Are neighbourhood bookshops doomed?

Relative prices of selected magazines in hardcopy (1st col) vs electronic delivery in the US (2nd col) and Australia (3rd col). Chart by Kwanghui-Lim

There’s a small, independent literary bookshop in my local shopping centre whose days, I fear, are numbered. I can’t see how it will survive the online challenge. Its likely demise will make the shopping centre even more monocultural. This isn’t a big shop like Readings in Carlton, so its scope to live on by “adding value” for customers is limited.

Some people really love their local bookshops. In Friday’s Crikey, Ben Eltham said “many independent bookshops offer…..character, passion and charm”. What they provide, he says, is:

An induction into a vast and exciting secret society, populated by beautiful physical objects containing wisdom, and knowledge, and love.

Not sure I like the “secret society” bit, but as a keen reader I understand the delights of browsing, even though I don’t make a lot of use of my local bookshop. Although Readings is further away, I’m much more likely to browse there because I can combine it with a visit to the movies and dinner. Readings is also bigger with a larger range of specialised books.

However the key reason I don’t spend a lot of time in the local store is because, like most people, I’m actually far more interested in reading than I am in the act of buying. The fact is the internet offers me a vastly superior buying/browsing experience and thereby gives me more time to get down to reading.

It goes without saying that I can get books much cheaper online than I can over the local counter. There’s no way even the big chains are competitive on price with Amazon-Book Depository, so my local indie has no chance. And there’s no way any bricks and mortar bookshop in Australia can compete on stock against the online behemoths, especially when it comes to technical books or out of print volumes. A smaller bookshop can’t afford to carry all the works of even popular literary authors. Its big advantage is immediate over-the-counter delivery, but that only works if it has stock.

Then there’s information. Although I hear a lot of talk about the expertise of dedicated bookshop staff, there’s no way they can have the sort of product knowledge that’s just a click away at Amazon. Maybe bookshops run by owner-managers that specialise in arcane topics do, but chances are it’ll be something I’m not interested in. My local is a more general, literary-oriented bookshop.

Somewhere like Amazon gives you instant reviews from literary sources and other readers across the world. Amazon even tailors recommendations for new books based on your search topics and previous purchases. Even on those occasions when I do buy a book from my local (usually a gift so new releases are preferred) I’ve already done my research and know what I’m after.

If I want a novel in a hurry I’ll go to my local bookstore, but unless it’s reasonably popular or new, chances are the proprietor won’t have it in inventory. I can either get the store to order it in or do it myself at substantially lower cost (as well as avoid another trip to the store). In fact these days I’m much more likely to get an electronic copy instantly and read it on my (Kobo) e-reader. A growing proportion of Australians are doing likewise.

Some argue that if we don’t patronise our local bookshops they won’t be there when we need them. They usually turn out to be people who are in the publishing and media business, like Ben Eltham or this writer. The “use it or lose it” argument is of course rubbish – no commercial operation is likely to survive, much less flourish, on this sort of shaky business model. It would be nice to have a local bookshop but it will hardly be the end of civilisation if mine disappears – I’ve got too many other options.

I have sympathy for the proprietor of my local but at the end of the day that’s the nature of commerce – the current business model simply isn’t sustainable. There are wider structural forces at play here. One of them, obviously enough, is new technology. We’ve seen it before and we’ll see it again and again – just ask VCR manufacturers. The other is the outrageous restrictions on publishing in Australia. Price discrimination – where publishers charge a much higher price in Australia than in other countries – raises book prices in Australia substantially and of course makes bookshops uncompetitive with overseas online suppliers.

The standard argument is price discrimination is warranted by unavoidable factors like higher transportation and distribution costs in Australia. Yet when Kwanghui-Lim looked at the prices of magazine subscriptions, he found the electronic version of National Geographic costs US customers US$19.99, but Australian customers pay AU$44.25. Similarly, The Economist costs US$126.99 in electronic form in the US and AU$266 in Australia. There’s no evident reason why it would be cheaper to supply electronic content to the US market than the Australian market.

I expect bookshops like Readings will be around for some time yet. There’s still a large, albeit diminishing, proportion of the population who won’t buy online and it has location and history on its side. Moreover, Readings has the critical mass to reinvent itself as a player in the business of reading rather than just in the business of book selling.

The thought of having a bookshop in my local centre to lend some variety and interest is nice – it won’t be as attractive without it. But I don’t imagine there are enough book-lovers around who are prepared to cop a loss so I can occasionally enjoy the ambience and the convenience. Unless something dramatic happens, like reform of price discrimination in the publishing industry, I think it’s unlikely my local bookstore can survive, at least in its current form. Maybe it could specialise, but then I won’t get much value from a bookshop that only sells books on (say) Warhammer or camping and caravanning.

Looking at the longer version of Kwanghui-Lim’s chart (here), of greater concern to the health of local shopping centres is the possible demise of newsagents, whose viability will surely be threatened by competition from online delivery of magazines and newspapers. Some readers of Elle are bound to prefer 47 cents for an electronic edition over $20.92 for the hardcopy edition.

