It's great when the received narrative gets disrupted, and Oren Teicher, the CEO of the American Booksellers Association (ABA), has heard more than his share during his long tenure at the independent bookstore trade group, where he's been the boss since 2009 and in other positions before that. The story that is told, news cycle after news cycle, is that indies were always just about to be wiped off the face of the country because of a new challenge.
First, he says, it was that the B. Dalton and Waldenbooks outlets in every mall would kill local stores. Then, the big boxes like Barnes & Nobles and Borders. After that, the deep discounters like Crown Books. And onward to mass merchandisers like Walmart and membership stores like Costco. And, finally, along came Amazon, he says, followed by Amazon selling ebooks.
But after years of shrinking sales and locations, indie stores have seen a slightly accelerating tick upwards since 2009 in new businesses, more stores, a bigger slice of the retailing pie, and a growth in overall revenue. Teicher cites several reasons, but one of them is the same wave of technology that, the story was supposed to go, would drown non-chain stores once and for all.
Indie bookstores have taken a truly big hit in the last 20 years, but the trends cited account for only a portion of the roughly 4,000 independently owned stores (including small chains) shrinking to under 2,000 by 2011. Two recessions didn't help any independent retailer, bookstore or otherwise, and deep bricks-and-mortar and then online discounting certainly bit into sustainability for all kinds of retailers, even those that had been around for many decades — or more than a century. And skyrocketing real-estate costs since the last economic dive, especially in major cities, put a squeeze on stores that didn't own buildings or have favorable landlords. "You can't put the bookstore out in the middle of nowhere," Teicher says. (Beloved bookstores have been closing down due to rent forever, but nostalgia sets in when reading this story from 1997 when a mere 2.5 percent rent increase forced Manhattan's Books & Co. to shutter.)
But it's easy to miss in the "indies failing" story the fact that thousands of mall and big-box locations also closed, starting before the big decline in independents. Crown Books went early, by 2001, from almost 200 stores at its peak. B. Dalton had its most stores (800) in 1986, and shrunk over the next 25 years. Waldenbooks at one time had over 1,200 outlets; when it was sputtering in 2010, it had fewer than 300. Borders, its parent company, had about 500 Borders-branded locations before it shuttered in 2011, taking the rest of Waldenbooks with it.
One analysis, using Labor Department and other data, puts the peak number of bookstores at nearly 14,000 in the mid-1990s and at about 8,000 by 2012. Non-chain stores represent roughly one third of the closures.
Now indie stores are seeing a resurgence — small, but noticeable, sustained, and continuous. The ABA says its membership has grown from 1,401 and 1,651 locations in 2009 every year through the current one, with 1,775 members and 2,311 stores even as Borders shut down and Barnes & Noble closed 120 outlets during the same period. (Not all indie stores are ABA members, though most are. This can result in apples-to-oranges comparisons among articles that rely on ABA numbers, industry figures, or government analyses.)
There's a fair argument to be made that indies remained bulwarks and carved out territory that bigger competitors couldn't hold as ebook sales grew and consumed a hunk of the overall market for book purchases. Ebooks, along with Costco, Walmart, and Amazon, might have been the real culprit in killing chains by sucking the high profit margins of new hardcover booksales out of the big boxes. This also ostensibly gave breathing room to indies, though they lost some of those sales, too.
It's important to put this in perspective, of course. The most recent comprehensive look at retailer market share is from Bowker's 2013 U.S. Book Consumer Demographics and Buying Behaviors Annual Review. A chart from that report tells the story vividly. From 2010 to 2012, large chains' percentage of consumer purchases dropped from 31.5 to 18.7 percent; online sales swelled from 25.1 to 43.8 percent. Indie stores' percentage rose from 2.4 to 3.7 percent. (Book clubs had the other big loss, dropping from 11.5 to 6.1 percent of the market.)
Overall retail book revenue in the category has remained relatively flat for years when adjusted for inflation, especially in the "trade" category, which is general fiction, non-fiction, and religious, and excludes most materials aimed at education.
