Business Musings: Bookstores (2017 in Review)

Ah, the heady days of 2011. The Gold Rush in ebook publishing had started. Books with terrible covers and no copy editing at all sold tens of thousands of copies. Writers who couldn’t get published traditionally were selling books at record numbers.

Readers flocked to the Kindle, and needed product, product, product. Some of what they bought was truly awful (because there wasn’t a lot available) and some of what they bought was wonderful (usually books that either went out of print from traditional or should have been bought by traditional and weren’t).

Writers at the edge of this wave were continually predicting that ebooks were the future! The Future! The Future! And mostly, those writers were right. Ebooks have changed the publishing landscape, which is why I’m writing this small blog series, just so I can understand what happened in 2017, and move into 2018.

But writers were wrong as well. A large number (you know who you are) predicted the death of print. An even larger number predicted the death of traditional publishing.

Well, traditional publishing is still with us, and I wrote two blogs on what happened in that part of the industry in 2017.

Print is still with us as well, and is growing worldwide. I rarely agree with Carolyn Reidy, the CEO of Simon & Schuster, but I agree with something she said at Frankfurt Book Fair in 2017. She said,

E-books have done some pretty remarkable things. But e-books are, and always have been, just a format.

Yep. They are a format. And if they hadn’t altered the publishing world these past five or six years, audiobooks would have. They’re growing too. Digital formats are taking over, in a lot of places for a lot of reasons.

But paper books remain one of the best technologies ever invented. They’re portable. No one can remove them willy-nilly from your computer or phone without you knowing or a license changing. Someone would have to actively steal your paper book to get it out of your possession.

You own the physical artifact, and you can do with it what you will. You can have all the authors of an anthology sign it on the table of contents page, and then rip out that page and throw the book away (you know who you are too—since I watched you do it, and the collectors in the room shuddered).

You can put the book in a mylar bag and never touch it again, and then resell it decades from now for lots and lots of money. You can bend the spine and crease the corners and write all over the interior as you read (you know who you are…I mean, ooops, that’s me). And you can stack the books up in a pile that nags you every single day, begging you to read them, if you can only find the time. (Again, me. Sigh.)

Most people buy their paper books online now, at least in the U.S., leading lots of people to declare the death of the bookstore. And, to be fair, bookstores have had a rough go of it for the past decade or more.

Because bookstores, like everything else in publishing, went through a major transition in the past decade, maybe even the past twenty years. First, they got hit with the rise of the chains (and traditional publishing in the U.S. screamed at Evil Barnes & Noble!), then they had their rents jacked up in various cities while the customer base declined, and then readers discovered the convenience of online book buying (and traditional publishing in the U.S. screamed at Evil Amazon! while chanting save Barnes & Noble. Gotta love the inconsistency).

It is no longer possible for an independent bookseller in the United States to remain in business based on in-store book sales alone. Okay, maybe a handful are doing it in high traffic areas with low rents, but not many at all. The old way is no longer the new way, and unless the bookseller understands that, the bookstore goes out of business.

But readers do want their paper books. And readers love browsing bookshelves. Sometimes readers “window,” meaning they look at books on the shelves, then order them online. In fact, Amazon’s fifteen or so bookstores are designed to window books—and to make it possible for people to buy physical books after holding them in their hands.

Readers recognize that they will discover books that are new to them in person more often than they’ll discover them while shopping online. So book people venture into any place with books.

Amazon knows that. That’s one of the many reasons they’re opening more and more physical stores. I love watching the traditional media try to figure out Amazon’s “game” with its bookstores. Some articles say that the stores are designed for prime members; others just call the stores “stupid.”

But none of the articles I’ve seen—not even the ones in the business press—ask why Amazon is opening physical bookstores at a time when “bookstores are dying.”

Well, the obvious answer is that Amazon, which sells more books than any other company in the U.S., knows that paper books sell. A lot. And Amazon likes disrupting other businesses. So why not disrupt the physical bookstores? If Amazon can build a successful chain of brick-and-mortar stores—and it looks like the Amazon is trying—then that’s a big F-U to the old-fashioned traditional publishing business all over again.

