Betting

Bookshops, You Have Three Choices

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.