11 Aug 2005, 7:32:16 pm
In my research, reading, and imagining, I've come up with a list of changes small bookstores can use to increase profits and remain viable when challenged by Barnes & Noble and Amazon.com for their products.
Small bookshops, formerly the only place to find books of any merit, have been dwindling over the past twenty years, due to the creation of megabookstores like Barnes & Noble, and online sellers like Amazon.com. While I've never run a bookstore (several of you leave), and I've got no significant bookselling experience (more leave), this is what I see when looking at the industry from the outside, based on information I've read in the news and in several publishing industry books recently.
First, some facts:
- The big chains make their money off volume sales of new release hardcovers because of the high demand and reasonable margins, and they can easily return the unsold copies or dump them on the sale rack;
- Big chains avoid small publishers, who are untested and do not have high demand;
- Big bookstores leverage selling customer lists and non-book products to increase profit margins;
- The chains use their leverage to get deep discounts from publishers -- not that they lose money on unsold copies, because they always return them.
My ideas are based on a few assumptions of your bookstore's business:
- You understand the market and have an idea of what kind of products will or will not sell;
- You are willing to put effort into altering your business;
- You see that a change needs to be made, due to shrinking sales or increased expenses;
- You feel you need a new segment of customers, because the regular crowd is shrinking, dying off, or spending less.
Here are some of my ideas:
1. Mix used book sales with new book sales. Remember the university bookstore? College students have developed an eye for the yellow "USED" tape on the spines of used books, even if it's an older version, as a way to save money. Those same college students also remember how much they got for their books when they sold them back at the end of last semester. The student got paid $10 for a book they paid $150 for, and that book, in turn, ends up back on the shelf with a $90 pricetag.
The new Harry Potter is out, with a cover price of $16.99. The new copies you bought through your distributor cost you $7.65, or $9.34 profit. Now, let's say in a month, the used Potters start coming into the store. Offer the customers $4 for the book ($5 with dust jacket) -- even just give them store credit -- and put the book on the shelf with a $10 pricetag, right next to the $16.99 Potter book. The sticker on the spine shows other customers that they now have two options: get a used book for $7 off, or get the new one for full price. How about the first hardcover Potter book? Make it $3 to the seller, and put a $7 pricetag on it -- profit margin goes up. Later, someone brings in a nice, but old, Flowers In The Attic? Give then $0.50, put a $1 sticker on it, and put it on the shelves. In this model, there's also the chance of picking up a rare first edition, or expanding your store's inventory with titles that at least one customer, for certain, saw worth reading. The used book trade will also draw in casual browsers looking for deals, or ones ready to use their store credit immediately.
2. Own your building. The books that are an impulse buy end up in grocery stores and near the door at Barnes & Noble: you're not competing with them, you can't at those prices & volumes. So, the books you carry are ones that a customer is searching for, and is willing to get in their car and drive to any location to avoid shipping costs. Bookstores are even seeing customers arrive at their door with a printout from Amazon.com and the question, "do you have this?" So, location is less relevant, so long as it's accessible by the average driver. Many cities have an "old downtown," away from the malls and big-box stores, with buildings for sale. You'd also be surprised how many book-buyers consider this a mark of credibility, remembering the creaky wooden floors of bookstores from their youth.
The additional advantage of owning the building is to maximize land profit. Look for a building with apartments upstairs; pay a management company to oversee the rental, and count their rent towards the building loan. Got extra parking spots in back? Rent them out. Some buildings have basements with separate entrances: convert it into it's own storefront, rent it out to another business. A shrewd building purchase can pay for itself, without dumping thousands every month into mall rental; the difference can go towards promotion to re-educate customers how to find your shop.
3. Magazines are impulse buys; do not devote floorspace to a 'magazine area'. Books are the purpose of the business, and books are what pays for the floorspace. Magazines, however, soak up enormous floorspace, because they are displayed face-out in large, clunky racks. The same space, filled with regular bookshelves, with the larger profit of books, has far greater value.
Customers who love a magazine so much that they must have it every month are going to pay for the subscription -- at a cover-price discount -- and have it arrive at their door every month. Bookstore customers are looking for a magazine that they have never seen before, and will buy it on the spot if it appeals to them.
The ideal places for magazines are mixed with the books, and at the counter. There's a reason grocery stores and KMart have the celebrity-interest magazines at the checkout: people grab them as they walk by and toss them on the conveyor belt. These sorts of magazines belong at the counter in your store as well, for the exact same reason.
