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Old 01-18-2013, 08:16 AM   #108
fjtorres
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Quote:
Originally Posted by Fbone View Post
Yes, it's possible. However, the smaller indies will face the same issues as the large big box stores. High leases, utilities, computer, inventory, website and advertising. And the big expense ... payroll. What would be the salary of a knowledgeable employee? And you would have to do it with lower margins from distributors, competition from online retailers/libraries and customers unwilling to pay full list price.

It's a tough business.
Yes, it's a tough business but the costs don't *have* to be as big for an indie as for B&N.

Take leases, for one. B&N runs massive warehouse-style stores as regional draws and the place them at or near big malls. That drives up their leases. A neighborhood-focused indie typically runs in a strip Mall. I haven't priced strip mall rental rates but I doubt many leases run $400K a year like this particularly stupid Borders lease:
http://www.the-digital-reader.com/20...ing-the-lease/
And that was in a relatively poor California suburb trying to draw in traffic from neighboring suburbs.

Or try this:
http://amarillo.com/news/local-news/...se-not-renewed

That is from a lease B&N can no loner afford. The property is valued at over $1.5 million and it sits near the entrance to be big mall. I don't think even the largest of indies would take a ten year lease on such a site; B&N certainly isn't anymore.

Quote:
An annual report Barnes & Noble filed with the Securities and Exchange Commission in June noted the company had 123 store leases set to expire in 2013.

“Substantially all” of Barnes & Noble’s 691 bookstores are in leased premises, the report said.

“Barnes & Noble’s profitability depends in part on its ability to continue to optimize its store lease portfolio as to the number of retail stores, store locations and lease terms and conditions,” the report said.

“Barnes & Noble has 442 leases up for renewal by April 30, 2016. If the cost of leasing existing stores increases, Barnes & Noble may not be able to maintain its existing store locations as leases expire,” the report said. “In addition, Barnes & Noble may not be able to enter into new leases on acceptable terms, or at all, or it may not be able to locate suitable alternative sites for additional sites for new retail stores in a timely manner.”
The whole Borders and B&N megastore format was conceived for a different era and is no longer viable. That does not mean that is the only way to deliver pbooks to a B&M customer base.

Other business models exist or will exist that better fit today's market, logistics, and customer base. Some will be used by chains, others by indie stores, but few if any will work to the old "stock it and they will come" megastore format--not even B&N if they survive. You'll see a different ambiance, different shelving strategies, better use of floor space *and* vertical space.
Maybe, like a Home Depot (among other places) the lower, accessible, shelves become the retail space and higher shelves become the "warehouse" with the extra copies of the books on display shelved out of the way to maximize the number of "different" books visible at eye level. Or a chain can run a regional warehouse in a cheap-rent area and use it to replenish the stock of multiple smaller storefronts scattered throughout the city two to three times a day. Add-in an internet component and customers could order a book from work and pick it up at the strip mall on the way home.

So, no, indies do not have to face the exact same costs as B&N. Nor do they have to generate the same kinds of revenue as the corporate chains. Most are smaller, often family-owned, and they merely have to be stable and reasonably profitable, wheareas big chains have to satisfy investors and stockholder looking for growth, increased margins, reduced costs, increased volumes; not stable profits.

They might be selling the same product but they're not really in the same business. And it may be that surviving indies are a closer fit for the new pbook B&M retailing market needs than the megastores. There is certainly no guarantee that the same factors weeding out the marginal megastores will also squeeze out indies. B&N is trying to restructure their stores--right-sizing them, in corporate-speak--for the current market. Well, may indies are already the right size for what demand remains in their area for B&M pbook sales. They've already been "weeded out" by decades of chain store competition.

Again, it's not B&N pbook retailing that is going away--merely the giant megastore way of doing business. Mourn that if you must but don't think there won't be bookstores after the bulk of the megastores go away.

(Some will remain, though. In cheap-rent, regionally accessible sites. Say one per large metro area. You won't find one in downtown Washington, DC but you'll find one in Silver Spring or Oxon Hill, Md as one example. The things were originally meant as regional draws and that is what they are reverting to.)

Last edited by fjtorres; 01-18-2013 at 08:18 AM.
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