I think we’re at a tipping point in developing alternatives for affordable retail space …

Mark and I recently visited Nashville, our former home town, and loved traveling East Nashville, a community blossoming with home renovations and new cafes and retail stores.

While Nashville is known as a creative community … home of the Southern Festival of Books, Ann Patchett’s Parnassus Books, plus all of those creative songwriters and composers who come from all over the world to contribute to the world of entertainment.

IMG_0131What we stumbled across was The Idea Hatchery, a cluster of small spaces near a major intersection. The flyer we picked up began with the headline:

“Start a Small Business in East Nashville”

Then continued, “The Idea Hatchery is”

* A community of small independent businesses hosted in 8 individual buildings.

  • An arrangement of buildings that have footprints of 168 sf, 256 sf, and 320 sf.
  • An opportunity to experiment and to share ideas with other small business owners.

The Idea Hatchery offers:

  • 1 year leases with no limits on renewal.
  • Reasonable rents with pro-rated utilities…”

Check out the gallery of photos and just imagine all of the cool things people discover when they visit.

New models are surfacing. They focus on collaboration, synergy, and creative energy. It’s an exciting era for indie businesses.

We celebrate each new opening of an independent bookstore. Shelf-Awareness, ABA’s Bookselling This Week, and Publishers Weekly all do a good job of announcing new store openings. It’s interesting to learn how a dream has become reality, but sometimes a single photo can tell us that we’ll soon see an announcement of the store closing.

One of the common pitfalls in opening a new bookstore is understanding the financial dynamics of a bookstore to get the business plan assumptions right. The margins in the book business are tight, and metrics, like inventory turns are essential to clarifying what sales need to be in order for the business to grow beyond break-even.

While no one wants to lose money, it’s surprising when a new bookseller will say, “I can’t afford the time” to come to a workshop to learn the business that will require thousands and thousands of dollars to launch.

Our response is, “can you afford NOT to?”

Lean inventory levels will need sluggish sales and struggle to keep the bookstore afloat.

Lean inventory levels will need sluggish sales and struggle to keep the bookstore afloat.

The photo we’re featuring has been modified to post in this blog, but it’s one of the photos that indicate the bookseller has opened on “a wing and a prayer”, driven by a dream, but uninformed and positioned for early failure.

All retail businesses are based on the buying and selling of goods. Inventory turns is a key metric that measures the productivity of our inventory. You take your inventory at its retail value and multiply it three to five times to forecast your annual sales.

The key question then becomes, “Is this enough?”

We recommend that a full and interesting selection of books and non-book items should run about $125 per square foot at its retail value, $75 per square foot at cost. The inventory in this photo appears to be at about $15 per square foot at cost.

Launching a dream for a bookstore is a wonderful contribution to community, but only if the story of this new business continues. It’s painful for everyone when a dream crashes. Those of us in the book industry want to see more success stories. The margins are tighter in the book industry than other forms of retail.  It pays to learn the complexities of the book industry and the basics of retail management before you dive right in.

While in New York City for BookExpo America, we used a window of time before the convention began to slip into the flagship Macy’s store on 34th Street. There was a cover story on “Macy’s magic” in the Delta Sky magazine and we were ready for a retail field trip.

Macy's flagship store in New York City, an American institution.

Macy’s flagship store in New York City, an American institution.

The iconic store has been featured in films and is beloved for its Thanksgiving Day parade tradition. In touring the store, it’s clear that Macy’s has embraced many traditions while keeping the store fresh and exciting.

For booksellers and all retailers, Macy’s is a model. Here are a few of the lessons we took away:

Keep Building On Your Reputation
Macy’s has been the fabric of New York City and is known throughout the world. The windows are kept fresh and interesting. Displays are constantly changing. The staff is friendly, happy, and helpful. The old creaky escalators still take you floor to floor. Their signature event remains the anchor of their marketing plan.

Cater to Your Customer
We walked by the kids shoe department and saw the adjacent display of skate boards in really cool colors, stacked up high ready for loads of summer fun. Macy’s knows people stay for hours and hours, so they’ve added food and beverage service in strategic places. Macy’s understands many of their customers are tourists. Near one of the main restaurants is a display of Macy’s branded merchandise, from dog bowls to t-shirts and tote bags that connect their logo with artwork they commissioned.

Create a Delightful Escape
The store is a destination. It sparkles. It smells good. There are beautiful displays everywhere you look. The graphics make the store feel alive with real people. Signage helps you find things. It’s a happy place. You can Macy’s online, but if you can, you want to go into the store.

