It is becoming increasingly clear that bookshops, both chains and independents, are the first segment of the trade book publishing industry to face wrenching decisions that amount to bets on survival in this digital transition.
Publishers, agents, authors, wholesalers and many others all need to respond and some have already made significant efforts to do so, but it is clear that bookshops are the facing the full thrust of this change right now.
The way I see it bookshops have three choices:
1) Bet On Digital
Betting on digital means much less emphasis on real bricks and mortar locations. In order to win in this space you’ll be taking a leaf out of Barnes & Noble‘s book and building a real platform for content that provides self-publishing access AND access for traditional publishers direct to your platform and be shifting readers to your platform in your store(s).
Waterstone’s looks like it is about to embark on this strategy by launching its own device next year, I fear it will be too late. Barnes & Noble is two years into this strategy and is well on the way to building a convincing platform with a significant share of the US ebook market. They could still fail, which only goes to emphasize the importance of acting quickly.
Make no mistake about this choice, it means closing bookshops and shedding staff and soon. It’s a hard choice for chains because up until recently floor space devoted to print books were hallmarks of success. That is no longer true.
Smaller chains and independent book stores are faced with an impossibly high barrier to entry here, their own device is an excessive cost, as is creating their own platform and I don’t see a real way for them to pursue this strategy unless they can develop a loyal customer base for a curated ebook offering. It’s not an impossible prospect, but it will be damn hard for them to take this option.
2) Bet On Retail
This is perhaps the hardest decision for a bookseller to make because in essence it involves admitting that the product that to date has defined your business, books, is no longer the most important aspect of your business.
It seems to me that WH Smith has decided that its focus should be on retail, that its retail space can be best used to sell anything and perhaps over time that means fewer books and more of the other things it sells. If that is the case, then being in the digital book business is a distraction not an essential element in its future, hence the Kobo Deal.
By working with Kobo, Smiths leverages the book portion of its business to gain revenue and to sell devices while shifting its actual in-store focus towards products that deliver more revenue and profits. The company may feel some regret about that but as a retailer it will have to be unsentimental and profit driven. The flip side of not developing its own platform and device is a significant investment saved for another opportunity.
On balance, I think it’s probably the right decision. Either ebooks take off and WH Smith must replace a large section of their product line up OR ebooks plateau and what has the company lost?
I suspect that here in Ireland Eason is following this strategy, but the signs could point either way.
3) Bet On Print
By betting on print, bookshops will be making the assessment that they cannot compete in another retail space (or that they choose not to) and, as I suggest above in 1, they simply don’t have the resources to compete in digital.
Nothing about betting on print prevents a bookshop or a chain from doing a deal with an ebook platform to sell a device and provide access to an ebook library. That will bring some revenue but it won’t (in all likelihood) be enough to replace the revenue lost to most bookshops of falling print sales.
The bet here is that YOUR bookshop or chain will the lucky one. The one with just enough customer loyalty, just the right location, just the right level of population density, just the right amount of print loving readers, just the right range of books in the right formats and at the right prices, just the right amount of business nous and just the right amount of marketing know-how to rise above the other bookshops hoping the same thing.
Sadly, some bookstores probably most of them will lose this gamble. Many will lose because of bad luck or poor location, nothing to do with how good a bookstore or a bookseller they are which is a slightly depressing reality, but one we should face.
The winners may well do pretty well because although the overall market for print books shrinks, they will have an increased share of that market and also because the market for print will change most likely towards higher value books.
There’s a final choice of course, which is to do nothing and keep on rocking. I don’t hold out much hope for survival for those who make that choice.
Eoin Purcell's Blog 
I think you have outlined the choices facing bookstores very well.
For long-term survival – for the chains – I think #3 will lead to a quick end, #2 will buy them some time, but will probably end up the same way as their partner (Kobo in the case of WH Smith and FNAC) ultimately build loyalty with the customers and siphon them off. #1 is the best bet for long-term survival, but, as Waterstone’s will find out, it’s quite late to be getting into the device game and they face a really tough fight on unfamiliar terrain against competitors with significant and sophisticated operations and much deeper pockets.
For indie bookstores, they are really forced into #3, but I think they need to be much more pro-active in both developing an e-offering, and curating it. I think the last part is essential for their survival. In the US, the ABA has made a smart partnership with Google. However, most stores seem to just be offering an open portal to Google’s millions of e-books, and not doing much to filter or curate that collection. They seem to forget that their customers are the minority who actually want their selection heavily curated, as opposed to the majority that prefer the near-infinite selection (and convenience and price) of somewhere like Amazon.
David,
Proactive is the word alright. It’s essential, but may not be enough. That’s what saddens me the most. Survival may well be out of most bookshops hands at this point!