But you don’t invest hundreds of thousands (maybe millions) of dollars in a big F-U. At least, I don’t. And most business owners don’t either, no matter how great the temptation.

Amazon sees a viable brick-and-mortar bookstore landscape, and, as I look around, so do I. If I didn’t, I wouldn’t have bought an already established bookstore in August. I would have let that store die, just like it nearly did.

Before I get to that story, though, I want to point out something that folks in the United States rarely think about. The book is alive and well throughout the world.

On the last day of 2017, Mark Williams of The New Publishing Standard wrote a marvelous post titled “12 mind-blowing book events you probably never knew happened in 2017.”

There’s a lot in this one post alone about print books and how they are the center of many events around the world. But there are several lovely items about bookstores. The one that fits into what we’re talking about here is this:

Waterstone’s, in the U.K., opened four new stores in December alone.

Those of you who follow the U.K. market will recall that Waterstone’s death was being predicted just a few years ago. Apparently, Waterstone’s is not just profitable these days, but growing.

And here’s Mark’s take on it all:

This in stark contrast to the woeful tale of mismanagement that defines the USA’s biggest bookstore chain, Barnes & Noble.

Not that I intended to bring the USA into this global look back on 2017, but the reference is necessary, because we need to realize that bookstores can thrive in the digital and ebook era. The UK is second only to the USA for having its book market dominated by Amazon and its retail sector being challenged by Amazon.

Paper books are viable, not just overseas, but in the U.S. Two days before the New Publishing Standard published its piece, The New York Times (which is a company town paper, remember) published a gloom-and-doom article on the decline of bookstores.

Here’s how the Times reports the loss of yet another U.S. bookstore chain:

Book World, founded in 1976, sold hardcovers, paperbacks and sometimes tobacco in malls, downtowns and vacation areas across the Upper Midwest. It had endured recessions, the expansion of superstores like Borders and Barnes & Noble, and then the rise of Amazon. But the 45-store chain could not survive the shifting nature of shopping itself, and so announced its liquidation.

According to the owner of the chain, Bill Streur, sales in his mall stores was down 30-60% this year alone.

Reading deep into the article, though, I’m shocked that Streur’s Book World chain survived as long as it did. He was making a profit in 2014, breaking even in 2015, and suffered his first loss in 2016. Clearly, he had good locations that brought his stores through the recession and the rise of ebooks. He doesn’t know how to change the stores to make them work in 2018.

He has been trying to find a buyer for the chain, but with the bad publicity about bookstores, he hasn’t found one.

If Dean and I had known about them, though, and had deeper pockets than we do, we would have investigated Book World in depth. Because it soon becomes clear, just from the article alone, that Book World was surviving on in-store sales only, and doing exceptionally well in the modern retail environment—despite the management of the chain.

The telling comment? From the manager of the Book World store in Mequon, Wisconsin. Erik Sanstad said, “I’m a little reluctant to say the internet killed Book World. We never advertised, never got our name out there.”

Um…what?

I went to Book World’s website, and found that it had an online presence. It looked like Book World’s sales site was the one prepackaged and built by the American Bookseller’s Association. But I couldn’t find the Book World books on Amazon as a third party seller or on Abe Books or any of the other third party websites.

And if Book World didn’t advertise, and didn’t do a lot of work to maintain each individual store, it had no way to make up for the loss of foot traffic.

Not all of the stores in the chain were operating at a loss. That was clear just from Streur’s comment that his “mall stores” were losing business. (Malls are suffering badly in the U.S.) That meant the other stores weren’t losing business at all.

And, at the end of the article, it seems that other retailers see an opportunity that Streur missed. Michael Bauer, a gift shop owner in Minocqua, Wisconsin, bought the Book World building and fixtures for $300,000 and will open a bookstore in that same location with a different name in March.

Retailers who have experience in a community don’t spend $300,000 on a romantic notion that they can save a bookstore when someone else couldn’t. Retailers with experience, like Bauer, know where the missed opportunities are, and how to capitalize on them.