Topical magazines should be in small racks in the area of your bookstore that readers looking for the magazine would most likely hang out: science with science, computers with computers, sports with sports. A customer finding the Farve book is going to be more likely to grab this month's Sports Illustrated nearby than to wander through the magazine racks in search of the magazine. WalMart partially does this, with video game magazines near the videogames and Field & Stream in the sporting goods area.
4. Do not devote large sales areas to 'big name' books, nor technical titles, nor time-sensitive books. Customers are not looking for those books at your store, as they're more likely found at the superbookstores or online at discount. The "Learn Macromedia MX" books will be outdated in months when the new version comes out; even if they are returnable, enormous effort goes into sorting the books out, and money remains tied up in stock that has little window for a browsing customer to find it.
Now, this isn't to say the big-name books should be banned. They do sell, but they sell without advertising or special placement: if a person hasn't already heard of the new Harry Potter book, then they are probably not interested in it. Devote large sales areas to the books that could use some help: the local author, obscure Halloween books when October rolls around, books your employees like.
5. 5-foot-tall bookshelves may make space look larger, but a 6-foot-tall bookshelf adds room for many more books in the same floorspace. I'm not the tallest of customers, but bookstores I've been in recently seem to be designed for short people; if the top of a sales fixture is 5' off the ground, the top shelf is around 4', so customers are constantly looking down for books. Taller bookshelves will bring more books to eye-level.
6. Events remind people that your store sells books. Find the local sitar player to perform every Wednesday, have a poetry slam, get every local author to do signings, have experts from the local college talk on subjects for which new books have been written: This may not result in instant sales, but it reminds customers that your store exists. Also, events can get your store listed for free in the newspaper: community calendars are often begging for events to list. They're not going to list book release dates, but a speech by the local Civil War expert can mysteriously coincide with the release of a new Civil War book.
7. Store hours can be from 2pm - 11pm. There's no reason to open the store at 9 simply because neighboring stores do; marketing and event promotion will educate customers as to store hours, but only being open when many people are at work cuts into the customer base. It's more frustrating for a gainfully-employed person to be turned away at 7:30pm by a bookstore that closed at 7 than it is for the person with their whole day available to come back in a few hours. Employee wages are also a significant impact on overhead; being open fewer hours, when more customers are available, will produce higher profits.
8. Have a way for customers to electronically search your inventory on their own, or have this information readily available. Customers on a quest are turned away by the slightest difficulty; many will turn to your store first, rather than 'giving money to the big corporations,' but if they cannot get a simple answer to their request, they will go elsewhere. Computerise your inventory, have a terminal available to customers, or have someone on-hand who understands the computer system and can get search results for a customer instantly. This does not mean the inventory is on a website, although this would be helpful to customers looking for a local shop online.
9. Make customer orders simple. Even if all you're doing is placing the order at Amazon.com and having it ready to be picked up next Monday, customers appreciate the service. If you can order books at wholesale cost through your distributor and have it arrive quickly, offer the service to customers. Hang large signs that say this is available. Pad your shipping costs if you must. Once a customer is in your store, closing a sale should be paramount, regardless if the book is actually on the shelf in an obvious spot.
10. See what deals are available with your distributor or individual publishers. Buying books non-returnable might get a greater discount, or insist on recieving the deeper discounts that the big-box bookstores get. Middlemen are notoriously ready to wheel-and-deal; don't just flip through the catalog and pay whatever it says. Grocery stores and department stores regularly do the same. Small publishers, who have great difficulty getting their wares in the big venues, may be very willing to do direct negotiation, even if they already have a distributor.
11. Have space available for meetings and clubs. Book clubs are a big deal today, but other groups are also in need of space. Here in Fargo, the 2600 club (a group of hackers) meets at Barnes & Noble regularly; it used to be near the westerly phones in the mall (spooky), but there's more room and softer chairs at B&N. Quality bookstores have long devoted space to chairs and low tables: the space saved by eliminating magazines and having taller bookshelves could easily be put towards a handful of nice chairs, with a dozen folding chairs in the back room when needed.
12. Trust employee recommendations, and order books accordingly. Nothing's worse than the "Employees Recommend" shelf barren because all the books were picked up by trusting customers. Get recommendation lists ahead of time, and add a couple to your weekly/monthly order. Use the employee's name in the recommendation sign, and customers will learn who they trust. It will create customers that see Bill as a friend, even if they've never spoken to him, which then produces a customer that trusts your store.
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