The End of Book World Is a Good Sign for Independent Bookstores

How does the sudden demise of the fourth largest bookstore chain in the country bode well for independent bookselling? It confirms that the business models of the vast majority of indie stores can succeed, and are succeeding, where largescale chains cannot.

Why did Book World close? Why all of their stores? Why all of a sudden? Suprisingly, it had little to do with books. Many of Book World’s locations were in shopping malls, which depend on anchor stores like Macy’s, Kohl’s, Herbergers, etc to bring traffic to the rest of the shops. As is well documented and much discussed, this retail segment has been struggling mightily in recent years. Book World’s senior VP Mark DuPont attributed the chain’s closure directly to the struggles of these non-bookstore retailers in the Publishers Weekly article that broke the news:

Dupont attributed the downturn to the national consumer shift towards e-commerce and away from large department stores. This, Dupont wrote, “has triggered the loss of vital mall anchor stores and a downward spiral in customer counts, reducing sales to a level that will no longer sustain our business.”

Despite a recent New York Times article suggesting that people only buy books on the Internet, this was neither Book World’s given reason for their closure nor was it an accurate statement. Stores in a closed mall saw losses of nearly 40% over the year prior, DuPont told the Midwest Independent Booksellers Association (MIBA). Book Worlds non-mall stores performed significantly better, but not well enough to compensate for the company’s overall losses. “Essentially, looking at the decline we didn’t see a way to reverse that. I put together an extensive proposal to only close the poorly performing stores, but it still came down to the continued decline of the rest of the stores. Everybody in house felt like online retail was cutting too much into our market.”

A view inside the Grand Forks, MI location

If you’ve ever been into a Book World, you’ll know that it’s a little different from most independent bookstores. In fact, it’s different enough that there is and has been significant debate within the independent bookseller community about whether the chain qualifies as “independent.” Technically, it is a privately held, family-owned company that operates multiple locations. But all of the locations functioned under policies originating from the company’s main headquarters in Appleton, WI. Purchasing, advertising, and branding were consistent throughout all of their stores. Stores did not operate individual websites. Furthermore, Book World’s model was much more invested in magazines and periodicals than a typical indie bookstore, with an inventory that skewed heavily toward bestsellers and mass market paperbacks—a very different feel from stores that curate books to the tastes of their owners, staff, and customers. This is not to say that Book World was oblivious to their clientele; rather, due to Book World’s larger operation they weren’t able to be as flexible or responsive as a smaller-scale operation.

So when DuPont says that “online retail was cutting too much into our market,” the market he’s speaking about is not necessarily book sales, but a specific type of book sales. Book World was by and large in the business of competing directly with online retailers, and not just for market share on physical book sales, though this is of course a major factor. The majority of their inventory also comprises the most common books to be purchased on e-readers and audiobooks, so their sales were also affected by those technologies as well.

How is the rest of the industry is faring against exactly the same challenges that faced Book World? In the era of online retail, disruptive technologies, and a stagnant economy, book sales in retail stores across the country are increasing, according to statistics compiled by NPD Bookscan and reported by Publishers Weekly. For the second consecutive year, book sales have increased nationwide. Furthermore,

(t)he unit gain was driven by the retail and club channel, where sales rose 3.5% in 2017 over 2016. Units in the channel hit 593.7 million units, compared to 573.8 million units sold in 2016. Sales via the mass merchandisers channel fell 6.7% in the year, dropping to 93.6 million units, down from 100.4 million units in 2016.

In addition to increased sales, the country is still experiencing a resurgence in small independent bookstores. Between 2009 and 2015, the ABA reported a 35% growth in the number of independent booksellers, from 1,651 stores to 2,227. In Book World’s region, MIBA also confirms that their membership has reached record highs, with more stores opening each year than closing, and most stores seeking to sell are finding new owners to take over rather than having to close.

(If you need more convincing, check out this great video by Amelia Kunhardt, lifted from the above-linked article on Quartz.com, originally published with permission of Harvard Business School Working Knowledge, where it first appeared.)

All of this suggests that it was Book World’s size and model that caused its performance to suffer, rather than the state of the industry as a whole.

What impact will this have on the state of independent bookselling in the Midwest? The most significant impact will of course be on those communities that are losing a bookstore. Book World provided a welcome place for readers in many areas in the Midwest that did not have another option, and now those readers will not have a place to go where they can be surrounded by books and others who love books. But many of Book World’s locations were in communities that had more than one independent bookstore, and many of those independent bookstores are hussling to prepare themselves for an influx of new customers, making slight adjustments to their inventory to meet those new customers’ needs.

Some customers might be willing to drive a little further to visit an indie bookstore in a neighboring community (many of Book World’s locations were in extremely small communities already, and their customers are accustomed to driving a good distance to get where they’re going).

Contrary to the common narrative, Amazon.com didn’t kill independent bookselling. Large chain bookstores like Borders and Barnes & Noble were really what put indies in a vice in the mid-nineties. Operating with the vast coffers of their investors, these stores were able to provide inventory unlike anything smaller shops (save mega-independents like Powell’s) could compete with. When Amazon came along, it competed most directly with these giants, toppling Borders and wounding Barnes & Noble to the point where indies could gather, adjust, and surge forward as they have in this decade. The takeaway is this: indies don’t directly compete with online retailers, they directly compete with chain bookstores. Amazon’s steady consumption of market share is a concern for everyone in every industry, not just booksellers, and of course it remains a factor in the livelihood of independent bookstores. But the facts remain that as Amazon takes market share away from chain bookstores, the indies benefit.

As such, we expect to see a number of new bookstores opening across the affected areas, all operating on a small scale with the independent model currently seeing so much success nationwide. In conversations with the MIBA, DuPont stated that many of the company’s locations were in fact performing extremely well, and that they had much reason to believe that those communities were more than capable of supporting an independent bookstore. Several interested parties have reached out to both Book World and MIBA and are in the process of purchasing fixtures, inventory, and/or locations to open new independent bookstores in communities affected by Book World’s closure. In fact, DuPont himself is entertaining the idea of opening a bookstore. Says DuPont, “There’s still a lot of great books being published, and people still want to go an buy them in a bookstore.” If the senior VP of Book World still has faith in the indie market after the demise of his company, that’s a pretty good indicator that there’s a lot of upside still to come.

Despite the immediate negative impact that Book World’s closure will have on the communities in which it operated, it provides a significant opportunity for existing independent bookstores in those areas to increase their market and bottom lines, as well as offering an opportunity for new booksellers to emerge. It also confirms that the models and strategies developed by small independent businesses to combat (or at least coexist with) the disruptions of online retail are effective and stable. Nobody should be happy about 46 bookstores closing. But the lessons we can learn from the end of Book World are reassuring for independent booksellers everywhere.