Rocket Bomber - article - commentary - retail - Rethinking the Box: Are We Talking About the Same Thing?

Rethinking the Box is a collection of ruminations on retail: a unique combination of sober (and sobering) business analysis mixed with drunken, inflammatory personal invective.

Previously:
Study your History. Recognise your Motives. Know your Customer Base, and your Staff. Find your Niche. Consider your Product Lines, take a second look at What the Customers Want, and then stare again in dismay at the Profit Margins. A calculation of Affordable Rents then veered off into a dry discussion of inventory, with a side of coffee

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Let me start off this column with the biggest chunk that was missing from the last one:

Children’s Books. Picture books, chapter books and other light fare with plenty of pictures, all-ages comics (precious few of these), and stuff that’s hard to categorize but still obvious for either a Graphic Novel Bookstore or any bookstore’s Kids’ Dept. — like The Invention of Hugo Cabret and The Arrival. (The Arrival was my favorite book of 2007, and has become an all-time favorite and one I love to hand-sell to people — I’m quite pleased that at least one local school assigned it as summer reading this year)

This is definitely a profit center. Also, as part of community outreach — and a way to pull ‘civilians’ into the store, as opposed to just the comic book crowd — you’ll go a long way towards general acceptance if you have a bright, happy looking Kids’ Department, well stocked and staffed by folks who love the books.

Here’s the thing: I hate your kids.

It’s not that I hate kids generally, or that I’ll hate my hypothetical progeny, or that I don’t want kids… well, OK, so I don’t want kids and have made some conscious lifestyle choices both limiting (rampant alcoholism, monk-like isolation outside of work) and also enjoyable and immensely satistfying to me personally (rampant alcoholism, monk-like isolation) and so I’m not too worried about that kind of complication — no matter how wonderful, enlightening, uplifting and life-changing — affecting me in my own private, comfortable, luxurious hell.

Kids are fine, in theory. Necessary even. Kids in the store, though — and your kid in particular… ugh. Sometimes I’d wish you’d just walk up to me and punch me, or kick me in the balls, as opposed to bringing your spawn into my bookstore.

Another problem is inventory creep: No matter what you call your store (I’m partial to “The Illustrated Empire” currently) or how you pitch it, or present the merchandise, or any line you stock outside of kids’ books, as soon as you stock one children’s title, customers will expect you to stock every kids’ book — from Bob’s Books on up to Twilight. They won’t understand any explanation you give, no matter how reasoned and logical, or any solid business decision you might have made based on hard dollars and what sells — there is a box in the mind of the public labeled ‘kids’ and they’ll want everything that fits in that box to be in the same store.

…and this is legitimate demand (in the economic sense) and so there is money to be made here. But I don’t know that I want to spend the time and money chasing this dollar.

If I had to make a choice, I’d get a liquor license and sell books and beer — and keep out anyone under 21. (or 18, when we finally come to our collective senses as a nation and lower the drinking age again.) Past my own dreams of the perfect store, though, I don’t know that I could make a go of it, as so much of the comic market (or at least the manga market) is in that middle-school-to-high-school segment; and twice over because the tweens-and-teens with an allowance (or job) but without a credit card — so they can’t buy online — are exactly the shoppers I want in the store.

Back on point: I might say that kid’s books aren’t worth it because

1. Might as well just open up a Children’s Book Store — same amount of work without worrying about the adult product lines
2. Might as well just open a Book Store: all ages, all products. You lose the (debatable) amplifying affect of a underlying and marketable theme, but the vastly expanded potential market makes up for that.
3. I know quite a bit about many, many different potential product lines, but children’s books are a blind spot. I know what *I* like, but that isn’t enough to stock a store. (Yes, this is a lack that I could fix, with time.)
4. I was about to say that children lead to more spills, more damaged and shopworn books, more liabilites (in a legal sense), and an overall negative impact on the shopping experience of others, but then I remembered all my other customers. Call it a push. Still:
5. Kids. Ugh.
6. The Teen and Tween market hates kids almost as much as I do; actually, it’s more accurate to say they hate being treated like kids, or as kids. The 17 year old wants sex and violence; at 15 they want what the 16 year olds are into. At 13 they want what the 15 year olds are into; at 7 they want what the 11 and 12 year olds think is cool. Over time, Trends and Fads inevitably age down — recall Pokemon and Hannah Montana: the original target ages are well above the current age of the fan base.

(I can get a sixth grader to sneak into my ‘adult’ store without trying; in fact, every effort I make to keep them out, the more desperate they’ll be to get in. There is almost no way to get a middle or high schooler to accept a book from a ‘kids’ store, though.)

Against all my arguments, you can stack Harry Potter and Sparkly Vampires. I kinda like one and loathe the other, but my feelings aside: this is a huge stack of almost-free money and I’d be stupid to turn my back on it, or to walk away from it, or to turn my nose up at it. I love money… but…

Ugh. Kids. I’m still on the fence about stocking kids’ books.

And the idea of a bar-and-bookstore looks and sounds better every day… I may eventually talk myself into it even though this combination is riskier than lottery tickets.

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And we’re not even into this week’s topic yet.

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Even more than the books, though, the modern bookstore sells atmosphere. It only seems like they give it away:

cups of coffee, the occasional newspaper or magazine, and eventually the larger purchase (even if only once or twice a year) pays for the comfy chairs, the music, the knowledgeable staff, and all that reading you sponges do for free while lounging in the aisles, or the inconsiderate louts who tie up all the tables (and outlets) in the cafe with their laptops and accoutrément, and even the people sleeping in the aforementioned comfy chairs.