In today’s retail, most department stores have had a tough time competing with online shopping. Not Macy’s. They embrace the art and science of retail and have created an American institution.

Listen to National Public Radio and you never quite know how your life might be affected. This week Diane Rehm interviewed Mattieu Ricard, author of Altruism: the Power of Compassion to Change Yourself and the World and what lingered for me was the value meditation has in changing anything.

Mattieu Ricard, author of Altruism, says change begins with our thoughts and leads to new mindfulness and way of being

Mattieu Ricard, author of Altruism, says change begins with us

During the conversation, Mr. Ricard noted the link between meditation and our neurological wiring. A commitment to thinking differently, and using meditation as our dedication to the effort, can bring amazing results.

In our work with bookstore turn-arounds, it’s become clear that the obstacles to turning financial losses to business sustainability are deeply rooted negative beliefs, mostly about money, profits, greed and business. Lump them all together in a negative light, and we limit our capacity to create a healthy business.

Here are some positive beliefs that can help guide daily activities in creating a sustainable business:

* My awareness will help guide a positive outcome.
* I seek to learn how to prioritize my work so that I give the bookstore the best and most important things it needs.
* My ongoing learning will help me broaden my awareness and strengthen my ability to lead the business.
* If I want a different outcome, I am willing to rethink my routines.
* Our profits indicate that we are making magical connections with our customers; that they choose to buy from us confirms when we are paying attention and making wise choices.
* I am part of the business community that values people. Our presence provides healthy places to work and honors reading and lifelong learning.
* Our profits are what allows us to continue to contribute to a healthy local economy.

We often refer to the “Art and Science of Bookselling” because both are necessary for sustainability. For some, the art comes easy and the science, not so much. Expanding our insights and learning skills begins with mindfulness and openness.

I am fascinated with the Every Door Direct tool developed by the U.S. Postal Service. Designed for use by small businesses for planning door-to-door marketing, it turns out this is quite a valuable resource for prospective business owners.

very Door Direct Mail allows you to analyze your market by postal carrier route

Analyze your market by postal carrier route for detailed information on neighborhoods within a community

Here’s how it works … Go to the home page at https://EDDM.usps.com and enter a zip code you want to explore. Using the menu options below (Route & Residential), refine your search. Use your mouse to hover over different carrier routes and you’ll see demographic data appear on the screen describing who lives there.

This resource is perfect for:
Obtaining much more detailed demographics than by zip code or market analysis that takes a random 1, 3, and 5 mile radius around a particular address

Identifying neighborhoods and even streets that would be best for your new business

Collecting data for your business

Gathering marketing information to use later as you target your promotions

And, it’s free and available to you right now.

If you’re a visual person like me, it’s great to see the map, clip and save sections, and use the tables to choose the routes and tabulate population totals.

Market research has never been this fast, easy, or valuable.

How is it that independent bookstores have not disappeared even though plenty of people predicted they would fall by the wayside like the record stores?

Harvard Book Store asks, "Tell Us Why You Love Our Bookstore".

The staff at the Harvard Book Store asked, “Tell Us Why You Love Our Bookstore”.

A Harvard Business School professor joined us during our one-day workshop at this year’s Winter Institute, the annual conference sponsored by the American Booksellers Association, with the goal of finding out why independent booksellers are so resilient.

It seems each decade members of the media find one more seemingly compelling reason that sparks the demise of the bookstore. Yet booksellers are creative and collaborative. They care and share and hang together in tough times. When booksellers put all of the energy and creativity together, something amazing usually results.

This is why independent bookstores are thriving, even in a digital world.

The first ever National Independent Bookstore Day was held on Saturday with great fanfare from coast to coast. In this morning’s issue of Shelf-Awareness (a free daily newsletter about the book business), we learned about the parties, events, decorated cakes and wine and locally crafted beer, the readings and signings, and the fun that took place in indie bookstores.

The first-ever National Independent Bookstore Day was sponsored by the American Booksellers Association May 2, 2015.

The first-ever National Independent Bookstore Day was sponsored by the American Booksellers Association May 2, 2015 and the celebrations took place in communities across the country.

 

Celebrating community at independent bookstores… what a great reason for a party.

Booksellers are thinkers and dreamers, entrepreneurs and business leaders. When the majority sees difficulty, indie bookstores are busy finding a way to turn the challenge into an opportunity … and building community, having fun along the way.

