Independent bookstores are bucking the trend. Here are some of the ways how.
Who doesn’t love bookstores? Most of us grew up with one or a handful of them in our local communities. Even if you don’t read, perhaps somewhat strangely, they’ve always been the de facto place for passing the time, before a movie, during a date, or in between meetings. They’re places to catch up on some work, hang out with friends, people watch. Above all this, though, they’ve always been places to learn, get inspired, and progress.
Last year, I read THE STORIED LIFE OF AJ FIKRY, a fantastic book about a man in a small town who runs a bookshop. His lamentations about the business got me thinking about the economics of bookstores in a post-Amazon world. Like most avid readers, I fantasized about running my own shop, reading and buying books all day.
I wrote down a bunch of questions, read a bunch of articles and decided to do some research.
What works and what doesn’t? Why do stores close? Is there more to it than just being “outcompeted” by bigger players? For the ones that succeed, why are they successful? What do they do that their less fortunate cohorts didn’t?
I have considered this idea for over a year, and in many ways I still can’t stop thinking about the notion that this could work, and be quite successful. Here are some of my discoveries:
Know your mission upfront and don’t waver from it. To be able to do this, and to do it well, you have to be motivated by a love and passion for books. It’s clear that the money coming in has to be greater than the money going out. There’s no way around that. But you have to operate on the underlying premise of passion — for books and the written word. If executed correctly, that passion will translate to success.
How do you execute?
Foot traffic. Your location needs a constant flow of pedestrian traffic. Most people will not go out of their way to drive to a place when they can conveniently shop online in their pajamas at home. There are exceptions, like Montague Bookmill, but they are usually legacy stores and have a built-in community and cultural significance. I’m speaking strictly to the kind of person who is thinking about starting a new venture from scratch.
Target a niche. You can’t compete on scale. You have to pick a niche or handful of genres and run with that. Even still, you must curate the heck out of those and winnow your offerings down to the choicest selections you and your staff (more on them later) can serve up. That’s what you’re selling: expertise and careful curation. The kind of person that is actually going to buy a book from a bookstore a) either already knows exactly what they want and are price inelastic or b) wants to be helped or nudged in a direction. In that latter case, you are assuming a consultative, or prescriptive, role in helping them. Success in these instances will make or break the long term viability of the bookselling component of the business. It’s true: despite algorithms and relentless online tracking, statistics show that more than 50% of readers choose books based on personal recommendations. And there is a lot of noise to sort through. That is where you come in.
Ripe targets: well-educated, hybrid readers (online and offline) and parents. A kid section is a must. Even better if you offer brainy games, projects, and host events catered directly to them and their parents. Regularly.
It’s all about events. So much so that an events manager should be your first hire if you can’t hack it. Events drive traffic and your space needs to be able to accommodate them. The programming selections should be eclectic, relevant and based on the particularities of your community. Live music, whether jazz or orchestral soul, should be a regular offering. Consider unsigned musicians or even students looking for exposure as good sources of ready and able talent. Beyond music, host readings, talks, open mic nights, classes, screenings, and art exhibits. Your space should be versatile enough to accommodate these myriad choices. When possible, broadcast these events. Keep the flow of conversation and ideas going strong. Leverage social media and don’t let the content get stale or sporadic. These are the seeds of community and relevance necessary for long-term support.
Food. You’re not getting into the restaurant business, but, actually, you kind of are. You need to be a destination, a place people want to stay and return to often. Food, particularly good food, is a necessary part of that equation. You can outsource it, or do it in house, but it has to exist. The good news is that simple is ok: meat and cheese blocks, PBJs, grilled cheeses, and french press coffee. Some successful locations have incorporated wine and beer. Some places offer alcohol only during events. If you can work out a license it can be a powerful source of revenue. It has to be in your wheelhouse, though. Every concept is different.
