Main Area and Open Discussion > Living Room

Sad news for scifi booklovers. Borderlands Books of San Francisco is closing.

<< < (2/3) > >>

wraith808:
It's a change in venue and a change in distribution.  Adapt or die.
-wraith808 (February 03, 2015, 09:30 AM)
--- End quote ---

It's actually more a change in expectations that's the tipping point AFAICT. As the owners of Borderlands Books said in their blog, the list price of books are set (and printed on the cover of books) by their publishers. And with the advent of Amazon, nobody expects to pay list for a book today. So the indie stores can't push the price up above list because that's simply "not done" (nor is it doable) when it comes to books that are in print.

"Adapt or die" is one way of looking at it. (I suspect Renegade would applaud that one.) But there are practical limits. What's happening to these small stores is the equivalent of sealing them in a glass jar and telling them: "You have a simple choice. Learn to live without oxygen - or perish."
-40hz (February 03, 2015, 09:44 AM)
--- End quote ---

I personally think that's simplifying a bit too much... and this is after working in the book business at a couple of small stores, and seeing the way that they went.

When in college (and after college for several years), I worked at a game shop.  One might wonder what that has to do with the subject at hand, but they were a role-playing game shop, and face the same sorts of challenges with their inventory and competition.  In business for 30 years and counting.  Then PDFs and the internet and distribution changes (they were unable to go direct even though they were a distributor because of volume) proceeded to kill the business.  The owner closed up shop because he said that they were bleeding year after year... and though he could keep it going for a while more... why throw good money after bad.

However, in my estimation, that's not what killed the store.  The owner didn't have the passion that you need to operate as not just a business, but a place to draw people in and get their support despite the advantages of purchasing elsewhere.  There are advantages to being a small store, you just have to leverage them.  When the owner re-did the store after having to move because of increased rent, the place was sterile.  There was nothing inviting about the store, and other than myself (who was working for credit instead of a check) and someone else in that same boat... there was a lack of engagement with the customers.  For gratis, I offered to make his internet presence more, and to help with that end... and his interest was minimal.

The other two shops that I worked with/frequented had similar stories.  They tried to compete as a business on the same level as the larger players, and they just can't do that.

I don't disagree with your assessment of the distribution and pricing difficulties- but those should force an adaptation.  And it's just not happening in many cases.

40hz:
Ok...your background and mine is similar. I worked bookstores and I have friends who owned one so we both have a down in the trenches bird's eye view. I have also run a few businesses of my own, including the current one, so I deal with this sort of reality every day.

"Passion," and "differentiate your offering," and "don't compete on price," are all well and good. But they don't really make any difference when you can't contain operating costs despite all your "good faith" efforts and heroic sacrifices. People who work need to get paid. People who own businesses need to make a living. Your sales volume and profit margin need to provide enough surplus to meet operating expenses - of which wages make up the bulk in most small businesses; along with rent, utilities, and taxes.

You can't do much about rent costs in retail since location is critical - and landlords know it. So regularly shopping rents and relocating isn't viable. Utilities are fixed. You can reduce your use as much as possible. But health & labor regulations determine just how far back you can cut the heat or A/C before you get into trouble. And if your customers are uncomfortable, they leave and often don't come back. Taxes aren't worth getting into. Most real tax strategies don't apply to small business. You can minimize taxes with competent ($$$) help. But taxes don't go away. And they generally keep going up.

So where does that leave us? With the prime gross margin (i.e. gross sales minus returns and discounts minus prime cost of goods sold - which includes freight-in). Costs are largely driven by volume here. Big orders = higher discounted unit price + more advantageous shipping charges. Small shops can't compete in that arena. So to a certain extent, you could say cost of goods is largely out of a small business's control. You can do some adroit shopping for vendors and try your best to "buy smart." But at the end of the day, your suppliers don't really need you in the book publishing world. Most times you'll need to order your stock through aggregators such as Ingram rather than deal with the major publishers themselves. And these middlemen will take a cut too.

So what's next...ah yes...prices!

Nope. Amazon has got you skunked there. Those discounts they offer customers are killer. So much so that I see people in B&N routinely see a book they like, pick it up, scan it with the Amazon app on their smartphone, put it in their online shopping cart - and then put the book back on the shelf. "Thankee B&N! I just wanted to take a look at it before I bought it!" Then, on the way out of B&N, they hit the one-click purchase key and Amazon delivers it to them a few days later. If B&N is lucky, these folks (and there are many) maybe bought a magazine, or cup of coffee during those two hours they were "shopping" in the store.

