Bye Bye, Big-Box Bookstores

After more than a decade of dominance fueled by aggressive expansion, the leading big-box bookstore chains in the United States are hurting.

Borders is barely hanging on by a financial thread, with an almost $38 million loss near the end of 2009 sending the company into a tailspin. 2010 began with a round of layoffs, followed by restructuring and most recently the departure of its CFO, Mark Bierley. The cracks are beginning to show in its retail stores, too. Here in Bloomington, Indiana, where I live, the bookshelves at our local Borders are getting emptier by the month. It’s also now closed on Sunday, presumably as a way to cut operating costs.

Barnes & Noble seems to be faring better, but that’s a relative statement these days. For the better part of a year now it’s been fighting a takeover attempt led by billionaire corporate raider, Ron Burkle. But in some ways that’s not the worst of its worries. In an attempt to counter Burkle, Barnes & Noble CEO Leonard Riggio recently went looking for someone else — someone friendlier — to buy the company. He was met with this grim response by the financial press:

Before news of Barnes & Noble’s plan to explore alternatives, shares had declined about a third this year in the face of concerns that the growing digital-books market and competition from Amazon.com Inc. would squeeze out its 720 bricks-and-mortar stores while also leaving it with little market share in the digital world, where its Nook e-book reader followed in the footsteps of Amazon’s Kindle.

“It’s difficult to envision a buyer of this company given the structural issues it continues to face,” said Credit Suisse analyst Gary Balter.

Realistically, it’s probably an overstatement to say that nobody would want to buy Barnes & Noble. Someone with an interest in revamping the chain might well want to do so. Of course that would most likely mean, sayonara Barnes & Noble as we know it.

This isn’t a surprising development, and both Borders and Barnes & Noble should have seen it coming.

Remember Tower Records? Or all of those Virgin Mega-Stores? With the rise of digital music, most of the big-box music stores were forced to shut their doors. They just couldn’t compete with a business model premised on minimizing infrastructure and abandoning material goods. The same goes for Blockbuster and all of those other national video store chains, whose physical stores have been driven under by the double-whammy of Netflix and video on-demand.

E-books still have limited uptake, of course, which means that Borders and Barnes & Noble have yet to feel the digital squeeze to the degree that music and video stores have. Still, their lackluster forays into online bookselling have put both companies at a major disadvantage. Barnes & Noble used to have a fallback in the education market, with an exclusive lock on hundreds of college bookstores across the United States. Even that’s now being eroded by Amazon.com, however, which is actively courting students on its website.

There’s been some talk lately of how to retool the big-box bookstores to make them more competitive. Unfortunately, as a recent Publishers Weekly article noted, one plan would significantly involve “Taking the ‘Book’ Out of Bookstores.” In place of the physical volumes there would be an increase in what booksellers like to call “non-book product,” including journals, cards, fancy writing paper, reading lights, games, and that type of thing.

No doubt the profit margins on non-book product are attractive, and I suspect they help to create store traffic. But honestly, is this a viable long-term strategy? Does it make sense to save these bookstores by turning them into plus-sized stationery stores?

Here’s a different idea. Bowker, a leading book industry research and information firm, recently reported that women over the age of 40 comprise the largest segment of the US book buying market. Common sense would dictate that Borders and Barnes & Noble ought to pursue that aspect of the market even more actively than they do now, since that’s where the money is.

But it’s clear that now’s not the time for common sense; now’s the time for bold, unconventional thinking. What this means is that the bookstore chains ought to be courting those who aren’t your usual book buyers and working closely with publishers to develop titles that would appeal to them. That way they’d be broadening the market rather than simply reproducing it as it is.

I also wonder if now might be the right time to begin experimenting with smaller, shopping mall-based stores as well. Borders and Barnes & Noble closed most of their Waldenbooks and B. Dalton mall locations in the 1990s, in part to help finance the construction of their superstores. Nevertheless, people still love to shop at the mall, even in the internet age. The experience of being in pubic, hanging out, and poking around is something that online retailers can never hope to duplicate. And so here, again, is another untapped possibility. A suitable print-on-demand system could make mall stores even more attractive to book buyers, moreover, since then they wouldn’t have to wait for titles to be delivered from suppliers or sources online.

Maybe, in the end, it’s time to bid farewell to the big-box bookstore chains. Personally, though, I’d be sad to see them go, especially since they’ve been instrumental in making books available in places where, for the most part, they weren’t abundant — places like my hometown of Goshen, New York, for instance. I also think it’s important for printed books to remain a part of the experiential landscape of people’s everyday lives, both in the form of libraries and retail stores.

Indeed, what would it mean to live in a time when we couldn’t pluck a random volume off of a shelf and start reading, just for the sake of doing so? That’s the question we’re staring at now, not only because of the shakeout that’s been going on for the better part of 15 years in the retail sector, but also because of the cutbacks that are crippling US public libraries. But Instead of staring at this question, isn’t it about time folks started staring it down?

