Читать книгу Merchants of Culture - John B. Thompson - Страница 17

The traditional patterns of the retail book trade – small independent booksellers on the one hand, department stores and other non-book retailers on the other – began to change in the US with the rise of the mall stores in the early 1960s. This development was linked to a major demographic shift that was taking place in the United States at this time, as the middle classes moved out of city centres and into the suburbs that formed the expanding satellites of American cities.⁴ With the migration of the middle classes to the suburbs and the rise of the automobile as the primary means of transport, the suburban shopping mall became the new locus of the American retail trade. In 1962 the Walden Book Company, which for many years had operated a network of rental libraries on the East Coast, opened its first retail outlet in a shopping mall in Pittsburgh. Four years later the Dayton Hudson Corporation – a company formed by the merger of two department stores in the American Midwest – opened the first B. Dalton bookstore in a suburban shopping mall in Minneapolis. In 1969 the Corporation bought the Pickwick Bookshop in Hollywood, together with other Pickwick outlets, and in 1972 the two operations were merged to form B. Dalton Booksellers. By 1980 there were more than 450 B. Dalton stores located in shopping malls across the United States. Waldenbooks also expanded rapidly during the 1960s and 1970s; by 1981 Waldenbooks had 750 sites and claimed to be the first bookseller to operate bookstores in all 50 states.

As it turned out, the 1970s were the heyday of the mall-based bookstores; in the course of the 1980s they were gradually eclipsed by the rise of the so-called superstores, especially the chains of Barnes & Noble and Borders. Barnes & Noble was an old bookselling company whose origins dated back to the establishment of a second-hand book business by Charles Montgomery Barnes in Wheaton, Illinois, a suburb of Chicago, in 1873. Barnes’s son, William, moved to New York in 1917 and set up a wholesale book business with G. Clifford Noble, supplying textbooks to schools, colleges and libraries in New York. At the outset, Barnes & Noble was primarily a wholesale operation, selling to educational institutions rather than individual customers, but it gradually became increasingly involved in retail sales, leading to the opening of a large bookstore on Fifth Avenue and 18th Street in Manhattan, which was to become the company’s flagship. By the 1970s, however, Barnes & Noble had fallen on hard times. John Barnes, grandson of the founder, had died in 1969 and the business had been bought by Amtel, a conglomerate that manufactured toys, tools and other products; business declined and Amtel soon decided to divest themselves of their new acquisition. In 1971 Barnes & Noble was bought by Leonard Riggio, who had founded a successful student bookstore while he was a student at New York University in the 1960s and had set his sights on building up a bookselling business. Under Riggio’s management, Barnes & Noble expanded its operations in New York and Boston, opening more stores and acquiring a couple of local chains. In 1986 Barnes & Noble bought the B. Dalton bookstore chain from Dayton Hudson, and in 1989 they acquired Scribner’s Bookstores and Bookstop/Bookstar, a regional chain in southern and western United States. These acquisitions turned Barnes & Noble into a national retailer and one of the largest booksellers in America.

At the same time as Barnes & Noble was expanding its bookstore chain from its original base on the East Coast, Borders was building a national chain of bookstores from its base in the Midwest. In 1971 Tom and Louis Borders opened a small used bookstore in Ann Arbor, Michigan; they moved to larger premises in 1975, expanded the business and ran it successfully for many years. In 1985 they opened a second bookstore in Detroit to see whether they could replicate their success in a less academic setting. The success of the Detroit store encouraged them to expand into other locations in the Midwest and Northeast. In 1992 Borders was bought by the retail giant Kmart, which had acquired the mall-based bookstore chain Waldenbooks in 1984. Kmart merged Borders with Waldenbooks to form the Borders Group, which went public in 1995. By this stage, the Borders Group and Barnes & Noble had become the dominant book retail chains in the United States and their sales were five to ten times those of the other national chains, such as Crown and Books-A-Million.

