Although independent bookstores, so-called "Mom and Pop" stores, have receded from a market share of 35% at their height 20 years ago, to a mere 8% today, some industry observors feel they might just outlast the big chainstores like Borders and Barnes and Noble as conditions continue to shift in the U.S. book market.
The chains drove many independents out of business during the last 20 years. Now they are not only feeling the effects of the recession, they are being hit hard by competition from online booksellers, Big Box retailers and changing technology.
The remaining independents like Books Inc. or Book Passage in the Bay Area, Portland's Powells or Denver's Tattered Cover, are deeply rooted in their communities and supported by loyal customers. "Our customers have all been shaken by a raft of bookstore closings, even stores that have been been around for decades, like Berkeley's Codys, observed Nick Setka, General Retail Manager of Book Passage in Corte Madera, "Consequently they have been made aware that their support is an important part of our survival. "
According to Nick, a bookseller for more than 30 years, stores like Book Passage thrive because they are integrated into their communities. Book Passage offers classes, lectures and signings throughout the year and also sponsors book groups and clubs (full disclosure: I have a talk and signing for my new book, California the Beautiful, at Book Passage on Dec. 3).
Instead of being cultural centers for their communities, Borders and Barnes and Noble rely on depth of inventory (so-called "superstores" stock more than 125,000 titles) and, in the case of Borders. a diversified inventory that includes music. Depth of inventory is no longer important in the electronic age, a time when Amazon maintains a multi-million title database. Depth of inventory also takes up space and drives up the rent. In the age of the iPod, the value of Borders' music inventory been supplanted by technology. In fact, Borders sales, for the first half of 2009, fell precipitously by 17%.
According to Publishers Weekly, Borders will be adjusting its inventory to minimize music and adding new releases and best-selling backlist. Barnes and Noble' s strategy is to diversify its business lines by beefing up B&N.com and releasing its own electronic reader, the Nook, a direct competitor to Amazon's Kindle. In order to load your Nook with books and periodicals, you will have to visit a B&N store. Borders cannot catch-up with online bookselling, they started much later than B&N and they have no prorpietary technology like B&N's Nook. Borders is in real trouble.
Will these defensive moves be enough? "I think there is a real chance that Borders will go out of business in 2010," said Nick Setka, "and that won't be good news for anyone. Publishers will have a mountain of returns, bad debt and lost sales. Nick also observed that the Independent's real competitors are no longer the chainstores, but, in fact, online booksellers and Big Box discounters like Target and Wal-mart.
Wal-Mart initiated a price war this fall, discounting best-selling hardbacks, like Dan Brown's The Lost Symbol, down to $10.00 (up to 74% off). Amazon came back with its own loss leaders at $9.00 and Wal-Mart had the last word at $8.99. These discounted, loss leaders will take a big bite out of Borders and Barnes' best-seller business and hurt the Independents as well. As Nick said, "The big chains will feel it more, they rely on best-sellers more than we do. Right now, the shoe is on the other foot."
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