A Grim Future for America’s Bookstore Chains?

Marketing maven and provocateur Seth Godin has the blogosphere talking today with his post “It’s not the rats you need to worry about.” Godin stated that online bookseller Amazon and the Kindle had done to bookstores what iTunes and filesharing did to the once-profitable music store chain Tower Records: rendered them obsolete and even an impediment to the customers who matter most, heavy users. Godin stated that bookstores depend on shoppers who buy one hundred to three hundred books a year and that the Kindle, which offers near-instantaneous delivery, more variety and a less expensive format, is incentive enough to abandon the bookstore.

Certainly, it has been a tough year for the major chains. Borders Group narrowly avoided bankruptcy when creditor Pershing Square Capital Management agreed to extend the pay-off date of a nearly $43 million loan, allowing it an opportunity to take numerous cost-cutting measures, including the closure of 100 Waldenbooks locations. Competitor Barnes & Noble fared better, but experienced hardships of its own as it headed into the holiday season with reported quarterly losses.

Both chains have already taken steps to capitalize on the growing e-market. Borders Group began selling the Sony Reader in its stores some years back, and Barnes & Noble launched its own branded e-reader this year, the Nook. Further, Borders Group announced plans this month to invest in Kobo, an e-book content delivery service spun off from Canadian book chain, Indigo Books & Music. But is all of this enough to save the brick-and-mortar chain bookstore in America? Probably not.

When it comes to the e-reader’s natural habitat, the internet, Amazon holds the home field advantage. Online since 1995, the company’s website attracts over six hundred million visitors annually, has no storefronts to maintain and is already a trusted name in e-commerce. The Kindle reader is estimated by some to already hold up to 60 percent of the US market share in e-book sales. Further, along with big box retailers Walmart and Target, Amazon is putting the squeeze on chain bookstores in the hard copy arena as well by offering selected popular hardbacks for as little as $9 a piece. From any perspective, it doesn’t look good for the long-term future of the big chains.

As the reading public becomes accustomed to e-readers, the market for paper books will grow smaller, limited to collectors of special editions and a dwindling sliver of customers who refuse to embrace e-reader technology. Chain bookstores may wake up to find their commanding share of the American marketplace greatly diminished, forcing them to cut fat, consolidate resources and focus on winning the hearts and minds of local customers. In this arena, they may face great competition from not only Amazon and whatever e-reader platform that’s left to pick up the crumbs, but also the surviving independent bookstores, many of whom have had years to sharpen these very same techniques in their own war against the once-mighty chains.

n653213921_1671825_1056996Matt Staggs is a literary publicist and the proprietor of Deep Eight LLC, a boutique publicity agency utilizing the best publicity practices from the worlds of traditional media and evolving social technologies. He has worked in the fields of public relations and journalism for almost a decade. In addition to his work as a publicist, Matt is a book reviewer and writer whose work appears in both print and web publications.

8 thoughts on “A Grim Future for America’s Bookstore Chains?

  1. Much of what you wrote here is smart and forward thinking. But what is not addressed is how this does not actual help the publishing market at all. Your piece focuses on what this does to the chains. But what about the independent booksellers who frequently can not afford to offer discounted prices on any material. How does the cut rate prices affect them? I would suggest harder than the chains.

    But here's the larger problem, from my perspective: If that 60% market share of ebooks to Amazon's Kindle figure is correct, and it may well be, do you realize the impact of that fact on the market? It's staggering! At it's best, B&N was about a third of market share in the U.S. Less market share on bestsellers; more on certain books they championed vs competitors, less on those their competitors championed over their selection. But 60%? That's a monopoly in the making and having a retailer control that much of the market is not healthy for anyone, artist, publisher, etc. in the long term.

  2. One major error and 2 minor ones to point out.

    Amazon only claimed that Kindle sales beat print sales ON Christmas day, not for the entire season. It's easy to figure that a lot of Kindle giftees went online to get copies of books to test it with that day, so at least for now, this is a singular event.

    Second, Borders U.S. had sold Borders U.K. to British investors some time ago, so its closure had nothing to do with the weakness in U.S. operations.

    Finally, Pershing Square is the largest investor in Borders as well as a creditor for that $43M, but the overall debt at Borders is $375M (against a market cap of $72M). It's easy to see why Pershing wouldn't push to have this loan repaid while it has a major stake in the company's overall value (17% of outstanding stock, with an option to increase that to 33%).

  3. "As the reading public becomes accustomed to e-readers, the market for paper books will grow smaller, limited to collectors of special editions and a dwindling sliver of customers who refuse to embrace e-reader technology."

    No way, man. Artwork fares very poorly on any of the current crop of ebook readers. Even a full size desktop computer screen displays images at 72 dpi. That's not going to change any time soon. Compare to 150 to 300 lpi or more for printed artwork. Consider the growing importance of comics and graphic novels.

    Also, there are tons of books, such as old books or non-mainstream ones that aren't likely to ever be available for the Kindle or any other reader.

    At this point I read about 1/3 of my books on the Kindle iPhone app. I'm sure that will increase, but I seriously doubt it's going to come close to 100%.

    When it comes to mass-market fiction though, you're probably right though.

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