In the course of the 1990s both Borders and Barnes & Noble expanded rapidly, seeking to extend their presence across the United States and to consolidate their positions as dominant players in the retail book trade. In both cases their expansion was based on the concept of the ‘book superstore’, which differed in certain key respects from both the mall stores and the independents. Often located in prime city locations, the book superstores were designed as attractive retail spaces that drew customers in and encouraged them to browse – they were clean, spacious, well-lit stores with sofas and coffee shops and areas to relax and read. The stores were open for up to a hundred hours a week, seven days a week; they emphasized customer service and attractive, eye-catching displays. The chains competed with one another and with other chains and independents by giving deep discounts (30–40 per cent) on frontlist⁵ bestsellers and modest discounts (10–20 per cent) on other hardcovers and by the range and depth of their stock. They centralized stock purchasing and inventory control, which gave them a great deal of leverage in their negotiations with suppliers and enabled them to realize substantial economies of scale. In many cases they stocked merchandise other than books, such as magazines, music CDs, computer games and videos. They sought to make the experience of buying books easy, unthreatening and enjoyable for individuals who were not accustomed to going into a traditional bookstore.

As the rivalry between Barnes & Noble and Borders intensified in the early 1990s, both companies closed many of the mall stores in their B. Dalton and Walden chains and opened more superstores instead. In the year from 1993 to 1994, for example, Barnes & Noble closed around 52 B. Dalton stores, the total number of which fell from about 750 in 1993 to 698 in 1994; at the same time, it increased the number of superstores from 200 to 268. During the same time period, Borders closed 57 Walden stores, the total number of which fell from 1,159 to 1,102, and it nearly doubled the number of superstores, from 44 to 85 (see table 1).⁶ The old mall-based bookstores were gradually giving way to the rise of the book superstores.

Table 1 The expansion of Borders and Barnes & Noble, 1993–1994

* estimate.

Source: Logos (1996).

By 2006, Barnes & Noble was operating 723 bookstores across the United States, which included 695 superstores and 98 mall stores; its total sales were around $4.8 billion.⁷ The company had diversified into the video games and computer software retail business and was operating a large number of video game and entertainment software stores under various trade names including Babbage’s, Funco and Software Etc. It had also become involved in publishing, acquiring Sterling Publishing in 2003 – a non-fiction trade publisher with some 5,000 books in print – and publishing an extensive line of classics under the Barnes & Noble imprint. In 2009 Barnes & Noble entered the ebook market by launching its own ebook reader, the Nook, and selling ebooks from its own website.

The Borders Group, with total sales of around $4.1 billion in 2006, was the second largest book retail chain in the US at this time, operating around1,063 bookstores in the US, including 499 superstores under the Borders trade name and around 564 mall-based Waldenbooks stores. Borders had also expanded internationally, opening a number of Borders stores outside the US (mainly in the UK and the Pacific Rim) and acquiring Books Etc. in the UK in 1997. But in the early 2000s the Borders overseas operation began to run into difficulties. In 2007 the UK business – which by then comprised 42 superstores in the UK and Ireland and 28 branches of Books Etc. – was sold to a private equity group, Risk Capital Partners, for a modest initial sum of £10 million. It was bought out by the management in July 2009 and went into administration in November 2009. All 45 Borders stores in the UK were closed on 22 December 2009. Borders’ US business also went into decline; its last recorded profit was in 2006 and from then on its annual sales fell and its losses grew. In February 2011 Borders announced that it had filed for Chapter 11 bankruptcy protection and by September all remaining Borders stores had been closed down.

The bankruptcy of Borders marked the end of an era, in the sense that the long-running rivalry between Barnes & Noble and Borders, which saw the two book retail giants rolling out their superstores across America, was now over. But the profound changes currently taking place in the retail marketplace will pose major challenges for Barnes & Noble and the smaller retail chains that remain. Bricks-and-mortar bookstores have long faced serious competition from online retailers like Amazon and from mass merchandisers (more below); now they face the real threat that a growing proportion of book sales will be realized as ebooks that bypass the physical bookstores altogether. Total revenues from the Barnes & Noble bookstores have been declining since 2007. Barnes & Noble is a significant player in the ebook marketplace but well behind Amazon in terms of market share, and it’s not clear whether the growth of its ebook revenues will be sufficient to offset the decline of bookstore sales. While Barnes & Noble will pick up some of the sales that would previously have been credited to Borders, it is likely that the overall proportion of retail sales accounted for by the superstore and mall bookstore chains – which was probably about 45 per cent in 2006⁸ – will decline significantly in the coming years.