How can you not be overjoyed to hear that a bookstore you’ve loved is available … and you could become the next owner?! For many, owning a bookstore is a dream come true. You’ve spent your life so far doing many things, and now you have the opportunity to begin a new chapter doing something you love.

bookstore-For-Sale-300x198People want to sell their bookstore for a variety of reasons, mostly to enter retirement, but some burn out, others decide they don’t like owning a small business and feel overwhelmed with the demands of having to wear so many hats, and some simply have changes in their personal lives that makes it too difficult to carry on the business.

Here are a few things on my mind over the last few months that I want to share with you so you begin to look at your purchase of a bookstore business from a variety of perspectives.

Understand exactly what you are buying. It’s typical that a retail business will identify one price for the business and value the inventory separately. This is understandable since inventory changes each day … books arrive from vendors, books sell to customers. Inventory is constantly in a state of flux. When considering the price of the business itself, you should receive a detailed list of everything you will receive, from domain names of websites to furniture and fixtures, from wrapping paper to the store’s sound system. I was shocked when a buyer told me the previous owner came in to redeem a small bookcase she wanted to keep. The situation was awkward for the new owner.

bookstoreImageKnow you can negotiate the value of the inventory. Not everyone who has had a bookstore computer management system has used it effectively. Unless a store is vigilant about doing physical inventories (at least annually), the on-hand quantities may not be accurate, inflating the stated value of the inventory. Also, know that inventory that has not sold within a year can be returned to most vendors if the stock was purchased on a returnable basis. But, the stock needs to be returned by the company that purchased it. Make sure old stock that hasn’t sold is returned before you value the inventory and sign papers. If some of the inventory is beyond the twelve-month limit, ask the current owner to donate the stock or offer a very low amount for this merchandise. If it hasn’t sold in almost a year, you probably are going to have a tough time selling it as well. Either don’t buy it or significantly reduce its value. If a current owner cannot tell you what’s been on the shelves beyond 12 months, you have bargaining power to offer much less than the recorded cost for the entire inventory since its integrity is in question.

Beware of expecting that you’ll learn everything you need to know from the current owner. You’ll find the current owner essential in introducing you to key contacts within the community and book industry and what’s where in and around the store. Not all bookstore owners have been applying the best practices, updating their computerized management systems (there still are systems out there based on DOS!), claiming publisher co-op (worth thousands of dollars for your marketing efforts), or working to grow their business. This may be especially true for owners who are retiring where practices can be still inefficient and cumbersome based on old technologies. Be careful not to adopt bad habits and outdated routines; a former owner will only know what they know.

Know when it’s time to take the lead. There’s a friendly period where the previous owner is letting go as you are leaning in. It can be an awkward time. How long should that period last? A few weeks working side-by-side usually does it; longer can be problematic. Keep in mind that when previous owners stay on too long, staff members become confused. Who should they ask? Will they offend the previous owner if they ask you a question? Commit to a few weeks together and then proceed ‘as needed’ is our best advice.

When you buy a bookstore, you’re buying a very personal business. Navigate the due diligence process to make sure it’s clear what you are buying, and step in to take a leadership role when you’ve learned the store’s daily routine.

Each day offers an opportunity to learn something new, especially when you open a page of a book. Last night, I read an insight about architecture that sparked thought about the future of bookstores.

What do you find in a bookstore? Comfort, ideas, stories to connect us with others.

What do you find in a bookstore? Comfort, ideas, stories to connect us with others.

Stephen Mouzon has often been quoted about the mindfulness of architecture and urban design in Traditional Neighborhood Developments (TNDs). Since Mark and I moved to a TND on Amelia Island twelve years ago and now I serve as president of the neighborhood association board, I’ve loved learning about what makes us feel safe and secure and at home. “Contentment” has been a big word for me as I age, and what I value even more as the years go by is beauty, the comforts of home, and holding a book in my hands while the words enrich the moments.

Mouzon, who after years of studying neighborhoods and homes people love, has developed the leading guide to traditional home design, Traditional Construction Patterns: Design & Detail Rules of Thumb. While the last fifty years of home construction has led to McMansions, sprawl, and “hyper” buildings that have been over-designed, Mouzon helps us see how fascination with the machine became the “expression of our age.” Our obsession with technology still seems to cloud our basic human needs … and still does.

So, as BookExpo America kicks off this week in New York, I am reminded with the first time e-readers hit the trade show and how the IT professionals claimed to know the future of the book was to be purely electronic. For the last decade, many of us questioned the prediction and now, it turns out that the bookstore of the future feels a lot like the comforts of bookstores through time. While things in the back room may operate a little differently, life in the store is still thought-filled, personal, and human scale.

