Small Business

Coliseum Books' Fighting Spirit


Q: Can't sell books without java these days! The chains certainly seem to think so.

A: The trick to surviving as an independent bookseller, as I say, is concentrating on doing the one thing that you can do better than the chains. For us, that means having the book that somebody wants at the time they want to buy it.

It's extremely labor-intensive to achieve that. I had six buyers in the other store. We're trying to do it with four here. Me? I don't want to be a buyer, but I think I'm going to have to be because we have to be fast to compete, to get what the customer wants onto the shelves fast enough to satisfy. I hope that we can continue to do that, because that's the thing we do better. I'm hoping that we can get back up to what we had before. Not in volumes, but titles -- back up to around 100,000 titles.

I didn't have chairs at the old store for people to sit in. We didn't have a caf? We had a problem with the dirt coming in off the street -- we're going to have the same problem here, by the way -- so I had to shrinkwrap just about every book. If the customer wants to order a book that's fine, but they can do that anywhere. What we aim to do is give people what they want when they want it. As I said, it's an extraordinarily labor-intensive process to anticipate the needs of so many different readers with wildly varying tastes and interests.

Q: Are you going to have an online operation?

A: We're going to have a Web site, but I'm certainly not going to be selling books online. What you'll be able to do is find a book on our Web site and send an e-mail asking us to send it, but it won't be anything like the way Amazon does business.

Q: Book junkies are buying an awful lot of books from Amazon, books that would otherwise be purchased from stores like yours. Does that deep-pockets competition worry you?

A: I do know we're going to have a very tough time fighting off Amazon. I had hoped that, by the time I reopened, Amazon would be history. But they're still going, and this is problem. First of all, you get books cheap from Amazon, and I just can't afford to give discounts. To me, the economics of [online bookselling], well, they're just plain crazy. I don't see how Amazon can sell books at 30% off -- and that's delivered, too, in many cases.

From my perspective, what Amazon is doing is just nuts. How can Amazon make money on books at 30% off? There's just no way, even if they're buying at a 50% discount. Yet Amazon stock is doing O.K. What am I missing? It's really quite astonishing. As I said, I had hoped that by the time I opened, Amazon would be history, and I'd only have to fight Barnes & Noble's and Borders, which are bad enough to fight.

So anyway, that's where we are. We may or may not be able to make this new store work. But I do know I can't afford to discount books with the rent that I pay for this location. But that's all right, because neither does the competition -- you don't find Barnes & Noble discounting much of anything except The New York Times Bestseller list or their own bestseller list.

Q: Overall, how are book sales holding up? In times like these -- terrorism, war, economic anxiety -- are books a "necessary luxury," so to speak?

A: They've always been sort of recession-proof because people turn to them as an inexpensive form of diversion in hard times. Are as many people reading these days? Well, I only know what everybody else knows, and that's there are other means of acquiring information. There are other means of entertainment and diversion.

Myself, I don't get to read a fraction of what I want to -- what I used to read -- and for any number of reasons. People, even intelligent and inquisitive people, are busy making ends meet and dealing with the demands of our society. You sit down at your desk, and it can take you two hours just to get it clean of all the the paperwork you need to do. And then there's e-mail! There was never a bigger time waster in the world than the personal computer.

Think what it was like looking up something in the encyclopedia. You'd find it, then that might lead to looking up something else, and then, maybe, something else again. But that was beneficial. With the Web, it's often not. What I mean is, you're still looking things up, but they're often the wrong things. It's so much easier to get distracted, and I guess that impacts books and reading them.

Q: So in the time you've been in the business, how has it changed? I mean, you had what, almost three decades in the business now?

A: I started in 1965 as a clerk. Computers changed the whole world, but what they did in the bookselling business was revolutionary, because they gave the chains the tools to do a very good job, which is something they had never been able to do before.

Q: Managing inventory and the like?

A: Correct. We were one of the first booksellers to jump into a computerized system -- a clunker by today's standards, but very good for the time -- and that helped us to fight off the chains. You know, our old store was only a short block from a Barnes & Noble, and we were able to compete successfully against it. Once computers arrived -- and this is true of what happened to the hardware industry and the stationery and, well, you name it -- the chains were able to do a much better job on inventory. And with their obvious economies of scale, they were able to knock little people out.

And so that's the primary change in the business. And I mean, that change drove all the other changes. It drove the changes, too, in the buying and in publishing, because the publishers now had to satisfy the chains. Where there used to be 5,000 or 6,000 independent bookstores, there are only 3,000. And the clout of the chains is that much greater. They call the tune on a lot of things to a lot of publishers.

What [the technology revolution did] was give the chains the wherewithal to discount books and knock the independents out. Now, most of the independents are gone, so the chains can drop their discounts. In other words, they have achieved the goals they set themselves of clearing the field.

Q: What sort of margins would you be looking at?

A: The standard margin for books is 40%. If you can operate at 43% after freight as a gross margin, you're doing pretty good. The chains obviously operate at a slightly higher figure because they're always buying at the top discount, and also because they still have some other advantages over us -- in returns to publishers and things like that.

It's certainly the wrong time to be in this business in terms of the economic cycle, and it's the wrong time in this business in terms of the competition. But it's what we know, and we know it well enough to compete with the chains, so that's what we'll do.

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