Why would the two largest book chains merge?
First, sales of physical books sold in conventional stores have been falling. This is because online sellers like Amazon.com have been grabbing huge chunks of book sales and major retailers, such as Walmart and Target, have been selling large numbers of bestselling book titles at discounted prices. Add to this the growing number of electronic (e-book) book sales To put it mildly, this has caused a perfect storm for traditional brick n' mortar booksellers who have always prided themselves as the place to go to find books. Now, more and more, the least profitable part of their business is book sales with more profits coming from their in-store coffeehouse along with ancillary sales coming from gift items and greeting cards.
If this deal goes through it will be reminiscent of the merger of K-Mart and Sears over six years ago as orchestrated by real estate investor Edward Lambert.
Depending on whether you were a customer or investor, the results of that merger could be telling when it comes to the proposed Borders - Barnes and Noble deal. In the Sears - K-Mart merger, operations were consolidated in the Sears headquarters in suburban Chicago and the corporate offices of K-Mart in Michigan were shuttered. They then changed the name to Sears Holdings to reflect the ownership of its real estate. To Ed Lambert the Sears - K-Mart deal was all about leveraging their properties by closing underperforming stores then selling the property. This drove the stock price up and satisfied most investors.
On the other hand, the surviving physical stores operating under the Sears and K-Mart names continued to languish right up until today with their stores continuing to lose any competitive advantages. Other than hard goods lines like Craftsman and Kenmore, there are few reasons to shop one of their stores.
If a Borders - Barnes and Noble merger result in similar results, over time there will be fewer bookstores filled with fewer book titles. Some have imagined their bookstore of the future consisting of a cafe, gifts, periodicals and a small number of books. Rather than look through stacks of books customers will instead be ushered to download stations where they would be able to purchase e-books while sipping on a cup of coffee.
Stores would be half the size of today with fewer employees.
However that would be a short term situation as other big box chains such as Walmart and Target add their own download stations.
That could force the Borders - Barnes and Noble stores to downsize once more resulting in a Panera Bread style cafe with gifts and book downloads.
Whatever happens, for some time it has been speculated that the end of the conventional bookstore was on the horizon. All of which has been hastened by the technology that has led to eBooks and eBook readers.
What will this mean to those who are trying to release new works? Will they have to market more to internet customers than traditional brick and mortar stores?
ReplyDeleteDirk, the prospect for the future as you outlined it is probably spot on, but it saddens me. I have always loved traditional bookstores. The whole experience from browsing stacks and shelves of books, to relaxing and reading on couches or comfy overstuffed chairs, to kibitzing in the cafe. If I needed to kill and hour or two before an appt, I always seemed to end up at a bookstore ... and then rushing out the door because I lost track of time. But I guess this is progress, eh? *Sigh* Even my 75-year-old dad - an avid reader - wants a Kindle for Christmas! This from a guy who refuses and says he doesn't need no stinkin' cell phone!
ReplyDeleteWilliam and Mike,
ReplyDeleteGreat comments. As for marketing new releases, it depend on the genre. Fiction will be hardest to market while nonfiction that is well niched will do much better due to search engines and dedicated audiences. I, too, enjoy the bookstore experience. I'm hoping a Panera Bread type experience (with a large retail space, would bring in browsers and create a good sense of community. I like the new Google platform for e-books which will allow users to save copies of books on their computers, mobile devices and e-readers. An open platform like that makes a lot of sense. I've been holding off on a reader. I really like the iPad because it provides so many options in terms of usage. The book of the future will include video, links to websites, continual updating, photo libraries, etc. The book will not go away, it will just expand in its capacity. There will still be a conventional book market. Probably more suited to fiction. Exciting times.