Advertisements

18 Comments on “Are neighbourhood bookshops doomed?”

  1. Dave Bath says:

    Must admit I love my local (“Books in Print”, Glenferrie Rd) – Readings a few minutes walk up the road is for a browse through different stock… or for music.

    They know me. They know what I would like and can say “you should look at this” or “no… I don’t think that’s you”. They’ve known my daughter since she was little, and helped guide her reading (they also have a lot to do with local libraries) in the stuff I didn’t know (I know a bit, used to run a bookshop myself back in the early 80s – lived in it Bernard Black style). And now the same people are welcoming my grandson and making suggestions based on what he says, and knowledge of what his mum and grand-dad have read over the years.

    I suppose I’ve been lucky. The “regular” bookshop in Geelong we frequented had staff that acted like school librarians – saying to my parents “Yes he’s10, but David is ready for the full EVRieu Iliad and Odyssey”. I owe that bookshop a great deal – the staff there helped to form me – out of a family without Homer, of farmers and a scientist dad. My parents knew, however, that the bookshop staff would know what they didn’t.

    You cannot get that at Amazon. Hell, it’s hard enough to get it in schools these days.

    Can this full-service friend-of-family business model work? In some suburbs. But those suburbs have to have stable residents – for a generation or two , not students and young professionals going through a stage in their lives – in and out again within 5 years. It requires a customer catchment area that loves books, appreciates knowledgeable staff, knowing not just books but the customers – for a good book to the wrong customer is a bad book.

  2. Michael says:

    I don’t think this is particularly limited to bookshops. I have increasingly bought all kinds of goods online from overseas suppliers and have been amazed at how much cheaper the goods are even when they are shipped from the other side of the globe. The savings are often in the range of 50%. I’m afraid all the arguments about why the Australian retail sector is so uncompetitive are BS. I realised this when buying some I.T. components from some local businesses that have managed to do what no one else in the sector can do and that is compete with international pricing – how can they do it? They have no choice because their customers know what the international price is and where they can get it online? Almost nothing is made either in Australia or the other countries I’m buying things from. Retail rents are also similar as are wages. It simply comes down to the fact that for generations Australian’s haven’t realised how much they were being ripped off so they got used to the high prices and the retail sector grew fat and lazy off easy profits. Now the whole sector is going to experience a painful adjustment.

  3. Peter Hill says:

    When I need a novel in a hurry I go to the local (Gleebooks) but that is usually for a gift. For my own reading I prefer secondhand books in quantity, and the serendipity of what is available to guide my reading. I haven’t yet gone the kindle/iPad route.

    I agree with Michael that the issue isn’t limited to bookshops. I don’t know what the retail shopping strip is going to look like in 5-10 years time, because I don’t think there will be a lot of shops that will still be profitable enough to support shopfronts. The whole retail sector is in for painful adjustment, but so are our cities.

  4. Gayl Pollard says:

    There has to be something to cater for those of us who are suckers for bargains with immediate gratification. I have discovered some wonderful reads this way.

  5. Michael says:

    I don’t see retail dying out completely in the long run. It will just need to compete. There will be a period of adjustment when many shops go broke, commercial real estate values will probably drop, as rents drop and distributors (arguably some of the biggest villans) are forced to cut their margins as well. There is no reason why people will stop going to shops for advice, service and convenience. After all price isn’t everything, otherwise luxury brands would have ceased to exist.

    • Alan Davies says:

      Yes, can’t get services over the net (yet!). I expect local centres will get more important as population density increases, the demand for personal services like health and cosmetics increases and people continue to outsource household tasks like eating.

      • Dave says:

        I agree with this sentiment. I see three future ways of shopping – 1) online for products that can be easily posted internationally, or couriered from local warehouses (like whitegoods), 2) regional shopping centres for a shopping experience, bulk buying of perishables (like groceries), comparison shopping of services, movies, etc and 3) local centres for services and staples.

        We’ve seen the evolution via a local shopping centre (Follet Road, Cheltenham). Butcher, fish and chip shops (2 at different times), milk bar, video store, childrens clothes all gone in the last eight years. What seems to be surviving, long term, is an IGA supermarket, budget chinese takeaway, hairdresser and beautician. The rest of the shops sit there empty, year after year.

        • Peter Hill says:

          The number of shops that appear viable in local shopping centres seems to be reducing pretty quickly. A lot of shop fronts are empty and will remain so until, I suppose, commercial rents reduce to a level that more marginal businesses can cope with.

          But how many budget takeaways and $2 dollar shops do we really need?

          A good time to get out of small scale commercial property.

  6. chris gordon says:

    I’m delighted that this topic has been raised on your blog alan.
    I’m interested that no one has talked also of what else an independent book shop does for a community. For example, author talks, book launches, school visits, school discounts, fund raising for community school, groups and individuals. an example of this is the Readings Foundation which gives away close to $100k per year to art organisations, English classes and school projects.
    As people rely more on the internet and social media for a range of information, actual physical places are becoming more limited where people can meet and contribute to their very own landscape. And of course, by buying locally, even books by international authors, you are in fact supporting your own landscape.