There is no doubt that the rolling out of the nationwide book chains in the 1990s and the intense competition that developed between them greatly increased the availability of books to millions of ordinary Americans. People living in parts of the country that had, until then, been poorly served by bookstores suddenly found that there were now two or more large bookstores within driving distance, carrying a range of stock that had simply not been available before in a bricks-and-mortar store. But this dramatic transformation of the retail landscape had its costs and consequences too.

The most visible consequence – one that has been much commented upon and much lamented – was the precipitous decline of the independent booksellers. While this decline predates the rise of the superstores, it was undoubtedly hastened by it. In 1958, one-store independent booksellers were selling 72 per cent of trade books in the US; by 1980 this had fallen to less than 40 per cent of trade sales.⁹ As the chains opened new superstores in the metropolitan areas across America in the 1990s, more and more independents closed down, forced out of business by the two-pronged pressure of rising overheads (and especially the rising costs of real estate) and declining revenues. The American Booksellers Association, which represents many independent booksellers, lost more than half its members in the 1990s and early 2000s: its membership fell from 5,100 in 1991 to 1,900 in 2004. Whether ABA membership figures are an accurate reflection of the actual number of independent booksellers in the US is debatable,¹⁰ but no one disputes the fact that the number of independent booksellers has fallen significantly and that their market share has declined. In 1993, the chains accounted for around 23 per cent of retail sales in the US; by the end of the decade, this had risen to over 50 per cent. During the same period, the market share of independent booksellers fell from 24 per cent to around 16 per cent. This decline continued into the 2000s, so that by 2006 independent bookstores probably accounted for only about 13 per cent of retail sales in the US.¹¹

There can be no doubt that the decline of the independents was partly the outcome of predatory expansionist activity by the chains – this was not the only factor, to be sure, but it would be ingenuous to suppose that it played no role. The chains explicitly targeted those metropolitan districts or zip codes where the demographics were favourable to the sale of books, and these tended to be the same districts where independent booksellers were already located. Once the superstore opened, with its extensive stock range and aggressive discounting, it was very difficult for the small independent down the street to compete. On the other hand, many of the independents that closed down were poorly run businesses that didn’t serve their customers well. Their stores were disorganized, their stock-holding erratic, their accounts non-existent and they did little to make book-buying a pleasurable and rewarding experience for the consumer. ‘Did the independents go out of business because Barnes & Noble and Borders expanded and were predatory? Absolutely,’ said one former employee of a chain who was responsible for identifying sites for new superstores in the early 1990s. ‘The other side of the story is that they went out of business because you can’t be an amateur in this business anymore. Because bookselling was a noble profession, there seemed to be a fence between us and the rest of the economy; suddenly people woke up to the fact that you have to know what you’re doing.’ The independents that survived tended to be those that were well run and that built strong links with their local communities by hosting events of various kinds; it also helped if they owned their own real estate, or if they were protected by zoning regulations that restricted the activities of the chains. By 2007 there were probably only 400 independent booksellers left that were of real importance for trade publishers in the US. But by this time the decline of the independents appeared to have levelled off, as those that remained had succeeded in finding a strategy that would enable them to survive in the face of intense competition from the chains and other outlets. And for certain kinds of books, their role was and remains greater than their number and size – judged purely in terms of their revenue and their share of retail sales – would suggest.

