Reno News and Review

Thurs., June 24, 1999

Book Wars

© Carol Cizauskas

Independent Bookstores Struggle To Compete

In The Changing World Of Corporate Bookselling

The corporate book world entered Northern Nevada five years ago when Barnes & Noble set up shop in south Reno. Many changes have followed, including Amazon's July 1995 creation of the world of online book-selling and the February 13, 1999, opening of Borders, just up the road from Barnes & Noble. And on June 2, Barnes & Noble relinquished their proposed merger with book distribution giant Ingram, due to pressure from the Federal Trade Commission. The FTC was concerned about a monopoly of book sales and distribution, had the deal materialized. Local independent booksellers are pleased with the termination of the proposed deal.

As a result of the halted merger, Barnes & Noble will use the $600 million slated for the buyout for other ventures, including opening two new distribution centers, one of which will be located in Reno, the other in Memphis. In addition to Barnes & Noble's opening a Reno distribution center, another book-selling giant, the internet bookseller Amazon, has a warehouse in Fernley, Nevada. Currently in a startup phase, this facility will employ over 300 and expand to 572,560 square feet when finished. The warehouse is Amazon's third, and three more are planned in other locations in the country.

Ecommerce book-selling, Amazon's entire business, has changed radically the way all bookstores do business. Independents, affected in part by the arrival of the large chains, are both challenged and helped by the ready accessibility of online books. The giants Borders and Barnes & Noble battle with Amazon.com, now brandishing their own internet sites. All three types - web-stores, independent and chain brick-and-mortar stores - each offer individual advantages and disadvantages to consumers and communities.

The independents are distinct from the chains and therefore retain much of their customer base despite competition from the new kinds of booksellers, chains and Internet sites. Functioning as part of the community, independent stores provide a small, local atmosphere. According to Vicki Davies, the general book manager of the ASUN Bookstore, located on the UNR campus, "The most important issue about the independent bookstores versus the chains comes down to what do you want your community to be? The small stores are part of the community. They have personality." Davies says people are drawn to the deep discounts offered by the corporate stores, yet in communities where the chains have eliminated the independents, the large stores "no longer look like independent bookstores. They no longer have lots of literary fiction and poetry and the things that don't make money. They have a generic, whitewashed corporate store, where you can buy Danielle Steele and John Grisham, but you're not going to be able to get Robert Frost."

When asked why the owners of independent Sundance Bookstore began selling books, co-owner Christine Kelly explained the difference between the independents' and chains' philosophies. She said corporate stores are selling products. "That's fine, but I wouldn't sell widgets, nor would I sell bars of soap. I sell books because we believe in them, we enjoy them, we like them, we have a lot of fun doing it, and we enjoy the customers that like to buy books and talk about books."

An interview of Len Riggio, founder and CEO of Barnes & Noble, in the June 1999 issue of Wired magazine, magnifies this point. He says had he not begun selling books, he would have opened a hardware store and mastered that market instead of the chain bookstore market. Further, in a RN&R interview, Paul Capelli, spokesperson for Amazon.com, describes books as "product," saying "One expectation of our customers is to be able to find a product they want at a good price and to be able to access it via our website in a very easy, convenient manner." Capelli speaks mathematically when he says customers want "to get that product quickly. To do that, the equation we use is if we have the product in stock and we have it in a location that makes it easy for us to get it to the customer, this equals quick delivery time."

Independent bookstores also differ from the chains by consistently placing special orders. Kelly elaborates: "A lot of the special orders we do are time-intensive, but we're quite successful. Because of our size and the way we're set up, we can get them. It probably would be cost-prohibitive for a larger organization."

In addition, the relationship of independents to the community is symbiotic, because the bookstores contribute to charitable community causes, just as they exist due to their loyal customer base. Co-owner Dan Earl of Sundance says, "We are trying to put back in the community what the community gives us. And those people who are the recipients of those things are some of our fiercest, most loyal customers. It goes both ways."

