Chain Reaction


Earlier this month the legendary Cody’s Books in Berkeley announced that it was closing its doors for good. It’s a grim if unsurprising development. The last decade has not been kind to the traditional corner bookshop. Battered by online discounts and chain superstores, the American Booksellers Association has crumbled from 5,200 bookstores in 1991 to 1,702 stores in 2005. So if you were to seek a summary of their dilemma, this one might sound apt: “The old-fashioned bookstore was a charming place, but charm alone will not solve the problem of modern book distribution. . . . Hard though it may be to face the fact, the bookstore of today cannot primarily be a place for those who revere books as things-in-themselves.”

An editorial about the opening of another Borders superstore crammed with lattes and Sudoku instead of Foucault and Zola? No. Try a Carnegie Corporation report . . . from 1930.

Chain superstores, notes Laura J. Miller’s fascinating new study Reluctant Capitalists: Bookselling and the Culture of Consumption (University of Chicago Press), are the latest manifestation of a centuries-old struggle between bookselling Davids and Goliaths—a battle over where Americans actually shop versus stores with, Miller tartly notes, “a style of retailing that Americans at least profess to miss.”

The battle is as much about culture as it is about cash. “It’s almost as if there are two tracks of bookselling, the commercial and the literary,” muses ABA president Mitchell Kaplan in an interview with the Voice. (Disclosure: As an author, I’ve read at many of these chains and indies, and my work has been promoted by ABA’s Book Sense.) The founder of the Miami-area Books & Books, Kaplan started from a sheer love of what the Carnegie report pronounced dead: books as things-in-themselves. “When you lose an [independent] bookstore, you don’t just lose the place,” Kaplan explains. “You lose the people. Knowledgeable book people are being lost from book culture.”

Are we witnessing the extinction of that culture?

“Here’s how it used to be,” recalls Steve Bercu, founder of the Austin, Texas, shop BookPeople. “Across the street from the University [of Texas], they had about 15 bookstores—all of them relatively small, all niche stores.” And now? “Everybody’s gone. One hundred percent of them. There’s not a single bookshop on that street now.”

The reason, he says, boils down to one word: Chains.

Bercu should know: In 2002, he led a neighborhood coalition to accomplish the rare feat of beating back a Borders superstore looking to open across the street from BookPeople. While the effect of online bookselling has been diffuse and of questionable profitability, when a bricks-and-mortar chain fires up its espresso machines and Norah Jones CDs nearby, it’s often the death knell for an indie. So when asked if the proposed placement of that Borders was a coincidence, Bercu laughs.

“No,” he responds quickly. “It was not. They open these stores down the block from the established local bookstores. That’s a knockout blow.”

But it’s only the latest round in a very long fight. Before Borders and Barnes & Noble, the bête noire of bookshops was the department store. When Macy’s opened its first book department in 1869, local bookstores found themselves besieged by the original big-box retailing: deep discounts, clueless clerks, and a fearlessly déclassé combination of non-book “notions” and bestsellers that left snobs sputtering . . . but delighted the masses.

“Within a decade,” Miller’s study notes, “Macy’s was one of the largest book outlets in the country.”

Other department stores followed. Through the middle of the 20th century, they controlled as much as half the book trade. Small book chains like Brentano’s and Doubleday also appeared. Then, as now, independent booksellers grumbled about sweetheart deals and the chains resolutely middlebrow taste. Additional competition from discount stores and grocers hardly helped. “[T]he ordinary book outlet must now compete with everything from delicatessens to whore houses,” Miller quotes one miffed observer from 1954.

Still, independent bookstores survived—thrived, even. So what’s changed? First, one must follow the money.

“Bookselling is essentially a consignment business,” points out Andrew Laties, VP of the Brooklyn bookstore Vox Pop, in his recent memoir-cum-manifesto Rebel Bookseller (Vox Pop). In that innocuous statement resides the predicament of independent bookselling. Prodded by the Depression, in the 1930s publisher Alfred Knopf let bookstores stock his titles at little risk by making unsold copies returnable for credit on other Knopf titles. The practice became the industry standard. It seems like a good deal, and it encourages booksellers to stock untried authors. But in the early 1990s, several forces converged with overstock returns to create a perfect bookselling storm.

The first was the rise of mall-based chains with computerized inventories, like B. Dalton and Waldenbooks. Many mergers and shakeouts later, two major chains emerged: Borders and Barnes & Noble. Both went public. Wall Street investment encouraged steroidal growth without regard for quick profitability—as Kaplan puts it, “They didn’t have to play by the same rules as us. They could just keep losing money.” These chains built massive superstores wallpapered at little risk with returnable books. It was a boom time for publishers—at least, until that unsold “wallpaper” got returned.