What's most interesting is that after years of torrid growth, ebooks settled down and lost ground: the saturation point was apparently reached a couple of years ago in the mix of ebook, paperback, and hardback sales. The Association of American Publishers survey for 2015, released July 11, found ebooks were in the second year of slight decline in revenue and unit sales. Some of that change came as publishers were able to push an agency model.
Even through indie stores can sell Kobo ebook readers and ebooks through its bookstore, Kobo's revenue represents just 3 to 4 percent of the U.S. market. Amazon occupies about 74 percent, Apple's iBookstore 10 to 12 percent, and Google Play about 1 to 2 percent.
"Not only are we still here, contrary to the projections and predictions of many, we're better off and stronger today than we were 20 years ago," says Teicher, and the evidence seems to back him up. If not torrid growth, all trends are modestly popular. A new equilibrium may have been reached.
Especially with fewer chain stores, and Costco, Walmart, and the like stocking relatively few unique titles relative to volume, people still need to go to an actual bookstore to browse effectively. "There is nothing like the physical place to browse and discover titles that you didn't know about," Teicher says.
He has a four-legged stool on which he rests the current minor resurgence of local stores. "It's disingenuous not to acknowledge part of our more recent success is directly, intricately tied to the shop-local movement," he says. In some cities, bookstores have been rescued after losing a lease or after declining sales through crowdfunding campaigns, membership drives, or a wave of new sales from people who realized they were about to lose a store.
"Amazon can try to identify with local businesses," Teicher says, its so-far single-store experiment in operating a bricks-and-mortar store here in Seattle notwithstanding — he says, "Those aren't bookstores." (I've described the store's policy of shelving most books face out as the physical manifestation of a Web page.)
Teicher says a second leg is how publishers and other bookstore suppliers have overhauled their operations to better serve smaller stores, after realizing that they were ceding their future to Amazon and chains. "It's as important for them to be a viable network of bricks and mortar stores as it is for us," he says. "The publishers deal with bookstores dramatically differently today than they did a decade ago." This includes much faster delivery, reducing the advantage of online retailers, and print-on-demand for some titles, allowing what would have been an out-of-stock or back-catalog book to be produced and shipped almost immediately.
Third is handselling, something this site's founders know…first hand. Passionate bookstore staff can have a disproportionate effect in making sure people leave with a book at all, and in providing exposure to titles that would otherwise languish.
But it's the fourth leg that I plan to look into further in the weeks to come. It's a bit of tech innovators being hoisted by their own petard: the massive drop in cost in back-office software and computers has benefitted small stores as much as a large ones. It costs much less now to do much more than a decade, reducing overhead and improving efficiency. Teicher notes this includes point-of-sale terminals and transaction costs, inventory control, payroll management, and even bookkeeping.
On the front-end marketing side, the ease of reaching customers and helping remind people stores are there — via Web sites, email, and social networks — has gone way up, while cost have plummeted as well.
Teicher says there are clouds on the horizon. Higher rents, noted earlier, are one of them. Higher wages are another. While Teicher says members want employees to make livable wages, the timing puts a crunch on small retailers more than big ones, in that labor forms a larger percentage of expense, and a small store needs a minimum level of staff that can be proportionately much higher than a store with 10 times the square footage. (Amazon reportedly lured bookstore staff to its Seattle store by offering higher wages, a rarity in the industry.)
Because booksellers can't easily raise prices, between competition and the recommended list price appearing on nearly every book, there's no room as in other retail segments and other industries to pass even on modest increases in expense. Only increased volume helps. But the most profitable ABA members have increased their share of non-book items, which often have much higher margins than books, sad to say. He says 17 to 19 percent of total sales at the most successful stores are something other than books.
It would be the worst fate for indie stores to falter due to the resurgence success of cities and the growing enactment of better minium wages, rather than competition from other kinds of booksellers. But stores benefit from denser cities with more residents looking for a local book fix, and the prevailing winds that lift expenses apparently are lifting sales, too.