Bookstores finding neighborhood niches
Independent merchants serving as ‘anchors of authenticity’
On a recent Sunday evening in the basement of McNally Jackson Independent Booksellers in New York, about 40 people gathered in a 12by20foot space surrounded by movable bookshelves to hear Julia Phillips discuss her novel, “Disappearing Earth.”
Alex Unthank, a 32yearold artist and museum educator living in Harlem, was in attendance. She treks downtown regularly just for these types of events at the store.
“It’s the community,” said Unthank, who added that she appreciates the book selection and customer service, too. “You can come in and have a conversation with someone that’s a likeminded person or is interested in having a dialogue.”
Her experience helps explain the continuing resurgence of independent bookstores, even though Amazon contributed to the demise of its rival Borders and forced the largest American bookstore chain, Barnes & Noble, to shut stores in a turnaround mode.
Barnes & Noble, which recently agreed to be sold to the hedge fund Elliott Management, has been struggling to pull out of a tailspin. The bookseller recently reported that comparablestore sales had declined in its 2019 fiscal year. Sales of its moneylosing Nook ereader and ebooks fell for the seventh straight year. And its shares, after topping $30 at their peak in 2006, had slumped to about $4 before Elliot agreed to buy it for $6.50 a share.
Corporate chains were once a threat to smaller stores, but entrepreneurs have found ways to thrive, including hosting events and adding merchandise like games and Tshirts. The American Booksellers Association, a trade group for independent bookstores, has grown to 1,887 members with 2,524 locations as of May 15, the highest participation since at least 2009, when there were about 1,650 indie bookstores, the group said.
Another challenger to traditional publishing, ebooks, has also started to fizzle. Sales of digital books fell 3.6% to $1.02 billion in 2018, a third straight decline,
while hardback sales rose 6.9% to $3.06 billion and paperback sales 1.1% to $2.67 billion, according to the Association of American Publishers.
The success of independent bookstores has offered a lesson for other brickandmortar merchants: Become part of the neighborhood fabric.
“As more people spend more time online, they are looking for deeper ways to spend time with the community,” said Ryan Raffaelli, a Harvard Business School assistant professor who has studied indie bookstores’ reinvention. “Independent bookstores have become anchors of authenticity. This is almost like a social movement.”
The desire to be part of the community is drawing other entrepreneurs. Barb Short, 53, who works in corporate citizenship and philanthropy in Madison, N.J., said she felt the calling in 2014 after the bookstore that was a big part of her children’s lives was flooded and the owner decided not to reopen. But she had a fulltime job and no bookstore retailing experience.
She turned to the crowdfunding site Kickstarter to raise $18,500, which she used to open Short Stories Bookshop & Community Hub with her daughters, then 12 and 14. She also took the advice of a friend to study those in the industry that had survived. Her lesson: “Bookstores are becoming arts and culture hubs,” she said. “They are filling that gap in community. It’s a social entrepreneurship venture.”
About half of Short Stories’ space is basically a lounge area — decorated with a piano, a sofa, a guitar and an art gallery — that “people claim as their living room,” Short, 53, said.
The store’s events include author talks, opera recitals, open mike nights as well as birthday and engagement parties, which generate extra revenue. It also has a cafe to help “monetize the space,” she said.
That level of interaction has helped independent bookstores stand out, said Oren Teicher, the chief executive of the American Booksellers Association and a 30year industry veteran.
“Indie bookstores have always had fierce competition,” he said. “The thing that distinguishes indie bookstores is the engagement with the community they are in.”
Sarah Jackson, who grew up working at her mother’s bookstore in Winnipeg, Manitoba, knew about the importance of events when she opened McNally Jackson’s first store in the Nolita — North of Little Italy — neighborhood in 2004.
“A lot of concepts came from what she always had done,” Jackson, 43, said. “That was a radical thing in New York. Now all the indies are doing it.”
Both the original store and McNally Jackson’s second location, which opened last year in Brooklyn’s Williamsburg neighborhood, host free events almost daily.
McNally Jackson’s third and largest store, to open in August at New York’s South Street Seaport, will be able to accommodate hundreds of guests, Jackson said. A beer and wine bar she has designed will be added.
Owners are bolstering sales by stocking a diverse selection of nonbook merchandise, Raffaelli said. “Independent bookstores have very little pricing power to change the price of printed books,” he said. “With these other items, they have the ability to set the price.”
Books of Wonder, a children’s bookstore that has been in business for 39 years and has two locations in Manhattan, has added bookinspired toys and gifts that are more profitable, said Peter Glassman, its 59yearold owner and founder.
Janet Geddis, the owner of Avid Bookshop in Athens, Ga., sells items like magnets and stationery at both of her store’s locations. Avid also sells its own branded merchandise, including Tshirts and coffee, and offers book subscription memberships. Geddis, 39, said this merchandise made up about 18% of sales at the first location and 30% of sales at the second.
Adding these extras has helped strengthen the bottom line. Sales at independent bookstores rose nearly 5% in 2018, with average annual growth of 7.5% over the past five years, according to the American Booksellers Association. On average, its members are profitable, Teicher said.
But profit margins are slim. Costs for books and other products often total about half their sales; add in payroll, rent and other expenses, and profit for even the industry’s top-third performers is only about 8.8% on average, data from the association shows.
For some, rising rent means finding a new location. Glassman plans to relocate his downtown store when his lease expires at the end of the year.
“The biggest problem every bookstore faces is rising lease rates,” he said, adding the minimum wage he pays employees has risen about 40% the past three years. “We have to sell more to handle the increase in rent and minimum wage.”