Small is Smart
Today’s news about Borders continues to accentuate the company’s difficulties in meeting its financial obligations to vendors ad landlords. The big box bookstore is proving difficult to sustain and the unfortunate result of the company closing more stores is that our retail landscape will change again — fewer communities will have a real bookstore to provide a sense of place where ideas are the center of life. More darkened retail spaces remind us of the stark lessons from more than a decade of overzealous growth.
Meanwhile, Mitch Kaplan (owner of Books & Books and former president of the American Booksellers Association) opens another store in downtown Miami. Just 800 square feet in an urban setting with high foot traffic, the space is just right. Rents are high, but Mitch knows he can select just the right merchandise and sell like crazy out of a teeny, tiny storefront.
One of the inaccurate conclusions many prospective booksellers make when looking at the ABA’s ABACUS Financial Survey of Independent Bookstores is about the size space a bookstore needs to become profitable. If you take the average sales per square foot ($334 in the 2010 survey) and do the math, you’d come up with a space almost 3,000 square feet to gross about a million dollars a year. While this still seems quite small from the mega stores at 30,000 square feet and more, it can still be too much space — resulting in too much overhead and a tough uphill climb to profitability.
Simple math can sometimes lead to incorrect conclusions. First, in our work with indie booksellers, we know that some of the most successful stores are not reporting to ABA. We wish they would so the averages would reflect their success! Second, we know stores that generate $500 to almost $1,000 in sales per square foot annually, way above the ABACUS average. Their space is cozy and small, definitely “unchain” in its ambiance and appeal.
What should you do if you’re thinking of opening a bookstore? Start small. Be smart and minimize expenses while you’re working diligently to market your business and generate sales. Hold small events in your bookstore and find venues to hold large scale events so you’re not paying monthly rent on space you need occasionally. Sell beyond your four walls. Reach out to organizations, businesses, conventions, schools, government offices to sell books and bring people to your bookstore. Offer a website that sells books so others can shop locally when they may live across town.
The financial challenges the big box stores are facing will result in retail ghost towns. These spaces will stand as a constant reminder of the mistakes we made in the past, and the wisdom that ‘Small is Smart’ for entrepreneurs investing in their communities today.