The most important question in the world of trade publishing is “what will happen to the book trade”, meaning, primarily, the bookstores (but also the other retailers that sell books, the libraries and the wholesalers that supply them). That was the topic of a panel called “The Power of Retail” at BEA in New York recently. I wasn’t able to attend the panel but there was an excellent summary of the key points from Alex Mutter in Shelf Awareness.
The panel covered how important physical stores are to selling books (from Domique Raccah of Sourcebooks) and how publishers can work to build store traffic (from Madeline McIntosh of Penguin Random House). ABA head Oren Teicher talked about what stores do to contribute to their local communities and he and B&N’s chief merchandising officer Tim Mantel, at least for this session, agreed that more bookstores is good for all bookstores. (This is what I would consider a dubious proposition.) And Dennis Abboud of Readerlink, whose principal business is to put the books into stores, largely “general retailers”, for whom they are are a sideline, talked about the challenge of stocking book departments that have as few as 80 titles.
As it happens, this conversation took place only a few days before it was announced that Barnes & Noble was being sold to Elliott Management, which also owns and has reconditioned the Waterstones chain in the UK. That acquisition caught everybody’s attention and made two reporters call me as part of the research for their stories. (ReaderLink emerged as a late possible alternative acquirer of B&N, but that did not come to fruition.)
They wanted to know, “will Elliott save B&N?” The announced strategy, by James Daunt who will run both chains and who engineered the changes at Waterstone’s, is to repeat what appears to have worked in Britain. Diversify the stores from each other. Give more local autonomy for title selection and merchandising. Make them as different from each other as independents are different from each other.
My hunch is that it will take much more profound change to make the “big chain bookstore” model commercially viable in the US anytime in the future. What surprises me a bit is that this conversation about the future of bookstores, and just about every one I’ve seen, just doesn’t acknowledge the history of how we got to where we are.
The Barnes & Noble store network that exists today was spawned by investor enthusiasm in the late 1980s, which also financed the growth of B&N’s longtime competitors, Borders, which closed in 2009. When the book consumer of that time either wanted a specific book, particularly one that was not a current bestseller, or wanted to “shop” a category or topic to see what was available, it was a natural instinct to go to the store with the biggest selection, the most titles.
The fact that selection was a magnet became the driving reality the superstores were built on. The biggest independents had long carried a very large number of titles and now the chains, which had previously specialized in 20-25,000-title stores in malls, started building freestanding destination stores that carried 100-125,000 titles. The national wholesaler Ingram also kept expanding their title base, so both the chain stores and the independents could get rapid resupply support for most of what they carried.
The situation started to change when Amazon arrived in 1995 with the ability to deliver just any available book to any customer in as much time “as it took” (varied by the book and publisher, of course), with a “promise date” to tell the customer when to expect it. Since most needs for most books by most people are not immediate, over time online shopping, rather than looking for the biggest in-store selection, became the logical default for anything you weren’t sure you’d find. And in a multi-million title world of books (to which we have evolved over the past 20 years from the quarter-million title world we lived in before Amazon), that’s by far most of the shopping and has become most of the purchasing.
In addition to the shopping reality, the marketing reality has also changed. It used to be that word of mouth was a slow thing, taking the time it did to travel from person to person through conversation and personal interaction. The internet changed that; social media changed it on steroids. Now word of mouth can spread like lightning, and stop nearly as quickly as it starts. Social media can make a book, or a meme, very ubiquitous for a week or a month, and then disappear.
That means that there is a high premium on having a book available in as many places as possible for the period of its great fame, but it also means those books need to be rotated quickly. To maximize sales, they need to show up right away when they’re hot, and they have to relinquish their place of prominence to make room for the next thing that comes along.
What that all added up to is that the retail sector that is needed in the area of rising online sales is very different from the one we needed before. A massive selection is not an effective magnet anymore. And the books top of mind which could be candidates for an “impulse” sale are changing all the time, and rapidly. What should be by the cash register can’t be the same ten books for several weeks in a row. And all those titles in inventory meant to draw traffic are just an economic millstone.
That means we need smaller stores with much more rapidly rotating title selection, probably driven algorithmically by sales signals and social media signals more rapidly than human buyers could arrive at answers poring over spreadsheets.
Who has the system that could drive that outcome? Nobody I know of.
The bookstore growth we’ve seen has been driven by a growing number of independents, smaller ones than the big successful indies of the 80s and 90s. They have been enabled by the collapse of Borders and the reduction in shelf space for books at Barnes & Noble, which contracted the availability at retail even faster than Amazon was taking away the share. It has also been enabled by the charm and pure psychic reward of being a bookseller, which has attracted talented entrepreneurs to accept a effort-reward ratio which isn’t entirely about money. I can’t prove it, but my strong hunch is that most successful independent bookstore owners could make more money doing something else; they’re just making the rational decision to do something they love doing instead.
If this analysis is right, it will take more than diversification of the title selections and merchandising emphases to make the pretty large B&N stores thrive again. They need more smaller stores, not so many very large ones. Making the title selections more local is well and good, but the information that drives that has to be deep, sophisticated, digital, and reacted to very quickly.
It had seemed to me earlier that Amazon might be on the way to building just that. They have the ability to put small stores in place, rotate the stock quickly, and to do it with a minimal increase in their own inventory since they can “pick” a book for an Internet order off a store shelf as easily as off a warehouse shelf. But their store footprint has not evolved in a way that suggests they’re thinking along these lines, at least not yet.
Britain is culturally and physically different enough from the States that it is hard to know whether a strategy that worked for Waterstones there can work for Barnes & Noble here. From where I sit, making the stores a bit more diverse is a “deck chairs on the Titanic” move which does not solve the problem that the attraction of a bookstore as a place to buy books as opposed to the online alternative just won’t support a large number of large stores anymore. The right strategy would seem to be many more smaller selections customized to the neighborhood or perhaps even the traffic at a specific spot, or even in a department of some other store.
Executing on that requires what Waterstone’s and B&N can do — get the books needed from every source in the world and deliver them efficiently to many different retail locations. But it also requires what neither of them can do yet, which is to automate the stocking and restocking decisions and tie them to real-world data: both about book sales and about other things. ReaderLink might actually have been closer to having that capability. Maybe they were thinking along these lines when they, briefly, seemed to be putting themselves into play to acquire B&N. Doesn’t matter; didn’t happen.
But as Raccah and McIntosh made clear at Book Expo, every publisher will be hoping that what they do works. The shrinking retail channel, and particularly its last big single player, are of critical importance to the book publishers.
If you haven’t picked a copy of my new book yet, written with the late Robert Paris Riger, you should. It’s good.