We just arrived home from an on-site visit in a community that once had a Barnes & Noble bookstore. When the lease was up for renewal, B&N decided to exit the market, leaving millions of dollars of annual sales to customers up for grabs. In this case, our client, Thorne Donnelley of Liberty Bookstore, is in the midst of expanding his bookstore and revving up marketing to capture this gap in the local book market. Yet, what about all of those other communities now without a bookstore?

Libery Bookstore

Thorne Donnelley seizes the opportunity to capture the West Palm Beach, Florida market now that B&N is gone.

While there are people opening bookstores, there aren’t enough who have looked at the gaps and said “I will open bookstore in my community.” Many markets are now underserved, which often means the online Goliath get the business by default.

If you are thinking that then person to open a book store is you, here are some important considerations you may not be hearing from the media or even your own network of family, friends, and colleagues:

1. Print reading remains strong – According to research published in Publishers Weekly, ebook sales may level off at just thirty percent of the market, way less than the original predictions by IT professionals (who were self-serving in their forecasts). Seventy percent of book sales happens in print.

2. Younger people choose print too – When you think of kids growing up with printed picture books and those who fell in love with reading by devouring the Harry Potter adventures, there’s no surprise that many teens want to read in print. They’re using electronics for social interaction, but there is a perceived benefit to holding a book.

3. We need the balance between high-tech and high-touch – Many people go to a bookstore because it’s it feels like a sanctuary. People who work from home vocalize their need to be around other people. Most of us need a balance of time alone and time with others, for conversation and connection. Bookstores are third places and now that many communities are without bookstores, people recognize what’s missing.

Bookstores will not disappear if people keep asking the beautiful question, “Who will open a book store in our town?” If you’ve had dreams of opening a bookstore, but thought it was no longer a wise choice for your resources or time, keep learning and investigating the opportunities. A bookstore will meet the needs of readers to discover great books and give reasons to gather and talk about ideas. Bookstores fill that human need.

In the latest book industry news, Barnes & Noble has announced that it will be close more than 200 stores over the next decade. While some in the mass media are sure to see this as further evidence of their predictions that the printed book is dying, I see it as a smart corporate business decision that will open doors of opportunity for entrepreneurs.

Quaint places to gather, rest, and connect make a great community.

Quaint places to gather, rest, and connect make a great community.

For many of us who have spent time in corporate settings, the decision makes perfectly good sense. When big-box stores were all the rage, B&N seemed to be opening stores in communities large and small. Even into the ‘90s, those big boxes were filled with lots of books – not necessarily a greater selection of books within a subject category, but multiple copies of the same title just to fill all that shelf space. Because publishers offered quantity discounts and additional co-op funds, retailers like B&N got a better deal the more they bought. That not only resulted in a huge outlay of cash, but they often returned 30 to 40 percent of that stock (indies average 11 percent returns) when it didn’t sell through in a timely way. Imagine the labor costs of ordering, receiving, shelving, and returning books. Then add the freight costs.

Enter the 2008 economic crisis, followed by the growing acceptance of e-reading, and their retail strategy proved unsustainable. The company held long-term leases with suffocating overhead, and had devoted more and more space to marketing e-books, where the profit margin was considerably less than it is with print books. If ever there was a time to change course, this is it.
Without Borders and now with B&N exiting many markets, opportunities await the entrepreneur. The Pew research has shown that avid readers who read electronically are still buying an equal number of printed books. People still love to hang out in bookstores, because that’s where they discover great new books to read. In growing numbers, people are joining the “indie” movement and prefer to shop locally. Publishers and authors still need face time with readers. Consumers still long for meaningful “third places” to feel connected with others. Buying a book online makes it a commodity; but books are so much more than an addition to a shopping cart.
If you’ve dreamed of opening a bookstore, but have been scared away by the mass media yet again proclaiming that books and bookstores are dying, think again. Corporations who once dominated a niche market are now shifting their resources, leaving opportunities for indie entrepreneurs.