The long decade of struggle between the chains and the independents ended unquestionably in victory for the chains, but there were skirmishes along the way that resulted in important gains for independent booksellers. The most important of these was undoubtedly the series of legal challenges brought against the chains and the large publishing houses by independent booksellers associations which alleged that the publishers were giving preferential terms and discounts to the chains in contravention of federal antitrust law. In mounting their case against the publishers and the chains, the independent booksellers appealed to a piece of federal legislation called the Robinson-Patman Act, which was passed in 1936 to curb what were seen as anticompetitive practices by producers who allowed chain stores to purchase goods at lower prices than other retailers. The Act prohibits price discrimination on the sale of goods to equally situated retailers when the effect is to reduce competition. Following a legal challenge brought by the Northern California Booksellers Association against the paperback publishers Avon and Bantam in 1982 and the launch of a Federal Trade Commission investigation in 1988, the American Booksellers Association announced a lawsuit in 1994 against five publishers for discriminatory practices that favoured the chains.¹² By the autumn of 1996 all of the publishers had settled out of court, admitting no wrongdoing but agreeing to abide by rules ensuring non-discrimination in pricing, credit and returns.¹³ In March 1998 the ABA filed another lawsuit, this time against the two major chains, Barnes & Noble and Borders, alleging that they had violated the Robinson-Patman Act and California unfair trade practices laws (the suit was filed in the US District Court for Northern California). Again, the case was settled out of court; neither Barnes & Noble nor Borders admitted any wrongdoing, and they agreed only to pay the ABA a sum less the cost of its legal fees. This was something of a defeat for the independents, who agreed to destroy all documents obtained during the case and to refrain from any further litigation for three years.¹⁴ But the upshot of this prolonged legal battle was the emergence of a much clearer and more transparent system for discounting and co-op advertising,¹⁵ as well as an acute sensitivity to the risks involved in tampering with this system. The publishing houses make their discount schedules and co-op arrangements explicit so that all retailers know what they are when they are buying books and formulating promotion plans. In principle this creates a level playing field, as the large chains should not be able to use their size to force publishers to offer higher discounts, although in practice the issues are not always so clear-cut, as we shall see.

A second consequence of the rise of the retail chains was a gradual shift in the ways that books were stocked and sold. This shift began with the mall stores in the late 1960s and early 1970s, and it went hand in hand with the application to bookselling of the methods of selling and stock management that were being used in other retail sectors. Situated in the high-traffic retail space of the shopping mall, B. Dalton and Waldenbooks had to organize their stores in ways that would maximize stock turnover. Table displays and dump bins were used to stimulate impulse buying and multiple purchases. Computerized systems of stock management were introduced to monitor stock levels and stock turn, so that fast-selling titles could be promptly reordered and stock that was not selling could be returned. These retail practices were incorporated into the operating principles of the new superstores that were opened in the 1990s. The sheer size of the superstores gave Barnes & Noble and Borders more leeway in terms of the range and depth of stock. They could stock more specialized books and more slow-moving backlist titles than the mall stores, with their much smaller floor area, could afford to keep on the shelves, and this became an important part of their value proposition. Nevertheless, the superstores continued to place a great deal of emphasis on maximizing stock turnover in the highly visible space at the front of the store, where new books and bestsellers were stacked on tables and in dump bins and where publishers were charged for display space. As the national roll-out of the superstores began to grind to a halt around 2000 and the superstore chains began to look more carefully at the relations between investment in stock, overheads and revenues and became more concerned about cash flow, their book-buying decisions became more cautious and they became more proactive about returning slow-moving stock. The chains had succeeded in bringing bookstores into the shopping malls and city centres where Americans did the rest of their shopping, had made books more available than ever before and had turned book-buying into a consumer experience like any other. But the more books were treated like any other commodity and subjected to the same principles of retailing, the more the chains would be forced to focus on fast-selling titles by brand-name authors at the expense of those titles that would add depth and range to the store but that would have much slower stock turns.