While we’ve all gotten used to finding (and buying) things on the web and reading online, there’s a lingering human need for people, places, and material objects in our lives that are on a tangible, knowable, and comfortable human level.

Take a look around your community and you’ll see that the retail landscape has changed over time. Shops and restaurants go in and out of business as tastes and buying habits change or the cost of doing business escalates. Neighborhood demographics shift, business owners retire, and new concepts emerge. When change is such a constant, it’s surprising to see the same businesses remain at the top of the list of what people most want in their communities: coffee shops, bakeries, and bookstores.

The internet may have come to dominate much of our lives, but there’s still a demand for places to gather and connect with other people. High tech simply cannot satisfy some of our needs for high touch.

Workshop retreat for new bookstore owners and managers

Entrepreneurs from four countries gathered to discuss the opportunities to put a new vision to today’s bookstore.

During last week’s workshop, Owning a Bookstore: The Business Essentials, eighteen entrepreneurs from four countries gathered to discuss trends, develop competitive advantages, learn the book industry’s metrics and best practices, and chart a course for owning a bricks-and-mortar bookstore in the age of technology. While some still used their gadgets to take notes or check messages, the conversation throughout the week kept coming back to the hunger for a sense of place, a healthy environment to learn and grow and gather, the satisfaction from holding a book and turning its pages, and an appreciation for the many ways in which locally owned businesses contribute to their communities.

The growth of e-book sales has slowed and will eventually plateau. Rather than replace books in print, e-readers have simply offered yet one more option for ways to read. E-books have certainly added some turmoil to the book industry and the bookstore business, but by no means will they lead to its demise. While electronic reading represents a little over 20 percent of sales, printed books command the overwhelming share of industry sales.

Format alone does not define a bookstore that sees its mission as far greater than selling books as commodities. A bookstore can be so much more than a place to buy books: a place where we can escape from the hustle and bustle of our daily lives, find comfort and peace, stimulate our minds, stretch our understanding of ourselves and the world, connect with others, create community, and contribute to a sustainable local economy. More than ever, there’s a need for high touch in this world of high tech.

Throughout the holiday season, we’d been carefully watching the National Retail Federation’s daily reports on the outlook for retailers. There was lots of talk about how social media would be aggressively used, along with steep discounting to attract customers into stores. And even more speculation: Has the economy sufficiently recovered to put people in a gift-giving mood?

Many national retailers struggled to not only get people physically into their bricks-and-mortar stores, but also eroded profits by discounting to drive sales, believing that even a modest gain was better than a record loss.

Holiday Sales Strong at Indie Bookstores

Holiday cheer at the new location for Litchfield Books

There was quite a different story for booksellers, according to this week’s report from Publishers Weekly. Brookline Booksmith, an award-winning indie bookstore, reported a “stellar year.” The Book Cellar in Chicago boasted a 38% holiday increase, and Beaverdale Books in Des Moines noted being up 29% for the entire year. In previous updates from Publishers Weekly, Andersons Bookshops in the Chicago area, BookPeople in Austin, and a number of others also reported strong holiday seasons.

How do we explain these double-digit increases in sales at indie bookstores that generally offer no discounting? What’s even more noteworthy is that this year lacked the mega blockbusters like last year’s Steve Jobs biography, and e-book sales continue to increase (yet at a much slower rate). If you’re thinking of opening a bookstore or buying an existing store, you might want to ask yourself the same question … what’s special about indie booksellers that they would outpace national retailers?

Maybe a growing number of people want to unplug from the hype and experience something authentic. Perhaps shopping at a place where you can browse “real” books is appealing in a society where a frenetic pace has become the “new normal.” Having someone smile and offer to gift wrap your book for free? How refreshing. Hanging out in a place that won’t text you an offer while you’re browsing, but will offer some delightful personal recommendations? That’s where I want to be – and suspect that I’m not alone!

Sensible family-owned businesses don’t generally jump at the latest trend or rely on hype and bling to connect with customers. While national retailers scurry for the latest high-tech tool or play games with prices, indie business owners will do what they do best: present really great merchandise, invite you to come in and feel comfortable, be welcoming and genuinely nice on a human level, and be incredibly grateful that you choose to support a local business.

Bravo, indie booksellers for a stellar season! The “Indie” and “Shop Local” movements continue to gain momentum, and you’ve proven that the most important business strategies are not only fundamental, but timeless as well.