A (somewhat) flexible landlord. Rent has to be reasonable. 1000 sq feet on Abbot Kinney right now will run you around $14,500 per month. That’s not sustainable for current retail economics that suggest commodity items (like books) sell at around $150–175 per square foot per year. There are many other line items that this just won’t cover. Assuming you’re not venture-backed or wealthy enough to carry losses, you and your landlord will have to get creative. This can be a huge challenge, no doubt. And there are cheaper blocks than the Abbot Kinney section of Los Angeles. The point is that, as a hedge, you need a rental agreement that won’t bury your operation if it isn’t — to put it kindly — one of the ones that bucks the trend.
Curate everything. After all, that’s what you’re selling: expertise and taste. Introduce readers to books and products they otherwise might never have encountered on their own. Do this again and again. This, combined with the overall experience of your space, is your key point of differentiation. Idea: have a “zeitgeist” section — the latest and greatest in-depth reads on what’s happening in our world, country and community right now. If you break it down, you’ll become like a reliable radio host, or better yet, a thought leader that will have people always checking in for more. This is a challenge, but if you’re reading and even considering this, you likely already have the innate ability to execute curation like a boss.
Don’t be afraid of Amazon. Embrace them! They’re awesome at what they do. Fronting that is kidding yourself. Sell their Kindles (via Source) for a small cut. They are the best, so don’t mess around with the other e-readers out there. People buy digital music — mp3s or FLACs, subscribe to Rdio, or buy vinyl. Books are no different. It’s personal. Some people want to read the Lincoln Lawyer on their Kindles but want to read Master of the Senate (ok, maybe this was a questionable example, but it’s a fantastic book) in hardback. You’re providing the choice and embracing them both as viable. Concentrate on being a beacon of culture to your local economy, not a competitor of any big block retailer.
Tactic: stock books that don’t translate well to digital. Cookbooks, coffee table books, and reference titles are all high margin, highly personal examples.
Visually stunning space. This is huge (pun intended). The more space the better, especially for events, but what you don’t have in sprawl, you can make up for with style. The Economist believes a spatially stunning browsing experience is vital. I would add that cozy hideaways, work spaces, and conversation spots should all exist in harmony and be properly placed. There is a place in Argentina that converted an old theater into a bookstore. It is the very definition of visually stunning. It’s called El Ateneo. Google it.
Points of differentiation. First, offer same day local delivery. Believe it or not, you can actually do this better, faster and cheaper than any internet retailer. You have a huge advantage here: efficiency coupled with a personal touch. Second, create a membership program with legit perks: 3 for 2, wifi, reserved seating (no standing around table-anxiety), free coffee or random (useful) swag. Third, cluster books and products together to create more impulse buy opportunities. Put wine stoppers and local craft utensils next to cookbooks or messenger bags and journals next to travel books. Think creatively, there are so many perfect combinations of things. It’s your canvas.
Customer service via PhD-caliber staff. Target people with a combination of CSR-speak and in-depth niche knowledge of a particular area. They exist, and they’re some of the coolest people around. What’s more, they actually would love to work at a place like this. They need to be able to provide interesting and revelatory recommendations. Personal recommendations, beyond what an algorithm can extrapolate with limited data points. This is your secret weapon. This and love.
Have a killer newsletter. The key is amazing recommendations and commentary. People from all over the world should subscribe to it. Brain Pickings is perhaps the best paradigm here. Distribute the content prolifically online, get people talking about it, and allow them to make donations.
Creative financing. Try to work out longer and better repayment terms with publishers. Avoid distributors, if possible. Try. Publishers need and want you to succeed and flourish. If you need help, create a crowdsource campaign and lobby for support. It’s out there. Strike a chord. It’s not hard, especially if you’re doing this.
Confront your expenses, up front, and be realistic. You will have rent, payroll, insurance, utilities, operating costs, inventory, and freight expenses. Expect, conservatively, to earn a 5–7% ROI in the short term, assuming profitability. Have a safety net, a supply or source of funds, when times get tight. It will take time, relationships and reputation to grow the ROI and long term financial health. But it’s doable. And if you’re sufficiently interested and have a tolerance for risk, I wish you all the success in the world.