The Wrong Goodbye of Barnes and Noble

[solitarywolf]

As many of you I love bookstores. I worked for a 1/4 of my life at an independent bookstore that was pushed out of business by Barnes and Nobles moving in practically next store. I see the life of big box stores going out of business across the consumer market; Virgin Records, Tower Records, Compusa, Good Guys, Thrifty Drug, the list goes on. What I see happening to bookstores is if there is still a demand, there will crop in void in cities where there are no more B&N/Borders little stores that will soon take the place of them. I see it like a forrest that caught on fire. Little trees start anew to create the furture of the forrest. The question that stands is will publishers still be making books when this time arrives? Or will we be getting our books digitally or in used bookstores?

[Fbone]

Originally Posted by QuantumIguana

If the big box era comes to and end, indies could make a comeback. And if there's a market for these specialized stores, someone can fill it.

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.

[fjtorres]

Originally Posted by Fbone

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.

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.)

[QuantumIguana]

A indie bookstore doesn't need an expensive lease. Take my example of Uncle Hugo's in Minneapolis. It's not much to look at, from the inside or the outside. It's not in a highly desirable part of town. It doesn't try to look like a palace. It's a bookstore. Books packed on the shelves, books stacked on the floor. It's not a coffee shop. IF you want some coffee, there's the KFC next door. Knowledgeable employees don't have to be prohibitively expensive. If you sell mystery or science fiction, all you need to do is to find employees who are knowledgeable about these genres. By itself, being a science fiction fan, for example, doesn't mean you can expect an extremely high salary. But an employee at a science fiction bookstore who knows the genre is probably worth more to the store than one who doesn't know the genre.

[pdurrant]

Several large chain stores have gone into receivership in the UK in recent month. Comet (Electrical goods) in November, and Blockbuster (film rentals), Jessops (Cameras) and HMV (music/film retailer) just this month.

[Fbone]

Originally Posted by fjtorres

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:

I wasn't comparing a B&N lease with a smaller strip mall one directly. But, relatively speaking even the smaller retail places have expensive leases. In my area they vary considerably $14-30/sq ft per year. Add in all their other expenses and they would have to pull in some serious sales to break even. This may explain why the few indies left in NJ are in more upscale areas.

If this business was easy, there would have been more stores opening to replace my Border's and B&N that have closed.

Of course, this applies to all retail. I've lost Office Max, Office Depot, Staples, 6th Ave, furniture stores (they may be returning thanks to Sandy), several grocery stores, banks, restaurants, Joanne's and dozens of smaller businesses. High leases usually is the #1 reason given.

[fjtorres]

Originally Posted by Fbone

Of course, this applies to all retail. I've lost Office Max, Office Depot, Staples, 6th Ave, furniture stores (they may be returning thanks to Sandy), several grocery stores, banks, restaurants, Joanne's and dozens of smaller businesses. High leases usually is the #1 reason given.

Indeed, it sounds like a global issue...for New Jersey.
(And, I imagine, the NYC region.)

Not an issue in the depressed economies of the midwest, though.
It's a big country.
(shrug)

In my area the most prominent Borders (in an upscale mall) has been replaced with a PF Chang's restaurant that is reportedly grossing well over ten million a year. *They* have no issues with the lease.
(Location, location, location.)

[Fbone]

Originally Posted by fjtorres

Indeed, it sounds like a global issue...for New Jersey.
(And, I imagine, the NYC region.)

Not an issue in the depressed economies of the midwest, though.
It's a big country.
(shrug)

I suspect it's due to the property taxes.

[ereadingdotcom]

I think what Sregener said is really interesting, and dead-on.

More specifically, I think USED bookstores are in for a major come-back; but they'll have to carry a lot of inventory, as I believe print books will be largely considered "artifacts" for collecting within a decade or two. If it takes that long.

Now, we LOVE print books. I have about 5,000 of them. But I have a lot more ebooks already and love the convenience of carrying my entire library wherever I go. But I think someday every town and city will have at least one significant used bookstore left, and that those stores will also carry popular "print on demand" (POD) titles as well.

So it will kind of be the best of both worlds. And as POD quality continues to improve, there will eventually be some really beautiful short-run editions put out I think.

[fjtorres]

Originally Posted by ereadingdotcom

And as POD quality continues to improve, there will eventually be some really beautiful short-run editions put out I think.

POD quality is adequate today. (If just barely)

The problem is cost; they need to bring speed and unit cost down. The two are linked, of course, since the up-front cost of the devices stops indies from getting them and the (relatively) slow speed of binding makes the unit cost high and limits appeal to the consumer.
Both are solvable given time.

[WillysJeepMan]

Originally Posted by wizwor

I think it's obvious. Digital records are fragile. It's easy to make or lost copies of things. A substantial dose of EMP could erase terabytes of history. Much of this cannot be consumed without technology. A hard drive crashes and you lost photos and home movies. Maybe treasured books.

In many ways, technology is like Henry Bemis' glasses.

I very much agree with what you've said.

Originally Posted by kennyc

That's no different than a library or house burning down. That's not something that is lost because of moving from a paper book to an ebook.

So no, it's not obvious. If you want to take that tact then it's MUCH MUCH easier to backup because of your 'concern'

Yes you need a display of some type to see it, but that's simply a difference, not a loss.
You can't read pbooks in the dark, eh?

Although Wizwor focused primarily on the loss of media, he did make mention (in passing) to the need of technology to access that media. THAT is the greater and more hidden danger.

As every corporation attempts to carve out their own proprietary walled garden, they are increasing the danger by this fragmentation. At this point, it doesn't seem probable that there will be a problem, but with laws like DMCA and other consumer rights restricting legislation, that increases the chances of consumers losing access to media the previously purchased. Technology obsolescence, proprietary media format lockout, restrictive legislation... all the pieces are there.

I'm not saying that the danger will come to be, only that the danger exists... we should at least be aware. In much the same way as the Y2K issue. Because there was no catastrophes on 1/1/2000 people concluded that the Y2K scare was a hoax. Little did they realize that serious problems were avoided because of 10+ years of code rework that was done to avoid problems. I performed some Y2K repair work on some mission-critical applications that would have caused some serious issues in the banking industry were they not addressed.

[ereadingdotcom]

Originally Posted by fjtorres

POD quality is adequate today. (If just barely)

The problem is cost; they need to bring speed and unit cost down. The two are linked, of course, since the up-front cost of the devices stops indies from getting them and the (relatively) slow speed of binding makes the unit cost high and limits appeal to the consumer.
Both are solvable given time.

Agreed on the speed and cost issue. That will solve itself as the technology advances and the demand stabilizes into a sustainable business model.

I wasn't arguing that the quality wasn't adequate for reading; I was saying that I believe POD will eventually be the ONLY way to buy most print books, and that they will eventually become a collectible "artifact" rather than something most people will actually read. In that case, the POD quality will need to be much better than adequate.

Put more simply, I think there is a POD middle-ground between the stunning limited editions put out by companies like Charnel House that often cost hundreds or even thousands of dollars and the standard hardcover/dust jacket paradigm that has existed for so long.