There is also cooperation between the independent bookstores. Each values the community resource the others provide. The booksellers often send their customers to another store when it offers the selection sought by the customer. Lee Johnson, co-owner of Black & White Books, says, "We don't look on each other as competition, exactly. We help each other out." Moreover, the chains will often send their customers to the independents when the customers want books not easily available at the chains.

The chains, for their part, provide multiple titles, discounts on bestsellers, and a large-scale comfort not available at the smaller stores. They also sponsor various events, as do independents like Sundance. The events held in Barnes & Noble and Borders are easily accessible to the community due to the large stores' size. Hera Davis, community relations coordinator for Borders' Reno store, says the location brings in local authors, musicians, and performers. "We look at Borders as the community's bookstore. We do music, book events, children's events, story times. Borders is a destination spot for families."

Five years ago, with the arrival of the first chain bookstore in Reno, Barnes & Noble, independent bookstores saw a decline in business. Kelly describes the effect. "We felt a decrease in sales for about a year, and then we were back up to our previous numbers. Within the industry, that's the standard: a large chain will move in, the independent will take a hit and, usually within a year, recover. People go over, check out the new kid on the block, see what's going on." She says independent bookstores usually get their customers back or gain new ones. In comparison, Borders' opening has affected the independents only slightly, and most owners of Reno's independents expect the decrease to level off, as with Barnes & Noble.

Both the independents and the chains are feeling the effect of the Web on their business. Kelly says, "We probably see a loss of sales. Conversely, it's not uncommon for a customer to come in with a printout from the Amazon page, saying, 'I want to buy this book from you.'"

Earl elaborates on the effect of the internet on their business. Sometimes customers talk to them about a book they found on the Amazon site, and when Sundance researches the title, the customers discover "It's not a book they would have wanted. It turns out to be a different format, and if they had ordered it from Amazon, they would have been stuck with the book and paid money for something they wouldn't have been able to use. But it takes a certain amount of training to show customers that Amazon is not the be-all and end-all to books. They've got wonderful publicity that is hard to run up against. We do what we can."

However, Amazon also boosts business for some independent bookstores. Johnson says of his store, which specializes in used books, "Amazon's actually our biggest customer. They're competition to us in a way, but they're searching books in the national market, so we sell a lot to them. And they stir up interest in books. Amazon's probably done more to promote the book business in general than anything that's happened for years."

The ASUN Bookstore awaits the fall semester as a test of how ecommerce will affect textbook sales. Manager Tom Davies explains, "There's a stampede of various sources out there that are trying to get into that market. Certainly that's going to impact us, no different than a Barnes & Noble or Borders opening, because people are going to want to try it." He says that sometimes it's more expensive to buy and takes longer to ship textbooks over the Internet. "There's a learning curve within the industry. The promises that are being made by the ecommerce people don't actually reflect the reality in many cases, especially in textbooks." He concedes that for some people buying textbooks using the Internet "is more convenient. If you live at Lake Tahoe and don't get down here very often, it may be a way to go."

For their part, the chains have created their own websites. Barnes & Noble hopes to annihilate its major online rival, Amazon.com. Slow to take the web race seriously and therefore late to enter it, Barnes & Noble has attempted to imitate its competition. The sites Amazon.com and barnesandnoble.com look remarkably similar. According to the June 1999 issue of Wired magazine article, the brick-and-mortar giant's hope lies in the possible future of ebooks, where publications are electronically distributed and downloaded. Industry experts dispute whether this future will materialize, citing readers' love of the printed page and the physical difficulties inherent in reading electronic books. However, Barnes & Noble is hinging its ultimate front-runner status on the financial and physical ease of ebook distribution.

Interestingly, Amazon has posted a loss in each of its financial statements since it filed for public stock offering in March 1997. In the first quarter of 1999, its net loss was $61.7 million. Tom Davies says Amazon is able to continue operations because it has more than a billion dollar credit line, "Which means they've got money to lose. Because of the interest in Internet stocks, there is a lot of money flowing in there, but it hasn't really come back. Some people are saying, 'Is it going to prove to be profitable?' We don't know. In the meantime, from our standpoint, you weather the storm. The thought is if they keep at this long enough, they will rake in the big bucks."