Monday, August 30, 2010

The Death and Life of the Great American Bookstore

I once worked at a flagship book "superstore" here in D.C. (and at a lesser location in South Florida, which is, not coincidentally, scheduled to close in a month-and-a-half). For nine years, I witnessed firsthand the once-nascent problems that are now bankrupting the two major bricks-and-mortar book chains, Borders and Barnes and Noble. Borders has been on the ropes for years, and Barnes and Noble, the nation's largest book chain, is now up for sale. Neither could prevent the rise of the internet, the primary cause of their fall. Still, there are four ancillary causes, listed below, that have accelerated the superstores' demise.

Superstores have become for-profit public libraries.

Borders and Barnes and Noble superstores are inviting places that encourage customers to browse for hours without purchasing anything. Welcoming customer service, plush leather comfy chairs, plenty of tabletop space, premium coffee shops, community events like book groups and open mic nights, and regular national events featuring famous authors and musicians, the very amenities that were meant to make these stores "destinations," turned for-profit businesses into open access public goods.

Here's an excerpt from a recent article in the NYT, on the closing of a Manhattan Barnes and Noble:
Ms. Kelly said she visited the store at least twice a week, usually heading upstairs to read magazines and to pick up a sandwich and cup of Starbucks coffee.

“They’re getting business out of me, I suppose,” she said. “Even though I’m sitting there reading magazines for free.”
When I worked for my former employer, patrons like Ms. Kelly were our regulars. Like my co-workers, I knew most of these regulars by name, and would affably chat with them daily. They were dedicated, yes, but hardly our bread and butter. More perpetual browsers than customers, they would spend hours camped out in the aisles with piles of books and periodicals. In return, they would spend a meager average ticket of around $2.00 a day. It would take at least 5-10 labor hours after closing to clean up after the campers, not to mention the time spent during operating hours dedicated to reshelving their messes -- time spent away from providing excellent customer service and actually selling books.

So, bookstores became libraries. It wasn't uncommon for parents to come to the information desk with school assignments and we, the over-educated booksellers, were responsible for locating their needed materials (this would often involve a good deal of book sleuthing usually reserved for a Master of Library Science). Later, we'd inevitability find the same teetering towers of books in a corner, left unpurchased. Older college students were more self-sufficient, yet the result was the same. They would come in and use our product to complete their homework, with their only purchase being a refillable mug of coffee ($1.75).

During the heyday of hard-copy book and multimedia buying, the customers who came in with the sole purpose of purchasing merchandise were able to subsidize the campers, the needy parents, and the college students. Nowadays, post-Kindle and iTunes, this business model is no longer tenable. The high overhead of a Borders or Barnes and Noble superstore cannot be covered by the sales of tall lattes and blueberry scones.

The superstore's massive footprint is an albatross.

Borders pioneered the superstore model in the mid-1990s. Before then, most bookstores were found in malls, and were the size of the European History section of your local superstore. Stand-alone stores like classic Barnes and Noble locations were larger, and included cafes (which conspicuously did not allow-in unpaid merchandise). However, their focus remained on books and the common "sidelines" found in most bookstores (e.g., calendars, book lights, and inexpensive tchotchkes). Borders changed everything. A typical Borders superstore had a book department that could easily swallow an entire Barnes and Noble. It, too, had a cafe (which conspicuously allowed-in unpaid merchandise), and, unlike the Barnes and Noble of the time, had a gigantic multimedia department. (Barnes and Noble followed suit, but their superstores were conservative by comparison. They basically beefed up their book sections, made their stores vertical, and added marginal multimedia sections.) The sheer size of a superstore, and the diversity and quantity of its merchandise, called for large back room areas for receiving and plenty of office space for administration. This meant that even lower volume stores took up a lot of space, which resulted in hefty rents and high payroll costs.