Eoin
I think you’re right, and it makes me sad too. Despite being an advocate for digital self-publishing and believing that e-book dominance is inevitable, I still haven’t bought an e-reader yet and love losing track of time in bookstores.
But I think most will go the way of the dodo. The bright spot, from a personal perspective, is that I think the indie booksellers will do a little better than the chains (ultimately). I do think there is a minority who will resist the switch to digital, who will be prepared to pay a premium for good quality print books, and who prefer curation, And I also think there is possibly a lot of overlap between those categories and that they are the natural demographic for an indie bookseller. The chains? Not so much.
I guess the flipside of this question – which is a question that publishers should be very seriously considering – is “how am I going to sell my P-books when the bookshops have closed?
Publishers need to develop alternative relationships, we may see books returning to department stores, or a better full-price offer in non-traditional locations like garden centres.
Selections can be curated in non-traditional locations, but publishers need to start thinking more about their retail options.
Consumers also need to think seriously about their feelings about the imminent demise of book shops and print editions. Since I’ve become aware of the difficulties facing book stores I’ve made much more of an effort to buy from book chains and independent stores rather than online. I was very sorry to see Waterstones in Dublin close earlier this year.
That’s the truth Philip, it very much is!
Eoin
Just a few random thought.
1) Borders did not expect the e-book market to go off and with Amazon and B&N and to a lesser extent Apple are still here and look where they are now.
Waterstone’s entry into the e-book market is to late unless they can set up a deal with the three biggies because most of the people who will buy a e-book device already have one and to change platforms to a new one means they will not be able read all their books on one device.
2) I remember years ago there was an uproar when coin shops stated to sell non numismatic stuff at coin shops such as comic books, baseball cards and dare I say it… candy. The dealers said that they had rent to pay and that they were losing money to the internet. At first I was one of the ones that was up in arms over this but I understand why they had to decide to do this.
3) If you try to relay on dead tree books you will end up like Borders.
Waterstone’s may be too late but I think they are thinking back to the disastrous decision they (and Borders UK) made in the early days of on-line retail. That of allowing Amazon to host their offer.
This is effectively what WHS are doing with Kobo so Waterstone’s strategy seems like the better one in the long term. My anxiety is that they have started the long-term way too late.
I certainly agree that there seems to be over much retail space now dedicated to bookselling but then that’s been true for at least 5 years. Much as CD-rom and then the internet cut a swathe through the sales of reference books, I think e-books are impacting fiction and narrative non-fiction first and heaviest. As these are the bread and butter of large bookshops it think (perhaps counter-intuitively) that the large stores have the most to fear.
Hello Eoin,
An excellent assessment of the shop element in the chain between author and reader. As with any product and title selection process
shops are faced with, so will the raft of secondary reader devices,
in other words limited choice for the reader. Survival means making profit.
All these retail and distribution events are having their effect on the primary publishing industry and print industry. Cost and risk factors will lead to writers being excluded from the chain and again the selection process will exclude many writers and limit reader choice. Ironically, track records, awards and mentions in literary dispatches will mean nothing if a book doesn’t sell.
The alternatives are: a) publishers directly sell hard copy and digital copies in any of the common formats to readers who access their web-site or listings, b) team up with the likes of Google Books, c) writers publish directly on-line. It is possible to get work printed on the cheap by exploiting the labour market in places such as China. A real noble action
that.
It is sad to see the demise of so many bricks & mortar bookshops
but in an era of unforgiving profiteering which is affecting high streets
around Britain, Ireland and elsewhere, the cost of culture centres such as bookshops outweighs any perceived intrinsic cultural impotance.
It is probable that as bookshops continue to close or scale back their offerings, the author will in the end lose out by not having market placement and readers lose out on ‘new’ works due to limitations on publishers and outlets.
There’s no doubt that if current trends persist, the number of authors available in a real print run (Print On Demand aside) will be even more limited than it is now.
To counter it, authors MUST begin to build their own platforms, both to help print sales through the remaining bookstores and to drive digital sales through online retailers.
Course that’s not going to work for everyone!
Eoin
I can’t help but feel Waterstones and any others considering a move into e-reader app and hardware territory are grossly underestimating the size of the task ahead of them. Even if they resell OEM Android devices, they are effectively re-shaping their businesses to be a hardware/software company – a task they are currently in no position to perform.
Although, as the tide has now well and truly turned, they are probably faced with having to make a big bet. Fiddling around with rebranding or closing a few stores won’t get them anywhere.
Reading around, I’m also surprised to see an attitude that book retailers feel they ought to be protected by the government in some way: http://bit.ly/mZ6Sf5. Now that really does highlight the naivety in some parts of the sector.
Yes that feeling about protection seems to be gaining ground but won’t go anywhere I suspect.
