2011-2013: bookstores, adieu
Until a few years ago, after the Siberian tiger, the bookseller seemed to be the mammal closest to extinction. In developed countries no one would have invested a euro to open a bookstore. James Daunt, the boss of the Waterstones bookshop chain, in desperation had decided to dedicate a corner of the chain's shops to the display and sale of Kindles and equipped the premises with wi-fi so that customers could download an ebook at a lower price than the book they had found and leafed through on the tables and shelves of the library. “At least someone comes in and sells something,” he had declared discouraged. Just a few months earlier, he had lashed out at Amazon in a rage accusing it of being a scourge of God for the book business. It looked like the epilogue of the siege of Famagusta.
The year before, the closure of the American chain Borders had thrown the whole sector into panic. "We will go the way of music" the managers of the publishing houses said to themselves, especially after their conviction, in the company of Apple, for violation of the antitrust law. It was Steve Jobs himself who accepted their plea to bring in Apple to limit Amazon's influence. But the Obama administration's Department of Justice (DoJ) didn't like the deal, which in 2012 opened an antitrust investigation into the Apple-publishers deal. A story widely told also on our blog. At that point it seemed to have been pronounced not a simple sentence, but the de profundis of a secular industry and important for human development.
2014-2015: ebook, goodbye
Then something happened: there was the counterattack and instead of the apocalypse we saw the Lazarus effect. Over the next three years, the unimaginable happened to such an extent that Amazon itself opened its own bookstore and announced it was opening more (it is said three stores a year). There are now two, one in Seattle and the other in San Diego. There was a kind of reckoning à la Waterloo. Publishers, great authors, booksellers and wholesalers have united against Amazon as all the European powers united against Napoleon who kept them in check on a military and political level.
This coalition of incumbents against the innovator of the moment has decided to make a bold move with an unusual determination: it has put a sort of embargo or, better, a tariff on ebooks, the ground on which Amazon was undermining them. They basically told their customers: “Do you want ebooks from great writers and want to buy them on Amazon? Well, then pay them more than the book." A choice that could really have been unfortunate, and in part it was, given that ebooks were the segment of the traditional publishers' business with the fastest growth and highest margins. But that doesn't matter because business control is more important. The big names in book publishing, such as Philip Roth, Donna Tart, James Patterson, Jonatha Franzen and nine hundred others, joined the publishers and, in the end, put their faces on it, buying entire newspaper pages to pillory Amazon. It was a good decision for them too since over half of their revenues come from ebooks and new media.
This scorched-earth retreat strategy, which resembles Kutuzov's strategy against Napoleon in Russia, worked great. At Christmas 2014 James Daunt himself, who had publicly humiliated himself, triumphantly announced “the ebook is dead!” and he removed the corner of the bookstores dedicated to Kindles to go back to putting books there. The wi-fi remained, so no one downloaded ebooks anymore which, after the discount implemented on books, cost as much as hardcovers and more than paperbacks. The gamble had paid off: consumers had returned to buying books and preferring them to their electronic versions. A textbook lesson in resilience.
A large investment in the book by the publishers
Merit of the price increase, but not only of that, because it would also be a demerit. The big American publishers (the big five) have decided to invest tens of millions of dollars in the book distribution chain, that is, the one that gets the product to the point of sale. They built new distribution centers in strategic locations, streamlined their ordering and replenishment processes for bookstores to compete with Amazon's service and minimize returns, so they supplied bookstores in near real time. Penguin Random House has invested $100 million in this venture and is now able to fulfill orders in two days during its peak period from November to January. It has also added 34 square feet to its distribution hub in Crawfordsville, Indiana. Harper Collins did the same thing. Fast deliveries have allowed bookshops to place small orders and to replenish their stock in a very short time with the result that returns have decreased by 10%.
Firms, such as Procter & Gamble, which work for large retailers have provided the organizational and procedural model to publishers. For example, every day Penguin Random House tracks about 10 million transactions and based on the data collected is able to predict the orders of individual titles by the bookstores. Markus Dohle, CEO of Penguin Random House, told Alexandra Alter of the "New York Times", who reported this information, "It's a very simple thing, you sell the books that are on the shelves". A huge step forward for business sustainability.
A great investment in professionalism by booksellers
In the United States, the anti-Amazon therapy has worked properly: people have returned to the shops and have begun to enter independent bookstores where sales support is not entrusted to temporary workers, but to real professionals who know the goods. better than the publishers themselves. On the other hand, the big chains like Barnes & Noble are suffering, which continues to lose money and close shops. We will dedicate a future post to the situation that has arisen in the largest chain of bookshops in the world.