Secondly, a 1979 Supreme Court ruling (Thor Power Tool Company
v. Commissioner of Internal Revenue) changed inventory accounting, encouraging retailers to dump unsold goods before the end of their fiscal year. A huge market in remaindered books was born, and chains now had a surefire promotional item to load up their display tables. It’s the most profoundly unnoticed trend of literary culture in the last two decades. “I feel like I’ve been trapped in the publisher’s model of featuring new books,” says Sarah McNally, whose 2004 founding of a successful new Manhattan book- store, McNally Robinson, is a most notable exception to the trend of bookstore closings. “A publisher’s P&L [profit and loss statement] means that a book has to earn money as soon as possible, but I want my customers to be choosing from the best books in the world on my front tables, regardless of when they were published.”

Backed by financial muscle and heavy inventories, chains demanded lower wholesale prices to deeply discount bestsellers—a practice that had previously been illegal until the final repeal of anti-monopoly fair-trade laws in 1975. Chains also wanted more co-op money—the product placement fees publishers pay for prominent display. If subsidizing chains through overstock returns and co-op money wasn’t enough of an irony for publishers, they also found themselves competing with a chain. Barnes & Noble’s proprietary publishing house is now thriving—and its success such a touchy subject that in a March 16 investor conference call CEO Steve Riggio wouldn’t break out its sales figures. “We’re not investing in intellectual properties that have a lot of high risk associated with them,” was all Riggio would say, citing such genres as puzzles, astrology, and woodworking.

Critics can sniff at that. But there still remains one irreducible fact about chains: People like shopping at them.

Like milk in a grocery store, the kids’ section of a Barnes & Noble is almost always placed far from the entrance. Why?

Simple: B&N children’s sections are a customer magnet, and possibly the most child-friendly and parentally designed spaces in the history of retailing. There are low shelves, allowing good sight lines so that you can see your kid. There’s carpeting for inevitable toddler face-plants. A train table to play at. Comfy chairs for the parents. A single exit in sight of those chairs, so that your kid can’t bolt. Sit in the Barnes & Noble kids’ section, and their populist rhetoric makes sense. Some indie bookstores are not just figuratively exclusionary: If you have a stroller or a wheelchair, you literally cannot get inside some of them.

Superstores, with their SUV-wide center aisles and Rachael Ray displays, surely beg for hipster sneers. But what about when those hipsters have kids or get old?

This is why discounts alone do not account for the success of chains—as Mitchell Kaplan notes dismissively, “Most of their books are not discounted.” Yet chains remain almost ridiculously pleasant places to shop. How? By brilliantly mirroring the country’s best innovations in bookselling. Like nearly everything else about Barnes & Noble, their children’s section is not really new at all. The child-friendly bookstore within a store, as Rebel Bookseller author Laties points out in an e-mail to the Voice, was around as early as the 1940s, when the Carson Pirie Scott department store pioneered the concept. The in-store café? That first appeared at Upstart Crow and Kramerbooks & Afterwords in the 1970s. In-house publishing? Doubleday. Library-like burnished woods and comfy chairs? Brentano’s. Computerized inventory control? That would be another chain altogether: B. Dalton . . . which Barnes & Noble acquired.

As comedian Steven Wright once observed, it’s the second mouse that gets the cheese.

Independent stores haven’t taken this lying down. Chain competition has forced them to become better run, and Kaplan cites initiatives like Above the Treeline, a software suite that gives indies the deep inventory and sales analysis currently enjoyed by chains. There’s also, he notes, customer education through programs like ABA’s Book Sense. But Miller’s Reluctant Capitalists remains skeptical of Book Sense’s efforts to beat chains at their own online and branding games, and with reason. With co-op money, slick inventory control, proprietary publishing, and unheard-of financial muscle—Barnes & Noble’s latest quarterly report shows no debt and a staggering $373 million in cash—the playing field has precipitously tilted toward chains.

Today’s field, though, may not be the future’s. Superstores live and die by generous zoning, massive inventory, co-op money, and deep discounts. Zoning laws may stiffen, return policies change, or price controls curtail loss-leader strategies. All these possibilities, however unlikely, have precedents; indeed, it was the owner of Nantucket Bookworks who last month spearheaded a chain store ban in that island’s downtown. Ultimately, though, the greatest vulnerability of chains may be their muscle-bound nature. If print-on-demand technology, though still poky and faintly disreputable, ever achieves the availability and quality of traditional books, the need for overstock returns, remainders, and huge retail spaces may evaporate.

Strange to say, someday superstores may be the historical curiosity that indies are now in danger of becoming.

Paul Collins’s books include Sixpence House: Lost in a Town of Books (Bloomsbury).