    • Alan Davies says:

      Chris, good points. They’re the sorts of things that will be lost locally if small, active, well-managed independent book stores end up losing out, as I fear they will. Of course I expect it’s much harder for a small indie to do the kind of community things Readings does (I hear Readings even has a full-time marketing manager!) and in some cases it might have to compete in its community role with a pretty active library network. The challenge is whether or not these community benefits can indirectly generate enough revenue to offset losses from the sorts of factors I mentioned in the article.

  7. Andrew Ball says:

    Andrew from Andrew’s Bookshop

    Whether local bookshops are doomed or not only time will tell, and it is unwise to underestimate the passion and experience of your local bookseller and the support of the local community. Even if the local bookstore dies, I will continue to be committed to that bookseller-bookreader relationship, whether in markets, shopping centre kiosks, sidewalk stalls and mobile bookshops until I retire. I still have the passion for selling books that I had 33 years ago when I used to hitch-hike across Melbourne to buy people’s second-hand books. And local support is key: if people in the local area find the bookshop meets their needs they will shop there, and if not they will buy books elsewhere. Andrew’s Books had a shop in Carlton, first started off with two tables of books and was only going to be in Lygon Court for a week, and ended up expanding the business to a bookshop that a lot of people said was their favourite bookshop. In that time Borders came on the scene and it was gloom and doom, but we just focussed on our customers and let them make the decision if they wanted us to provide a service to them or not, which we did successfully until our lease finished. At our Ivanhoe store we endeavour with a passion to make books in the shop easily browsable for people to give them the opportunity to enjoy browsing and, if the need arises, purchase a book. When people come in the shop and ask for advice and they end up finding a book that suits them they are happy, excited and grateful. I am interested to know people’s thoughts on what it means to them when they read a book that they really enjoy and continue to reflect back on and find memorable over many years. It is my experience that the independant bookshop often provides that unique link between the person and that book and experience.

    • Noam Shifrin says:

      Andrew,

      Unfortunately you are a rare person. I suspect that Mark Rubbo, yourself, Mary at Readers Feast and others have not found a foolproof way of cloning your knowledge and passion for transplant into your staff.
      Certainly, my experiences in Readings Carlton, Port Melbourne and St. Kilda could best be described as spotty. Many of the staff seem to place a premium on slow service imagining that as ‘budding’ authors this is a side job to be tolerated at best.
      Having said all of that I will never forget the experiences of browsing second hand bookstores particularly one on the outskirts of Ballarat. There is something magical about entering a premises devoted to those containers of knowledge with dust motes sparkling in the air and others browsing the shelves on a warmish winter afternoon. Online can never replace those physical experiences. Will the so called ‘digital natives’ place the same premium on such experiences? Too early to tell but the provisional answer seems to be no.

  8. Richard Peterson says:

    Alan’s analysis is rational and well-argued. But so many point-of-sale retail decisions and indeed whole retail businesses, thrive on irrational, emotional, unpremeditated purchases.

    Some of the rather large library in my house comes from Amazon, but most seems to have accumulated in that economically unjustifiably and irrational way. And along the way, I’m delighted to support committed and personable local businesses like Andrew Ball, and I hope soon again, Mary Dalmau of Reader’s Feast.

    • Noam Shifrin says:

      Richard,

      I think you’ll find that once a jump is made to an e-reader of some description, whether it be an Kindle, Kobo, iPad or tablets based on the Android operating system you’ll find that impulses can be satisfied far more quickly using the online shop fronts Amazon and a dozen others have set up.
      Combine that with far cheaper prices for an e-book edition and you have a winning formula.

  9. Alan Davies says:

    PriceWaterhouseCooper’s new report on online shopping, Digital Media Research 2011. According to Bernard Keane, “PWC forecasts online shopping will grow at least twice as fast as the total retail market over the next four years, and will grow at 13% this year. They also note that we lag — quite substantially — the US and the UK in the proportion of retail sales revenue going online”.

  10. T says:

    I think that the prevalence of e-readers and iPads and the like are the final nail in the coffin of the bricks and mortar bookshops. Now, not only can you take advantage of lower overseas prices, and better selection, you also get the instant gratification factor that used to be only available at the local bookstore. Plus e-books are even cheaper. So instead of spending $20-$30 on a book (or sometimes even more), I spend $4-$7. And I get the book immediately. No longer will I be hampered by my local bookstore being out of stock or closed! I feel for them, I do. But what can you do…

  11. […] hard at being competitive. Up until now, international suppliers have even been able to practice blatant price discrimination. But the internet has changed the game. Consumers can now compare what they’re paying for many […]

  12. […] suburbs – have pretty clearly voted with their feet for shopping in malls (see here, here, here, here and here). That seems like a rational and inevitable response to the prevailing cost of travel and, […]


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s