A Blog by Jonathan Low

 

Apr 24, 2016

How Tech Is Bringing Readers Back Into Bookstores

Using technology for in-store printing that expands customer choice while reducing inventory cost - and growing the market. JL

Jeffrey Trachtenberg reports in the Wall Street Journal:

The tide of digital book sales has begun to slow, spurring entrepreneurs to re-imagine the physical bookstore, in ways that can compete with the Web without having to match its lowest prices. Bookstores of the future may well feature other cool technology that makes book shopping easier while expanding choices,
Soon after Dane Neller bought Manhattan bookseller Shakespeare & Co. last May, he shut the doors and built the bookstore where he wanted to shop.
“The old ways have to be reinvented,” says Mr. Neller, the retailer’s major investor, declining to disclose the purchase price. “People want to hang out, they want to talk, they want intimacy. But the store has to be productive.”
Only a few years back, some wondered if bookstores would survive the twin threats of heavily discounted online titles and easy-to-download e-books. But the tide of digital book sales has begun to slow, spurring entrepreneurs to re-imagine the physical bookstore, in ways that can compete with the Web without having to match its lowest prices.
Mr. Neller, for example, is also chief executive of a company that makes a desk-sized device called the Espresso Book Machine, which prints new paperbacks in five minutes or less. An $85,000 unit is featured prominently at Shakespeare & Co.
These are heady days for independent booksellers, whose ranks have grown to 1,712 bookstores operating in 2,227 locations in 2015, compared with 1,410 bookstores in 1,660 locations in 2010, according to the American Booksellers Association. Even Amazon.com Inc. AMZN -1.66 % has opened a bookstore in Seattle and has a second planned for La Jolla, Calif.
Independent bookstores’ big rivals have fared less well. Barnes & Noble Inc. has shrunk to 640 stores today from 726 at the close of its January 2009 fiscal year. Borders Group Inc., once the country’s second largest publicly traded bookstore chain, closed its doors in 2011. Books-A-Million Inc. went private last December at $3.25 a share.
After Mr. Neller got done tinkering with Shakespeare & Co., the store, on Manhattan’s Upper East Side, had a distinctly different look. Space inside the store dedicated to books has been cut by nearly 40% to 1,200 square feet. Titles on the shelves, however, are turning more rapidly. As a result, Mr. Neller says book sales from September through the end of March are up 10% compared with the same period when the store was under different ownership.
He attributes the gains to better-chosen titles, increased store traffic attracted by the store’s new cafe and the Espresso machine.
“It’s early days, but you don’t have to lay out as much money for inventory, and you can operate a much smaller store more efficiently” with the machine, Mr. Neller says. “Too many books are sent back because of over-ordering.”
Bookstores of the future may well feature other cool technology that makes book shopping easier while expanding choices, such as that found in the 4,300-square-foot Foyles bookstore operated by W&G Foyle Ltd. in Birmingham, England.
The store, which opened last fall with a modest 15,000 titles, is tapping the Internet to satisfy requests for books that aren’t on its shelves. Tablet-carrying staffers take customer orders for the more than 1 million titles that Foyles sells on its website. The sales staff has the flexibility to complete a sale without going to a cash register.
Foyles also can send coupons to the smartphones of customers entering any of its six stores. So far, though, it has held off doing so because of privacy concerns. “People don’t want to be tracked,” says Paul Currie, chief executive of W&G Foyle.
“We may start with a coupon that says, ‘Come in and have a coffee on us,’ ” he says. “It’s one step at a time.”
At Shakespeare & Co., Mr. Neller leaned on his retail and technology background when he redesigned the store. The former chief executive of food retailer Dean & DeLuca Inc., Mr. Neller put a café at the front of his bookstore complete with a splash of small tables.
“Amazon isn’t my problem,” he says. “My customer is here because they care about more than price. They want to be greeted, they want a sense of community, and they have a craving for culture.”
His customers also prefer to be more hands-on. Juliana Charles, a Bronx mother of three, was recently browsing for her 9-year-old daughter and said she prefers shopping at the bookstore rather than online so she can look over every book. “I want to see exactly what she is reading,” Ms. Charles said.
Carl Davis, of Beaufort, S.C., visits Shakespeare & Co. when he’s in New York and said he likes supporting a local bookstore. “It’s lower-key and smaller, and I can find my way around,” he said. “Before I leave I’m going to buy a cup of coffee and walk down the street. You can’t do that online.”
The bookstore’s main floor, a modest 2,000 square feet, offers traditional categories such as travel, children and hardcover best-sellers, only in more limited quantities. “The key is moving inventory,” says Mr. Neller. “Bookstores often overstock because books are returnable. But you need velocity of sales to generate profitability.”
Mr. Neller says the Espresso Book Machine serves two purposes. On the self-publishing side, customers can use it to print family histories, novels or poetry. Shakespeare & Co. offers these author-customers publishing packages priced from $149 to $549; they set their own cover prices for their books.
The machine also can access and print more than 7 million previously published titles. . Many are out of copyright; the rest are primarily older titles from traditional publishers.
There are surprises, including Mark Twain’s “Is Shakespeare Dead?” and Nikolai Gogol’s “Dead Souls,” two of the out-of-copyright books that Mr. Neller sells for $5.99 each. The books were originally scanned by Google Books. Mr. Neller struck a deal with Google to pay what he described as a small fee, and the scanned copies he produces, though easy to read, may have handwritten notes in the margins from previous owners.
“I believe in having the right books, but I don’t need 10 to 12 copies. I need one or two, with the exception of best-sellers,” says Mr. Neller.
Mr. Neller estimates that his store’s main floor generates sales at a rate of more than $1,000 per square foot, excluding space dedicated to the Espresso. The prior store did about $500 per square foot in the same space, he says.
Other booksellers have had mixed experiences with the Espresso. The Northshire Bookstore in Manchester, Vt., no longer has a machine. It was hard to maintain and publishers didn’t make current titles available, says Chris Morrow, co-owner.
Sarah McNally, owner of McNally Jackson Books in New York City, said with the Espresso book maker in her store she has built a thriving business centered around self-published writers. “Dane might be right. It could be the future,” Ms. McNally says. “Publishers need to get behind it.”
A publishing executive who has visited Shakespeare & Co. says he likes what’s he has seen. “It’s a breath of fresh air,” said Brian Murray, chief executive of HarperCollins Publishers, which, like The Wall Street Journal, is owned by News Corp. HarperCollins makes several thousand of its titles available to the Espresso device.
“They can compete because of good selection and because they have a machine that lets them offer the long tail,” Mr. Murray said. “Hopefully it will scale.”

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