionally, bookstores fall into the class of retailers that rely on discretionary spending for the large majority of their sales. While many people have to purchase at least some food at a retail store, nobody has to buy a book at a bookstore.

As the OP suggests, sky-high New York rents also contribute to the decline of bookstores. In addition to geographical constraints on rental property in the city, the amount of available space is further reduced by legislation that was designed to keep rents low for favored constituencies in the past.

Following World War II, concerned about rising residential rents during the post-war boom, New York politicians established Rent Control on apartments, a complex set of laws and regulations limiting the maximum rent a landlord could charge a tenant while the tenant continued to live in the apartment. Rent control continues to this day, over 70 years following the emergency it was established to address. Another set of complex regulations, Rent Stabilization, governs the amount by which monthly rent can increase in almost a million rental properties. When an apartment is finally free from rent control, it becomes a rent-stabilized apartment.

Among other things, these rent regulations can prevent landlords from tearing down an old apartment building to provide room for new residential or commercial space.

This type of regulation alone increases the costs of doing business in New York City, including the costs of operating a bookstore, by a huge margin.

 

Bookstores

13 Comments to “Why Are New York’s Bookstores Disappearing?”

  1. There are lots of low-but-steady-profit businesses and industries, it’s just that the sorts of folks who read books don’t have anything to do with them and can’t relate to the notion of used book stores being one of them.

    My father spent his career running a multi-site flour milling business a fraction the size of, say, Cargill. I remember being a teenager and the shock of discovering that the profit margin on the very high volume flour milling business was circa 1-3% per year.

    This is the end game for any industry where the manufacturing and distribution costs have been terminally optimized, there’s no new technology/organizational rearrangement on the horizon, and most of the merger/acquisition activity has been completed. We’re so used to thinking of the volatile tech industry that we forget the ones whose roots are a hundred years old. Lots of those firms can soldier on for a long time since there’s no particular opportunity for any but occasional disruption.

    “Steel” got picked off, but who’s targeting flour milling?

    Used book stores used to move to lower rent locations. Today, that’s the internet.

    • I’d keep an eye on Biotech.

      Sooner or later somebody will figure out not only how to use bioengineering to create perfect synthetic meat, but also sugars and carbohydrates. Probably from engineered bacteria as feedstock. Pour in water, CO2, light and air. Out comes tomorrow’s dinner for the masses.

      It might take a few decades, it might be tomorrow. Nothing’s safe, everything is in play.

      • Even biotech will need raw organic materials and will have to manage manufacturing (growth), energy, and distribution requirements. Could come from cheap crops or wasteland, could be hydrocarbon based — whatever. In any case, carbon will be involved, even if the rest is inorganic.

        It might be that the products of standard simple cheap mature industries like wheat flour could be less expensive. After all, flour used to (still does?) go into jello and gunpowder more for its physical properties than its nutritional ones.

        Biotech is not immune to TANSTAAFL (There ain’t no such thing as a free lunch.)

        • Felix J. Torres

          Bacteria work with the basic elements and everything that goes into carbohydrates is in the air.
          Organics started out as inorganics.

          And, no, it won’t be free.
          It’ll take energy in the form of sunlight.

          But it is doable.
          The science is clear.
          We’ll figure out the engineering eventually.

    • Good points, Karen.

      A great many people vastly overestimate the profitability of a lot of large organizations.

      • Terrence OBrien

        Agree. Anyone think publishers have a 15% margin? But, authors have a 15% royalty. Does this mean authors are getting a bigger cut of the revenue pie than publishers?

        But, the 15% is on list price. That’s retail price, not the price publishers get for the book. If retailers have a 50% markup (buy for $1, sell for $2) the percentage of publishers’ sales revenue that goes to royalties is 30%.

        Don’t like the numbers? OK. Cut them in half in the publishers’ favor. Authors still get a bigger cut of book revenue than publishers.

        Anyone think authors should get a 50% royalty? That would mean authors get all the publishers’ book revenue.

        I don’t have any publishers’ financials, but that would be even more fun.

        • When was the last time you saw a book being sold at a bookstore that was on a markup? Outside of a college bookstore (which is on a very different business model than any other type of bookstore out there), I have never seen a book being sold for more than the retail price on the back cover. Usually, they are on a discount.

          • Terrence OBrien

            When was the last time you saw a book being sold at a bookstore that was on a markup?

            Just about every book not on the remainder table. Markup is the difference between what a retailer pays for a book, and what he sells if for.

            In this case, a book may have a list price (on the cover) of $20. A bookstore buys it for $10, and sells it for $20. that’s a $10 markup.

            Sometimes people figure retail markup on cost, so that would be a 100% markup. Other times they figure it on sales price, so that would be a 50% markup.

            If the bookstore bought for $10 and sold for $19, the markup is $9. If it bought for $10 and sold for $21, the markup is $11.

            The price printed on the cover has nothing to do with retail markup. Note most retail goods don’t have prices printed on the goods.

            It doesn’t matter if we are dealing with books or widgets. Books aren’t special.

  2. PG suggests that if you want to help out the owner of an independent bookstore, just give some money directly to her/him instead of buying a book.

    You joke, but it is already happening. Borderlands Books of San Francisco, a sci-fi/fantasy specialty bookstore, uses a subscription model of 300 people each paying $100 a year so the store can stay in business. They also had their customers fund most of the purchase of a building.

    Mission: Comics & Art, also of San Francisco, is currently collecting $2,000/mo on Patreon to underwrite operating expenses. They hope to get that figure up to $3,000. I guess some people really need their next Iron Max fix on paper.

    I’ll bet there are others out there, but those are the only two of which I’m aware that I’d consider run on a business basis.

    • At least the owners of those stores and their faithful patrons are addressing the reality of today’s book business instead of slowly sinking into the swamp, Patrick.

      I’ll be interested to see if more independent book stores move toward this model in the future. I can think of a couple that I think would attract a lot of donations.

    • Ugh. Begging for money doesn’t sound like a long-term business plan. Better to close the doors before you get behind on payroll taxes.

  3. The internet has extended the reach of every business that uses it, and it allows businesses in low-rent areas to reach customers of businesses that are in high-rent areas. The only businesses that can raise their prices to compete are those that are less affected by the internet – typically, restaurants and personal services. Those are the types of places than are replacing retail, and that is why.

    • I would add those places where it is more important that you be seen to shop. Rodeo Drive, for instance, has a diverse collection of goods retailers. Also (from what I just looked at) only a 7.5% vacancy rate, by location. Eyeballing the map, less than 5% is actually vacant retail space.

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