I realise the shift is immense, but it is also critical if booksellers are to survive. I suspect many will fail. That leaves them with the option of using their retail expertise to sell something else of hoping the survive the print shake-out!
Eoin
You’ve left out Option Four:
4) Realize that all you’re doing now is getting ready to go out of business. So should you liquidate and return that value to shareholders before it’s been evaporated?
It is indeed a difficult future facing Bookshops, small and large.
Firstly however I have to say that although I grew up loving books, I have no emotional or sentimental dependence on them. Any more than for large bakelite phones in cold hallway or clothes wringers in the garage. It’s not about profit and commercialism, it’s about convenience. And I have little sympathy for booksellers. They have been told this was coming for years. They have been arrogant, complacent and smug. Paper book prices were way too high for years, book shops made easy money. It’s over now.
The truth of it is that most bookshops will be gone in ten years, whatever they do.
As for the choices set out above, there are nuanced choices available that don’t mean having to chose only one or the other. Bringing out a dedicated device is clearly not an option for most chains or big stores like Easons. But building alliances with other chains and launching joint devices or joint apps is a very real option. So is mixing e and paper and diversification. It is the mix that will decide their success, not their pure choice.
It is a big mistake, imho, to assume that Amazon is going to suck up all the online sales into the future. In the coming years I believe readers will look for choice; for alternatives. As in every other market.
One of the biggest drivers will be the hunger for guidance on what to buy and what to read. This topic is only barely being touched right now, with different sites experimenting with recommendation systems, social reading groups, reviewers etc. But it is only in it’s infancy.
Chains like Eason and others do have the option to innovate and offer location driven content, allied with good social reading guidance, discussion groups, recommendation systems etc. Irish people often have Irish preferences, Irish tastes. Huge sites like Amazon and B&N cannot deliver local tastes and needs.
The truth about paper is clear. It is only going in one direction. Down, big time. The inevitable increase in price for paper books will be enormous. Everyone I know considers books an expensive buy. If they think that now, wait a couple of years.
Every book shop needs to wake up NOW and start strategising, quick. For small/medium stores I see no future other than diversification, second hand, specialist formats and POD driven by multiple screens and agencies. There will be a lingering demand for paper than imho will continue for up to 15 years. The only thing that can satisfy that demand in a realistic way is POD. The justification for POD is only beginning to emerge. The technology is only beginning and costs are very acceptable to the best of my knowledge. But soon the tech will inevitably improve and I truly believe that it is the future.
Eoin you wrote earlier this year about how drops in sales would hit average, low print run, titles much earlier than many people would think. I think you are absolutely right. Availability of average selling, low print run titles will inevitably start to evaporate within 24 or 36 months. That will leave more or less only the best sellers list. And that will only last for a few years more.
A year or so ago many people were still poo-pooing this transition, saying it would take 25 years if it ever happens at all. Anyone paying attention can see that this was pure fantasy. The truth is that it is happening even faster than anyone thought. And i believe it will gather even more pace. The economics make that crystal clear.
What Howard said.
I think there’s a way for the bricks and mortar stores to have a mixed print and e business, but bringing out a dedicated reading device isn’t it.
I think what’s happening with Overdrive and its WIN program with libraries is a very interesting model, and if the bookstores can find a way to get a piece of the e-pie by allying themselves with the device makers and online distributors, there’s hope.
No bibliophile wants to give up browsing in a bookstore, but the bookstores can’t leave themselves as the showcase for books while their e-competitors are taking the sales from them via the very same customers who walk in the store and browse the hardcopies–then order the book for their Kindle, etc.
Making affiliate-type alliances with whichever device/e-stributor they can is probably the best option for bricks and mortar stores.
If people know they can help their bookstore and still have their ebooks, I believe they will.
There are also discussions going on elsewhere about bricks and mortar stores selling “e-book cards” (for lack of a better term)–a gift card like packet that represents a particular title that can be purchased at bookstore and then used to download the book to the particular device that the user wishes.
There are ways. But creating a new piece of hardware is definitely not it, IMHO.
I think you have left out another option.
What are bookstores? What has been their function, and what IS that function that makes some people want to rend their garments and cry to heaven at the prospect of their demise?
Public solitude. Community.
Bookstores as privately run, community space entities, with enticements to stay and read awhile. A privately run library with retail aspects.
The closing of the Columbia Circle Barnes and Noble in Manhattan prevents a public travesty because of the events they hosted and the meeting place capabilities it presented. I have had several meetings there when I was working as an independent artist working on a low budget in Manhattan.
Independent bookstores can reimagine themselves strongly in the vein of a community building meeting center that hosts public events, rents space, offers food, alcoholic and no-alcoholic drink, and caters to a demographic craving community, books, food, drink, and occasionally, public solitude.
Sounds to me like a reason to celebrate the cafe culture, that we already have, with no need to persist with book stores.