Tuesday, January 13, 2009

Pondering the Book Store Biz

A link on Twitter took me to the Dear Author blog recently. Of course the churning of books is a big, often-lamented subject of mine, as is the whole "returns" topic, so I had to check it out. But this got me thinking...why is it that bookstores have such a difficult time staying in business?

As a recovering bean-counter, I'm driven to imagine the business model of a shop. The basics are inventory stock, payroll and general business expenses. For inventory, the shops get the flip side of the publishers' returns scenario, so slow-moving stock, bad buying decisions and overstocked items are easily cured. If they buy direct from publishers, they start at about a 40% discount. If they go through Ingram or BT, it's less, but usually there is the mixed pallet advantage, and they can churn titles (a la the legal case referenced above).

It's hard to imagine payroll expenses being a deal breaker. No snark intended, but my guess is most of the staff works at a rate just slightly higher than minimum wage. And there usually isn't a staff of thousands, but maybe one or two people on duty at a time. The priciest employee would be the manager, and I'm betting he/she doesn't get a Rick Wagoner-level salary...nor a jet for running errands. Further bet -- probably not a lot of shops offer retirement accounts and group insurance.

For general expenses, the thing that pops out to me is the amount of rent the shop might be paying. For those mall stores, I'm betting the rent is a huge item. Many malls charge rent plus a percentage of sales, somewhat diminishing the gleam of a big sales month. Destination stores, the ones in downtown areas that are no longer hot spots for shoppers, may pay less rent but may also give up a lot in general traffic. This goes back to that old saw, "Location, Location, Location," I suppose.

Or, is none of this key to the demise of bricks and mortar stores? Is it, in fact, a shift of volume to online sellers, especially Amazon?

When you think about it, this isn't isn't just idle wool-gathering. If publishers and authors want to sell books (and we do, we do!) we need to know why people buy where they buy. So, going back to the thrust of this post...what is it that makes it so hard for a bookstore to stay in business?

9 comments:

Gayle Carline said...

I mostly shop for books on Amazon, because it's practical. I'm usually looking for a specific book. My options are: 1) Drive to the local Borders, figure out which section the book is in, see if they have it in stock, then buy it if they do, 2) Go to Amazon.com, search by title, and click once to buy.

We have a very few indy bookstores in our area. One is a children's bookstore. It has lovely books, but I dread going in, because the woman who works there follows me about and prattles on about any book I pick up. Another bookstore carries new and used books, but the man who works there treats customers like annoyances. That bookstore is closing. In both cases, I only visit when I'm looking for a book, but nothing specific.

Brooke said...

Reading in general has declined. I think that is why indie bookstores suffer.

Christina E. Rodriguez said...

I know that locally, rent and property taxes have forced many an independent bookstore to close. It's a shame that the city council where I live got so greedy. It was rather ridiculous, too, that stores located one street past Main Street would pay so much less in taxes than those right on Main.

Beth Groundwater said...

As an author, I've made friends with quite a few independent bookstore owners who have hosted me for signings. Some, unfortunately, have gone out of business in the past year or two. When I talk to them about the reasons, their largest expense by far is rent and is what eats up all the profits and more of keeping that brick-and-mortar storefront open. Having to compete with online sources for book-buying that do not have to pay rent is slowly driving independent bookstores out of the business.

Karen Syed said...

The problem with the industry is that the other aspects of the industry rarely give consideration to anyone else's business model/needs. If we all worked together, the industry might actually work.

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Jane Kennedy Sutton said...

According to a NYtimes.com article by David Streitfeld, bookstores are going under due to the thousands of individuals who buy and sell books on the internet - some for as low as a penny.

Jane Kennedy Sutton
http://janekennedysutton.blogspot.com/

Katie Hines said...

Our local bookstore is heavy into "stuff" that has nothing to do with books. Candles, coffee, weird plastic shoes, candy, post cards, gift cards, etc. They have said if they didn't sell that sort of thing, they wouldn't make any money and would have to close.

F. M. Meredith, author said...

We don't have a bookstore in our town or in the next city either. I'd definitely support an independent bookstore.

When I do a booksigning in an independent, I always buy at least one book while I'm there, sometimes more.

Frankly though, I do far better with signings at other places such as recreation centers, coffee shops, the local inn, art galleries. My books are on sale at a local gift shop and I receive a check every single month from them.

When No Sanctuary comes out, I'm doing a launch at our church.

Marilyn
http://fictionforyou.com

L. Diane Wolfe said...

Smaller stores are being driven out by larger chains and the fact that yes, they cannot afford the rent. A Books-A-Million moved into our town five years ago and drove out the independent and the Waldenbooks within a few months. Online bookstores are just the best option for most people.

Karen's right, the whole industry is at fault. Bookstores have a ton of overhead and publishers get stuck with returns. It just doesn't make sense.

Ultimately, a physical bookstore is really the worst place for authors to sell their books. There's so many other niche places, both physical and online!

L. Diane Wolfe
www.circleoffriendsbooks.blogspot.com
www.spunkonastick.net
www.thecircleoffriends.net