I’m not willing to say that Streur and his family mismanaged Book World, the way that Barnes & Noble is being mismanaged right now. It’s pretty clear that Streur and his family either don’t know how to change the bookstores to save them or don’t want to make the changes to do so.

Both are legitimate reasons to shut down, albeit sad for all the employees of the chain. But I get it.

The loss of Book World does not mean that bookstores aren’t viable in America—or in the world, for that matter.

But times have changed. People can buy paper books online, so booksellers need to capitalize on that. They also need to realize that they provide a service for their customers, one that Amazon tries to replicate with its algorithms.

Time to tell you our bookstore story.

North by Northwest Books and Antiques here in Lincoln City, Oregon, was started by Sheldon McArthur. Shelly used to own the Mystery Bookshop in L.A., the second most famous mystery bookstore in the United States (after the Mysterious Bookshop in New York City). Shelly retired to Lincoln City, got bored, and started North by Northwest.

He managed it, kept it viable, and made it a destination store for almost a decade. Many of his LA customers still ordered books from him here in Lincoln City, plus he managed to get other regular customers as well. He had a hefty online presence on various worldwide sites, including eBay and other stores. He carried new and used and collectible, and also had some specialty antiques.

When he decided to retire a second time, he didn’t tell any of us. Instead, he sold the store to his store manager, thinking she knew all of his tricks for keeping the bookstore not just viable, but highly profitable.

Well, she knew the tricks, and ignored all of them. She pulled the listings off all of the online stores, refused to work with any of the writers that Shelly had known for decades (including the writers from all over the world who come to our workshops), and stopped sending material to the regular customers.

She decided that the store could survive on in-store traffic alone.

She was wrong.

Within ten months, she didn’t have enough money to pay any of her bills. The landlord, a friend of ours, mentioned to Dean in passing that he was going to have to foreclose on the store. And we scrambled.

Because Shelly hadn’t been gone from the store for very long, the store could be saved, rebuilt, and made profitable again.

We knew that, not because we’re dreamers, but because we have two other retail stores in Lincoln City. Both of those stores carry books, but are not bookstores. (They also carry comics, toys, collectibles, and more.) The stores are destination stores in our little beach town. We have customers who stop in once a year, every single year, to see what we have. Then we have regulars who stop in weekly to see what’s new.

Our first retail store survived for seven years (when we didn’t own it, but had sold it to our store manager in 2007) on in-store traffic alone. It barely broke even, but it did.

Now that we bought it back (a few years ago), it’s doing more than breaking even, because we also have an eBay store and sell on other online sites. Both stores make their money online, and the physical space provides storage as well as windowing and sales from the in-store traffic.

We knew that with a minimum of effort, we could rebuild North by Northwest the same way.

Shelly took the store back from his manager (who wasn’t paying him either), we covered the back bills, and then we bought the store from Shelly. He’s helping us rebuild what she tore down, by helping us find books and accounts, and interacting with the previous long-distance customers that she alienated. He also works the store at least one day per week and will as long as he damn well pleases, because the store would not exist without Shelly.

Of our three stores, the bookstore has the highest foot traffic and usually has the highest daily in-store sales. We’re rebuilding the online presence, and are slowly putting the store back together from the mess it had been.

It’s new, used, and collectible again. We’re downplaying some of the antiques, because they’re not in Dean’s specialty, but the other antiques will remain, mostly to draw in the tourists.

We’re not trying to compete with Amazon at all. We’re trying to be the best little coastal bookstore we can possibly be. And it’s working. We’re more than paying the bills, even in our off-season, and we’re slowly starting to grow.

But we’re willing to experiment and figure out what works best for the bookstore and for growing the print-book experience for readers. We’re building on Shelly’s base.

You’ll see more about the store later in 2018 as we do a bookstore Kickstarter. The Kickstarter will help in a variety of ways: We have some repair work to do on the building, plus we want to open a few of the back rooms which have always been closed off. Our store manager has a plan for bringing in indie titles, giving them a way into our bookstore without going through one of the big distributors, but it’ll take a bit of an effort to implement that, including building our online presence.