In the United States, however, independent bookstores have the wind in their sails and are experiencing a sort of honeymoon with readers. From 2009 to 2016, more than 100 new bookstores opened across the country: according to the American Booksellers Association (ABA), independent bookstores increased from 1651 in 2009 to 1755 in 2016, an increase of 28,5%. There are 1651 localities in which an independent bookstore operates, compared with 2009 in 1410, 250 more. Less fortunate than American booksellers have been booksellers in the United Kingdom and Ireland, the other major market where the price of the book is not fixed by law. Here there has been a considerable decline: from 2009 to 2014 the negative balance of independent bookstores is 25%.
Western European countries, such as France and Germany, where the price of the book is fixed by law, the number of independent bookstores has remained constant because, as Guillaume Husson, representative of French booksellers, told the New York Times , the fixed price protected independent bookshops from “the aggressive pricing policy that has been fatal to the bookshop ecosystem in countries like the UK”. However, the same assessment does not apply to the United States where it was precisely the chains of aggressive discounts that were damaged by Amazon and the new players on the market.
Oren Teicher, from the ABA, explains the boom of independent bookstores in the USA, with the policy of innovation implemented by publishers and booksellers themselves thanks also to new technologies. Together with technology, the role of the bookseller himself as a real cultural "curator" is becoming decisive in a market now flooded with titles. According to Teicher, a movement of opinion has also contributed to the rebirth of bookshops which has conquered the most sensitive consumers, such as readers in general. This is the tendency to buy locally the products that can be found in the area where you live or are located. A trend known to us as kilometer zero.
Let's move now to London where the most significant experiment in the resurrection of independent bookstores took place.
Foyles, the temple of books
In London, Foyles is a truly legendary bookshop on an equally legendary street for book lovers, Charing Cross Road. If we wanted to draw a parallel with Italy, we could move to the center of Milan in via Hoepli where the homonymous bookshop looks just like an Italian Foyles. Come Foyles is spread over several floors and contains an endless number of books of all genres, manned by an expert and trained staff. You ask for a title and the floor attendant knows where to look for it, knows the publisher, the date of edition and sometimes the page number by heart. In the bookshops of the large chains, the staff goes to look on the computer even if they are asked for a work by Dante Alighieri.
Foyles, with over half a million books, could be described as the largest bookstore in the world. Anyone who bought books at Foyles in the last century will remember the three queues that it was necessary to do to get hold of the purchase: a first queue on the floor to receive a note with which to go to the cash desk on the ground floor where there was a second line to go, once paid you had to go back to the floor, get in line, show the payment receipt and finally collect the book.
Although this system was designed to limit thefts, the latter were memorable. There's a paparazzi shot of Liz Taylor stealing a copy of a book of poetry. Foyles was above all a large and reassuring mess, with books stacked on the stairs, in the corners free from the shelves and in multiple rows on the shelves themselves. There was one problem though, the margins had disappeared and he often traded at a loss.
A new home for Foyles for a new bookcase model
In late 2014 Foyles moved 100 yards from the historic shop into premises in the former Central Saint Martins art school, a prestigious art deco building, but much larger and more welcoming than the one that opened in 1929. At Central Saint Martins have studied stylists such as Alexander McQueen, Hussein Chalayan, Stella McCartney and John Galliano. The premises of the former school have been restructured to make them open, bright and sunny spaces with staggered mezzanines, so that it is always possible to glimpse the next level, half a floor above. There are a whopping 7,5 kilometers of book shelves arranged over four floors. The City of London has given its approval to the transfer and conversion of the building for commercial use, overseen by the historic studio of architects Lifschutz Davidson Sandilands, precisely because Foyles is a real institution in the British capital.
It was a substantial investment for the Foyle family who bet on the principle that the bookshop must become "a place that allows things to happen", that is, a sort of all-round multifunctional cultural centre. An unattainable goal in the old shop "chaotic and inefficient, a maze even if customers like recesses and niches, intimacy" said Christopher Foyle, the last member of the family to run the business.
This, of course, isn't just a place for books. The library's new layout is all about experience. And Foyles had already been at the forefront of the "added value" that books can bring to business. Readings, readers' clubs, luncheons and literary events have been held here since the 20s. With a large new glass-walled event gallery overlooking the atrium and the restored jazz bar, the Foyles family and architects have made every effort to make this the place where things can happen and generate an influx of public day and night.
Back to profit
In June 2014 at the time of the opening of the new store Christopher Foyles told the "Financial Times": "I don't think any of us know how this business will end up in ten years time". Well into June 2016 two years later, the gamble appears to have paid off: the business is back to operating profit and sales are also up a robust 10% at the other Foyles stores in Westfield Stratford City, Waterloo station, the Royal Festival Hall and at the Cabot Circus shopping center in Bristol. Another store is also located in Birmingham's futuristic Grand Central shopping centre.
Is it perhaps time to open new bookstores with a new store concept? For now, it is Jeff Bezos who has fully understood it, who seems to have learned the lesson of ancient Rome against classical Greece. Like Rome, Bezos has the wherewithal to do it and do it well. The competition is warned.