So what's left? Labor expense? Lay off non-family workers and work longer hours yourself? Ok. But for how long? And besides, even though you can elect not to pay yourself as the owner - everybody else (at least in my state) has to be paid minimum wage. To run a store responsibly takes at least two people. One to cover the front plus one to help out in front and cover everything else like shipping and receiving, paperwork, janitorial tasks, stocking shelves, doing the bank and PO box runs, etc. These two may swap roles back and forth. But you still need at least one person available to serve the customers and watch the store at all times. So small business labor savings are pretty much determined by how able the owner is to do without a paycheck. Not a very compelling proposition for most folks who don't have a trust fund to fall back on - as one of our town's former booksellers did. (interestingly, she was the first to close shop when things got really bad. ("Old money" doesn't tend to continue backing a losing proposition - even when they can afford to. A least not the "old money" crowd I've known.)

Despite all the fancy management bromides and new age business thinking, the two things that will most often sink a small business are:


* Insufficient sales volume
* Bad cash flow
Not enough money coming in - and not on a regular and predictable enough basis - are what kills small businesses more often than every other factor combined.

So no...I don't think the change in the average customer's expectation to pay lower prices than small bookstores can afford to offer is oversimplifying things at all. It goes right to the root of the problem. And that is what is most directly shifting the sales of books away from the traditional local shop, and over to large discount booksellers.

wraith808:
So no...I don't think the change in the average customer's expectation to pay lower prices than small bookstores can afford to offer is not oversimplifying things at all. It goes right to the root of the problem. And what is most directly shifting the sales of books away from the traditional local shop, and over to large discount booksellers.
-40hz (February 03, 2015, 12:45 PM)
--- End quote ---

I just don't think that's the only problem.  Many people in the store, I'd talk to and ask why we hadn't seen them in a while, just in conversation.  They'd point to the fact that since moving, we'd stopped having events and the store just wasn't as fun... and so given the opportunity to get things cheaper, they took it.  I think (and this is anecdotal, so take it with a grain of salt) that people are willing to pay the premium if you're give them a reason to come in and do so.  Are they going to pay it just to support your business and keep "local businesses local"?  That kind of platitude is only going to appeal to a select few.

Is it harder?  Yes.  Are distribution and prices big contributing factors?  Of course.  But is it the only, or even the main factor? Not in my opinion.

So what's left? Labor expense? Lay off non-family workers and work longer hours yourself? Ok. But for how long? And besides, even though you can elect not to pay yourself as the owner - everybody else (at least in my state) has to be paid minimum wage. To run a store responsibly takes at least two people. One to cover the front plus one to help out in front and cover everything else like shipping and receiving, paperwork, janitorial tasks, stocking shelves, doing the bank and PO box runs, etc. These two may swap roles back and forth. But you still need at least one person available to serve the customers and watch the store at all times. So small business labor savings are pretty much determined by how able the owner is to do without a paycheck. Not a very compelling proposition for most folks who don't have a trust fund to fall back on - as one of our town's former booksellers did. (interestingly, she was the first to close shop when things got really bad. ("Old money" doesn't tend to continue backing a losing proposition - even when they can afford to. A least not the "old money" crowd I've known.)
-40hz (February 03, 2015, 12:45 PM)
--- End quote ---

To speak directly to this, the game store that I worked in had one of the best advantages in retail... three out of four employees had worked there for years, and had worked through college.  All three of us were willing to work for credit.  So the only person on payroll he had was the manager.  It was always strange to me that the credit he gave was vs. retail instead of being vs the discounted price.  As you (rightly) note, payroll is a big part of the expenses, but there was no indication that he at a fundamental level didn't realize the advantage that we were conferring to him.  At least not until two of them quit.  That's when the downward spiral started as he began to have to pay more to actual employees, and the employees that he was able to get were not interested in the store as anything but a job.

40hz:
All three of us were willing to work for credit.
-wraith808 (February 03, 2015, 01:35 PM)
--- End quote ---

Interesting. I'm not even sure if you can do that where I live and still claim the 'expense' of the credit for tax purposes. Still...'free' labor is free labor. Although I understand that's starting to be looked somewhat askance at by government. And rightly so IMO since it's so open for abuse.  :)

Plus...free help allows a business to get sloppy if its not careful. Staring a payroll (that absolutely must be paid) in the eye every week does a lot to keep business owners on their toes. Most savvy businesses owners know - to the penny - what their daily "nut" is. We call it "what it costs to put the key in the door" in my business. How many dollars a day do we burn by just existing as a business? We need to keep our average daily revenues up plus our gross profit margin ahead of that number, on a consistent basis, or we're out of business. That, and make sure we get paid in a fairly timely manner. Sales and cash flow. It really is that simple. Everything else is finesse. ;D

wraith808:
I can see your point... I'm not sure as to how (or even if) he claimed anything on that.  Or was it just the amount of time "he as an owner worked."  But I did see that when he did have to clear payroll- the bottom line wasn't as flush as it was before.  And when one of the new "paid" help was caught stealing... the realities of dealing with people that he hadn't known for 15+ years became evident.

Navigation

[0] Message Index

[#] Next page

[*] Previous page