This inevitable shift was largely the consequence of the cost of real estate. Maintaining large bookstores in the shopping malls and city centres where there is high consumer traffic, and therefore competition for retail space, is a very costly business, and it is difficult to cover these costs and generate profits in a low-margin activity like bookselling. The pressure to reduce your investment in slow-moving stock, to focus more attention on fast-moving bestsellers and to look for other ways of improving margin – such as charging publishers more for display space and stocking non-book goods like chocolate and stationery where margins are higher – is difficult to resist. Epstein puts the point well: ‘In bookselling as in any retail business, inventory and rent are a trade-off. The more you pay for one, the less you can spend on the other.’¹⁶ Hence the growing dominance of the retail book chains, from the mall stores to the superstore chains, tended over time to accentuate the importance within the industry of fast-selling frontlist titles by authors with a good track record and a degree of name recognition. The chains were more likely to stock these books in substantial quantities and more likely to display them in prominent front-of-store positions, thereby increasing their chances of selling well. Books by less well-known authors were not ignored – on the contrary, the central buyers in the chains were always eager to find new authors and new titles that might appeal to their customers. But decisions about which books to buy, in what quantities, how to promote and display them and how long to keep stock on the shelves were being taken in contexts that were shaped by the increasingly stringent financial demands of running large retail businesses in expensive real estate. These were contexts that tended, over time, to reduce the levels of tolerance for slow-moving stock.

The rise of the retail chains had a third consequence which has been less appreciated but which was enormously important for the evolution of the publishing industry: it created a new market for what could be described as the ‘mass-market hardback’. Much has been written about the paperback revolution started by Allen Lane in Britain, with his launch of the Penguin imprint in the 1930s, and by the rise of Pocket Books, Bantam, Dell, Fawcett, the New American Library and other paperback houses in the US in the period after the Second World War. From the 1940s on, the sales of mass-market paperbacks grew enormously; paperbacks were being sold in newsagents, drugstores, supermarkets, airports, bus terminals and railway stations as well as in more conventional bookstores. Mass-market paperback sales became the financial driving force of the industry, and the sale of paperback rights became a principal source of revenue for the hardcover houses. By the 1960s the industry itself had bifurcated into two separate businesses – hardcover publishing, on the one hand, and paperback publishing, on the other. ‘The perception was that the only similarity between the two is that we both published books,’ explained one senior executive who had entered the paperback side of the business in the late 1960s. ‘The hardcover side was snobby, literary, prestigious, tweedy – all the things you would expect in that era. And the paperback business was sort of second class – we got the books a year later, we got no credit for the words, we were all about marketing, packaging, distributing and selling books. So you had these two universes coexisting, neither respecting the other very much but one totally dependent on the other for product.’ While the paperback business depended on the hardcover business for product, the hardcover houses depended heavily on royalty income from paperback sales to run their businesses.

The rise of the mall-store chains in the late 1960s and 1970s stimulated the sales of paperbacks and strengthened further the position of the paperback houses, as the mall stores embraced the paperback and made it available in a bookstore environment that was much more inviting and less intimidating for consumers than the traditional bookstore. By the mid-1970s, some of those working in the paperback houses began to realize that their business model – which made them dependent on the hardcover houses even though they, the paperback houses, were generating the real volume sales – was not a terribly good one. There were even cases where the publisher at a paperback house who had came up with the idea for a book was obliged to find a hardcover house to publish the initial hardcover edition, so that they could then license the paperback edition from them. ‘It would be like me coming to you and saying “look, I don’t have any editors here, edit this book for me, publish it in hardcover, I’ll give you the book to do that and then I will pay you some portion of the success I have after you do that,”’ explained a publisher who had started his career as an editor at a paperback house. Some of the employees at the paperback houses – usually the younger ones who were less wedded to the traditional model and less worried about offending the hardcover houses who were their traditional source of product – saw the need to start publishing books on their own. So in the 1970s the paperback houses began to originate their own titles, initially publishing them as paperback originals and then, by the late 1970s, publishing their own hardcover books. Crucially, they applied to hardcover publishing some of the techniques they had developed in the world of mass-market paperback publishing, such as using more attractive packaging and extending distribution to non-traditional outlets, and they were able in this way to achieve hardcover sales that were unprecedented in volume. This was the origin of the ‘hardcover revolution’.