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8 comments

  1. [...] This post was mentioned on Twitter by Ted Striphas, Alex Leavitt. Alex Leavitt said: You can blame piracy, but it's moving toward digital. Borders ended 2009 w/ $38 million loss. http://bit.ly/cZbSJB –> Manga implications? [...]

  2. Brian says:

    Interesting point, but what do you make of Blackwell’s in the UK handing the store over to employees? Their point is that employee-owned shops have done better during the recession, as seen by British dep’t store John Lewis. [ http://www.guardian.co.uk/business/2010/sep/08/blackwells-bookstores-staff-ownership-switch ] Could it work here? Interesting to think about, even if far too Marxist a concept to gain any currency in an American boardroom.

  3. Ted Striphas says:

    I volunteered briefly at a cooperatively owned bookstore, Brian. It wasn’t exactly worker-owned per se, but it was interesting to see that a business could be run if enough people cared passionately about it and its mission. Could something similar work for a place like Borders or B&N? Given how the word “socialism” gets bandied about here in the States these days, I seriously doubt the Blackwell’s model would have much uptake. Corporate raiders, “angel” investors, and venture capitalists seem to be more the American style of fixing things — even if those things don’t actually end up getting fixed.

  4. Brian says:

    It’s true, Ted, but models in all areas of publishing are shifting, as you well know. There have been some experiments with non-profit bookstores, including one that just opened in Spartanburg, SC (Hub City Books). As the chains turn into Best Buy Build-a-Bears, people who are committed to printed books and want the variety they’ve become accustomed to, not just bestsellers tucked behind the Nook display, may start exploring new options. You’re probably right about the chains in this case, however… unfortunately.

  5. Ted Striphas says:

    Thanks for the follow-up, Brian, and indeed you’re absolutely on the mark here. I was probably too cynical in my previous comment.

    For whatever it’s worth, in my post I’d considered including some mention of how now might be a good time for highly-specialized independent bookstores to start making a comeback. I backed off only because the post was already getting long, and I hadn’t fully thought-through the argument.

    I think we both agree, in principle, that bookselling needs more experimentation, not retrenchment.

    P.S. Thanks, by the way, for mentioning this post on Survival of the Book. It’s a great blog!

  6. yogi-one says:

    Indeed, what would it mean to live in a time when we couldn’t pluck a random volume off of a shelf and start reading, just for the sake of doing so?

    This scares me, because when I read it, I started to think of when the last time I actually did that was…and it’s more years than I care to admit here.

    Unfortunately that’s no longer how books get sold.

    I also remember the same argument being used in defense of record stores: many boomer musicians nearly lived at their local record outlets in the 50′s and 60′s, combing the shelves and drinking up whatever new music excited them right in the store. They had trouble imagining what the music business would be without the local record store.

    Well, we don’t have the local record store anymore, but a lot of people are still having trouble imagining what the music business is going to be like.

    The book industry is next in line for that experience, I’m thinking. As in the music biz, there may not be an easy answer, and the industry may be in for a decade of the same kind of breakdown and chaos the music biz is experiencing.

    For a few authors and booksellers, the magic combo of luck and preparedness may prove a boon, but I’m willing to bet for most it’s going to be a big WTF moment in the industry.

    • Ted Striphas says:

      Thanks for the comment, and sorry it’s taken me a few days to respond. Busy, busy, busy.

      In any case, I agree with your assessment about the future of the book industry, at least in principle. Rough seas clearly lie ahead on the horizon, no doubt yielding all sorts of WTF moments and more along the way.

      I say “in principle,” though, because in general I think people are too quick to generalize about the example of the music industry. One of the many things that distinguishes the music industry from the book industry is the former’s more successful experiments with and implementations of format change: from wax cylinders to proto-plastics to vinyl, and then on to reel-to-reel, 8-tracks, cassettes, and CDs, music lovers have consistently had to contend with new music delivery systems. Mp3s and digital downloading are no exception here. People have been taught to consistently not care how they get their music (serious audiophiles notwithstanding).

      Books, on the other hand, are different. Since about the early 1700s or so, book form has been comparatively stable — this despite many attempts to miniaturize books using microfilm and later placing them onto CDs, etc. This isn’t to say that e-book adoption can’t or won’t one day surpass that of printed books, but there is a kind of format-inertia particular to books that we don’t see with sound recording. With that, my take is that the book industry will be slower to change than the music biz, and to my mind it will be all the better for it. One can hope, anyway.

  7. [...] 13th, 2010 | Bookselling Three months ago I blogged here about the plight of the U.S.’s two major big-box bookstore chains, Barnes & Noble and Borders, both of which have been struggling due to the combined effect of [...]

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