Again, all well and good during flush times. However, the very nature of the industry changed permanently in the early 2000s, thanks to Amazon and iTunes. The multimedia section in an average Borders store used to be about 2/3 the size of the book section. Today, most Borders stores no longer even carry catalog music; their "music sections" are merely two "browser" fixtures of new releases. The highest volume stores continue to carry a limited number of catalog titles (about the same as a Best Buy's backlist), but it's a far cry from the days when jazz and classical alone took up rows and rows of fixtures. Now that the demand for hard-copy music has dwindled, superstores are left with more floor space than they can use. Those former multimedia sections now look like graveyards, filled with the tombstones of empty retail fixtures. A depressing sight for customers and employees alike.

Deep discounting further undercuts the superstore's profitability.

One of the best perks of working at a superstore was the employee discount, which used to run between 25% and 33%, depending on your full-time/part-time status. Even better, once or twice a year we were treated to "employee appreciation days" that gave us a whopping 40% off of most of the merchandise we sold. Employees readily took advantage of the munificent discount, and would often spend hundreds of dollars on a single purchase (usually on gifts, since this occurred in December).

Today, 40% off is the norm. I get weekly e-mail coupons from Borders, and I'm surprised when the discount is less than 40%. The harsh reality for superstores is that more and more hard-copy book and music consumers are shopping at Costco, Walmart, and Best Buy, chains that often price these items at a loss to drive traffic. With the aforementioned online juggernauts, Amazon and iTunes, added to the mix, superstores have had to slash their margins to a hair's breadth to remain competitive. Theoretically, Borders and Barnes and Noble could have "made it up in quantity," but the weak aggregate demand of the recession economy has only made matters worse for superstores.

The superstore suffers from a confusion of purpose.

I remember the nadir of my bookselling career. I was merchandising a table of "summer items" at the front of the store, the highest-valued real estate of any retail firm. Working from my planogram, I carefully arranged cans of meat rubs, sets of barbecue tongs, jars of four different barbecue sauces, and -- the afterthought of the table -- some books on grilling. One of the stacked glass jars of barbecue sauce fell to the floor and broke; its thick and pungent contents splattered wide on the carpet. I may be making too much of this, but, at the time, the sight of a puddle of barbecue sauce in front of fixtures displaying the bestselling works of McEwan, Chabon, and Atwood was a disheartening wake-up call. What exactly are we selling here?

A common joke among the employees of my store was that we were only weeks away from selling cigarettes and lottery tickets. It wasn't too far from the truth. During my tenure, we sold gardening spades, video games, t-shirts, manicure sets, sushi-making kits, wallets, Dean and Deluca spice racks, board games, hand creams, fake eyelashes, $200 Star Wars lightsabers, and the classics of the Western canon. One of these things is not like the others. Which of them belong in a bookstore?

Our buyers had an admirable goal in mind, to make our stores places for one-stop-shopping. Ultimately, most of the above-listed items ended up being marked down to $1.00, since they were almost always left unsold and were non-returnable to the distributor. In retrospect, this lack of focus, on the corporate level, of the business' identity led the chain down a number of blind alleyways. There are many retail stores that conveniently offer one-stop-shopping experiences, namely big box stores like Target and Walmart. I doubt barbecue sauce and fake eyelashes top the shopping list of the average booklover entering a Borders or Barnes and Noble store. That said, I'm not a professional book buyer. What do I know?

My guess is Borders will go out of business in the next year, and Barnes and Noble will eventually return to its original model of modestly-sized bookstores that cater to a small population of book consumers. Ironically, the clear winner here is the once-beleaguered independent bookstore, the scrappy underdog that never lost sight of what it was selling. After all, with eBooks on the rise, purists (like me) who stubbornly enjoy browsing non-digital bookshelves will need bookstores to patronize, super or otherwise.

Borders Group Inc., the second- largest U.S. bookstore chain, will start selling items from Build-A-Bear Workshop Inc., relying less on books for sales as more people use electronic reading devices.

Most of Borders’ more than 500 stores will create sections next month dedicated to Build-a-Bear, the maker of kits kids can use to craft stuffed animals, Chief Executive Officer Michael Edwards said in an interview. The new areas also will feature books and DVDs tied to the brand.
Emphasis mine. The excerpt speaks for itself. (HT Kelsey Pince.)