Time for bookstores to turn the page
Epidemic has highlighted underlying problems with struggling traditional business model
Brick-and-mortar bookstores have developed steadily in recent years with the help of government support, but the situation changed when 2020 was ushered in by the novel coronavirus outbreak.
With the epidemic lasting several months, the impact on the industry has started to show. Bookstores, where people spend time and money pursuing entertainment and intellectual nourishment, had to suspend operations and close their doors.
Fan Yingzhi, 24, founder of the October Time Bookstore, located in a cozy 210-square-meter premises in Beijing’s Haidian district, is still waiting for an opportune time to resume operations. “Our bookstore will not be open until the end of April, as far as I can tell,” he said.
The dilemma is obvious.
If a bookstore stays open during the epidemic, revenue falls but labor costs remain. If the owners close their bookstore, it means no revenue at all. No matter what they decide, neither strategy is profitable.
According to a recent survey by Beijing Normal University of 248 brick-and-mortar bookstores in the capital, more than 56 percent have closed without any immediate plans to reopen.
Forty-eight percent of the bookstores said their cash reserves can sustain them for one to three months, while 27 percent said they cannot hold on for more than a month. Seventeen percent said they can survive for three to six months and only 6.5 percent said they can last more than half a year.
The survey showed about half of the bookstores will close if they cannot get financing to last them three months.
However, the prospects of bookstores in Beijing, China’s cultural center, are better than the rest of the country.
According to a recent survey by the Printing and Distribution Bureau of the national body in charge of publishing, 90.7 percent of brick-andmortar bookstores in China have suspended their operations.
Most medium- and small-scale bookstores are facing high rents, property fees and labor costs. Some of them have additional problems such as being overstocked and loan delinquency, the survey found.
Up to 44 percent of the bookstores predicted that their revenue will drop by more than half in the first six months of this year even if they reopen soon.
The survey predicted that it will take two to three months for customers to return to bookstores after the epidemic ends. “Time and capital are double pressures on bookstores,” it said.
One Way Street Library, a privately owned bookstore in Beijing founded by several intellectuals in 2006, posted a letter asking for help on the Sina Weibo social media platform on Feb 24. It said the bookstore can only survive with the help of the public.
The letter said the epidemic had eaten into their cash reserves.
One Way Street Library has kept only one of its four stores open during the epidemic, and customer traffic has fallen to a 10th of its usual volume.
“We can only sell 15 books a day on average, and even then half of those books are bought by our own clerks,” wrote Xu Zhiyuan, one of the founders of One Way Street Library.
The bookstore has tried different ways to boost revenue, such as livestreaming book sales and discount promotions. However, the extra income generated was so small it was not enough to pay a clerk’s salary for one day.
One Way Street Library is now asking its supporters to buy stored-value cards online ranging from 50 yuan ($7) to 8,000 yuan.
“I bought a 8,000 yuan stored-value card,” said Ding Zhe, 45, a whitecollar worker in Beijing who seldom purchases books in brick-and-mortar shops.
“I always buy books online, which is cheaper and more convenient,” he said. “I just want to help because I think it’s worthwhile for physical bookstores to exist in this city.”
Ding said he may never use the card.
Xu Lin, a college student who bought a 50-yuan card, said: “no matter how hard life becomes, deep down we should always keep believing in our dreams. Books are where most dreams grow from”.
Booyee is a niche business which trades in secondhand and antiquarian books. It has the dual problems of being heavily overstocked and a shortage of capital due to the epidemic, according to a report by China Entrepreneur, a Beijing-based magazine.
Hu Tong, founder and owner of Booyee, has held several online auctions to raise cash.
Even though the bookstore has only 12 staff, including Hu, labor costs constitute the biggest component of its 200,000 yuan monthly outlays. The second highest cost is rent, Hu said.
Booyee also sell books online, and sales have returned to around 70 percent of the pre-epidemic level, which is helping the business stay afloat.
The Beijing municipal government has policies and measures to help brick-and-mortar bookstores to survive, one of which is handing out subsidies. Hu has applied for a subsidy and is waiting for it to be approved.
Subsidized industry
The Beijing government has been supporting the industry through subsidies since 2016.
The government gave 18 million yuan to brick-and-mortar bookstores in 2016 and again in 2017. The amount was increased to 50 million yuan in 2018 and passed 100 million yuan last year, which 239 bookstores shared.
Due to the epidemic, the capital’s printing and distribution bureau brought forward the support payments to Feb 26 instead of the second half of the year. The authorities are expected to distribute around 100 million yuan to bookstores this year.
The biggest hurdle for bookstores’ survival is rent. In previous years, the government handed out subsidies only after rent was paid.
The city government has decided to allocate rent subsidies early this year, so bookstores can cover their rent from March to June. The government has also encouraged landlords to cut rent for the bookstores.
Another form of assistance has seen government officials acting as intermediaries between the bookstores and banks to help solve money problems.
Publishing houses have also been encouraged to assist by helping with the supply and promotion of books and extending payment periods.
Government departments have promoted cooperation between online shopping platforms such as JD and Meituan, to expand sales channels and distribution.
“The physical bookstores are cultural landmarks in the capital, which are spiritual homes for our citizens,” said Wang Yefei, head of Beijing’s Press and Publication Bureau.
The epidemic has been a sharp reminder to bookstore owners and operators that they should improve their risk-management.
Chen Peng, general manager of the PageOne bookstores in Beijing, said his company took tight control over costs and risk management, which had reduced pressure on its finances.
He anticipated PageOne will not have a cash problem if the epidemic ends in the second half of this month.
“Even though the book business is a low-profit industry, it has enjoyed policy preferences that other industries haven’t,” he told China Entrepreneurs.
The landlords of the three PageOne stores in Beijing have cut rent, which has eased the financial burden on their operations, Chen said.
Similar to other bookstores, PageOne hasn’t had many in-store customers over the past two months, but it has followed its existing plan to increase its online businesses on several platforms.
Hu, the owner of Booyee, said online book selling is inevitable, and a natural result of technology and the way people now shop.
However, he said brick-and-mortar bookstores should develop into “cultural communications spaces” rather than just places where books are sold.
“People who go to bookstores don’t just go to read books, they want more experiences and are willing to pay for them,” he added.