What a fascinating time … and how refreshing it is to see ‘Local’ become fashionable. From Sarasota, FL to Rapid City, SD and Nantucket, MA to Bainbridge Island, WA, ‘Shop Local’ initiatives are moving full steam ahead, where residents want fewer national chains and more local flavor.

Was this predictable? Maybe in part. The last three decades brought us a deluge of stores and shopping centers that began to look the same. Perfectly coiffed with the same merchandise, their appeal didn’t have staying power. When the economy softened, corporate decisions, meant to preserve profits and shareholder investments, resulted in dark storefronts all across the country.

Bookstores sponsor events

Bookstores draw the right clientele

And who survived? The tenacious, spirited indie retailers — yes, the “Mom & Pop” stores. Not only have they weathered economic ups and downs (most recently created by the temporary deep discounting offered by the chains when they first moved to town), owners of independent businesses held on because their entire livelihood was on the line. Their commitment to community reached far beyond hitting profit targets – they were in it for the long haul.

Now that hundreds of communities are without bookstores — some driven out by the proliferation of Wall Street financed chains, and now Borders stores closing as a result of the ongoing mismanagement of the revolving executives who ran the company — there are openings for new anchors on Main Street and in retail developments from coast to coast. An independent bookstore is a wise choice to fill an opening, especially if the objective is to draw an upscale demographic.

While some would have us believe that e-books are rendering bookstores obsolete, brick-and-mortar bookstores are still relevant and here’s why. Printed books account for 85% of book sales and research now shows that those who read e-books still value — and buy — printed books. Bookstores are considered gathering places and symbolize an educated community that values learning as a lifelong endeavor. Also, people who read want to know what to read next. Independent booksellers have long been recognized for their genuine passion for books, honesty in making recommendations, and their ability to help publishers launch new writers. In most redevelopment polls, people say they most want a bookstore in their community — and will support it.

To developers and landlords, we suggest you look beyond the media’s obsession with technology to see the opportunities in your own backyard. An indie bookstore will draw the right demographic, hold a long-term commitment to the area, and will contribute to the well-being of the community.

As consumers become more and more mindful that a ‘Local’ focus helps their community, the momentum is continuing to build. To ensure that developments gain (rather than lose) appeal, you need look no further than an indie bookstore. It may require some investment and accommodation on the developer or landlord’s part to get a bookstore open for business, but its presence will generate ongoing tangible results.

While in our historic downtown for a meeting on this beautiful, sunny Valentine’s Day, I stopped into my neighbor’s chocolate shop to pick up a few strawberries dipped in chocolate for tonight’s dessert. Love is in the air on this happy day, yet I’m also feeling a bit blue.

This morning’s book industry news led with the story about the likelihood that Borders will soon file for bankruptcy. Being from the Ann Arbor area, I remember Borders when it was still indie, and even trained with them when I joined Davis-Kidd Booksellers as the General Manager of the Nashville store. In the 1980s, they operated a division called Book Inventory Systems that serviced several quality large independent booksellers. Their buyers were the best … true book people who loved books, enjoyed the art of bookselling, and understood their communities. Then they were bought out by Kmart and everything began to change.

Today, I’m not only mourning the unfolding of the Borders story, I’m concerned about the communities that will lose their only bookstore. Some think that it doesn’t much matter since we’ll all be e-reading anyway. But the research shows otherwise, as those who do read e-books read books in print as well. And you never hear people talk about how much they enjoy browsing and ‘hanging out’ at an online bookstore.

The mega-store model may prove to be unsustainable, but most were generating millions of dollars in book sales annually. Alternatively, some smaller, more efficient booksellers have been able make a decent living working in a business they love and passionately embrace.

It’s a sad unfolding of events for long-term Borders staff and for the customers who loved being in their stores once upon a time. A door might close, but a window of opportunity opens. For those who still hold on to a life-long dream of owning a bookstore and are willing to take some risks in the face of uncertainty, the timing is right for just such an opportunity.

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.