I’ll let you know when the Kickstarter goes live.

That’s only one of the many things we plan to do with the store. Some are plans for online sales, some are for collectibles, some are for signed copies, some for book signings (probably mass ones around one of our major workshops), and much, much more.

Bookstores have changed and evolved. They can’t be what they were fifteen years ago, because the retail world isn’t what it was fifteen years ago. People still want to go into bookstores. People still want that signed copy of a book by their favorite author or to find a great beach read on their vacation. But they also want a pile of ebooks on their ereader/phone, so that they always have something to read.

Ebooks are a format, remember. So are paper books. And if you look at the history of publishing, you’ll see that in different decades, different formats dominate—cheap hardcovers 100 years ago, mass market paperbacks 50 years ago, maybe ebooks now, maybe not. The key is to provide the readers the opportunity to buy books in whatever format they find preferable.

Why am I telling you folks about all of this in a writer-centric blog? Because writers, particularly writers in the U.S., have given up on paper books. I read a lot, as those of you go through my recommended reading list know, and I try to read a lot of indie published writers. Only my preferred format is paper. I don’t like reading on a screen before bed, which is when I do most of my relaxation reading.

I’ve ordered paper books from indies in the past, and regretted it. They’re badly designed, badly made, and clearly afterthoughts. Vellum has changed that with their program for paper, but not enough that I feel comfortable ordering blindly from an indie writer. I usually check with a friend who also reads that indie or read the indie in ebook format only—which means I’m going slower on my indie reads.

I know I’m not the only one who has paper as a preferred format.

Joanna Penn and I had linked blogs in 2017 about how our preferred formats blind us to the way that other people read.  I think that’s not just true of our reading habits, but our buying habits as well.

A lot of indie and hybrid writers in the U.S. want to believe the ebook market on Amazon is the only market. It’s not, and it might not even end up being the biggest ebook market in the world.

Independent bookstores have grown in number since their lowest point at the end of the recession. They’ve grown 13% in the past five years, and remained steady in 2017 (the growth was minimal, but not a decline). And that’s the stores measured by membership in the American Booksellers Association. Not every new bookstore joins, nor does every store that carries books.

According to an article in Market Watch in July:

Indies are thriving because of Amazon, not in spite of the internet behemoth. This is a story of two different types of bookstores: one with vast inventory, low prices and algorithm-driven recommendations, and another that lures customers seeking tightly curated collections and a community of bookworms.

It’s not 2012 any more. The heady early days of the revolution have become the more staid days of a growing and changing marketplace. As I mentioned in previous posts, the traditional publishing world is figuring out what it’s doing, and indie writers are going their own ways as well.

Bookstores now come in a variety of formats, and it’s up to writers to see if the brick-and-mortar stores fit into their plans as well. They fit into mine, but they always have, because of my perspective.

Bookstores aren’t dying. Print isn’t going away. Ebooks are a format. And even though I own a bookstore, I still buy a lot of books online. Because…well…books. One can never have too many.

Or at least, I can never have too many.

So as I’ve been reviewing 2017, I figured I should look at the state of the physical book retail market as well. And I liked what I found. Proprietors with vision changing the way books are sold in actual stores. Great paper growth worldwide. Yay. And cool. And hope for the future.

And we all need a little bit of that, now, don’t we.

Maybe I shouldn’t ignore an entire year of news. I’m spending a lot more time than I expected to examine 2017. But I’m learning a lot, and I hope you are too!

For those of you new to the blog, it’s pretty interactive. I get ideas and comments and news from email and online forums. I’m learning something almost every day because of the blog, and sharing it with you all as quickly as I can.

In that spirit, please share this blog with your writer friends.

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“Business Musings: Bookstores (2017 in Review),” copyright © 2018 by Kristine Kathryn Rusch. Image at the top of the blog copyright © Can Stock Photo / andrewgenn.