You don’t get any of that from Amazon.

I’m going to keep repeating that so we all keep it in mind; It’s the conclusion from the first column and could also be considered one of the starting points for the whole series:

Last week we discussed inventory. Let’s turn it around, and look at sales.

FY 2008:

• B&N had 726 superstores with sales last year of $4,525 million.
  - add on 52 smaller-footprint ‘mall’ stores (what’s left of the B.Dalton chain) for another $67 million
• Borders operated 518 superstores and 386 smaller-footprint storefronts (under the Waldenbooks and Borders Express nameplates, among others) for sales of $3,242 million (they didn’t break it out by store format so I can’t; just as well as this may give us a more realistic view of bookstores in toto, if also heavily weighted to bigger boxes, and obviously, to the corporate brands)
• Books-a-Million (occasionally abbreviated BAMM; here, on Nasdaq, and elsewhere) at the end of ’08 operated 200 superstores (and 20 smaller outlets) while logging $513 million in sales.
• Hastings [which has a new, flashier web site running on top of the old, sucky, and incomplete book listing database] runs 183 superstores — but only devote a portion of their sales floor to books: they report sales of $538 million but skip down to page 14 of their AR and you’ll see the fancy pie chart that shows only 23% of their business is books. [Actually, the Hastings model has a lot to recommend it, other than the fact that MediaPlay went out of business a decade or so ago with a very similar product mix. Hastings gets at least one brownie point for this tidbit from their AR — They report total revenue per square foot: $172/sq.ft. in 2008. Nice number for comparison to the rent calculations, and thanks, Hastings!]

• Let’s add in Indigo (parent company of Chapters of Canada) just for the heck of it, at appropriate currency conversion rates (I picked 30 March, just after the AR pub. date) with their 90 superstores and 155 smaller storefronts (the Coles chain, et al.) and revenue of CAD940 million (=USD760 million, give or take a decimal)

All together that’s 1534 “superstores” (presented as such by their owners) and 796 smaller bookstores (and book-components of multimedia stores) of many different sizes, locations, product mixes and visibility with only one thing in common: after 6 straight quarters of what is the roughest retail environment in 30 years these stores are still open and still being operated, presumably for profit, by no-nonsense corporate ownership: oh, sure, these companies are dedicated to books and love the book culture and all of that, but they have other outlets — hundreds of outlets in most cases — and a duty to their shareholders to Make Money, so sentimentality and ‘service to the community’ only carry one so far. Under-performing stores will be, and have been, closed.

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Oh, and $9.231 Billion in sales for those 2,330 outlets. About $4 mil, gross, per storefront.

This is (for some of you) one new way to look at what I mean when I say I want to open a graphic novel Bookstore —

My goal is just $2.5 million a year: about $50,000 a week, $7000 to $7500 a day on average; if an average transaction was only $20 (one GN in many cases) that would be 360 or so transactions a day. If I can add-in coffee at some percentage that would mean fewer [book] tickets necessary each day — and we can hope for bigger per-customer sales, and sales of both books and coffee to the same customer, and maybe something more like $25 per transaction (a book and comic, or book and magazine) and we could consider different product mixes and all kinds of mitigating factors.

Let’s concentrate for a moment on that one, simplified verson of the sales picture though: 1 person, $20, repeated 360 times a day.

For a direct-market-affiliated, out of the way, out-in-Peoria* comic book storefront this might seem like an impossible dream.

From my position as field management for one of the big chains cited above, 360 is actually a sloooow day. I know that by restricting my product mix to only 30-40% of the stock in a normal Big Box, I have to give up some of that volume — but I hope that in also building up the ‘art’ aspect of the books that remain, and stocking a significant fraction of the higher-price-point, larger format books I can mitigate those losses.

The other big point that I’m willing to bet on is a ridiculously deep selection of those categories that remain: especially the graphic novels.

I don’t ever want to say no: I don’t want to say, “Oh, were sold out today, but I can have a copy here in 3 days” or “We don’t have that but I can special order it for you” or “Sorry, we don’t stock that.”

I can’t do this for every book, unless I win the lottery and spend a couple of years building up the kind of inventory you’ll find at Powell’s or the Strand. But with a little work and a space the size of your average B&N or Borders — and a dedication to graphic novels as a format that is just a shade removed from insanity — I think I can do it with comics.

One has to draw a line somewhere, though: I’d love to carry multiple copies of every book but I’m not as enthusiastic about the comic ‘books’ — floppies and pamphlets are a Whole Nother and would require that 25,000 sq.ft. and football-field’s-worth besides.

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No one has to give out their sales numbers. (In the calculation above, I went the long way round to find an average-sales-per-outlet when I know off the top of my head my exact sales from last year, and the year before, and the sales goal for this year — but the corporate overlords wouldn’t be forgiving if I just handed that out)

But if your gross isn’t in the millions, then we’re not talking about the same kind of “bookstore”. My goal isn’t to build up from an LCS into a graphic novel store, but to judiciously pare down from a Big Box to a bookstore that specializes in comics — but hasn’t given up so much of the mainstream that it loses that million dollar appeal. What I propose is a specialty retailer serving a niche market — but depending on how we define that niche, and what we can reasonably add to it, and if we stock broader and deeper than the Other Bookstore or other niche retailers, and if I can keep the atmosphere of a ‘real’ bookstore instead of just being another comic shop — and that’s quite a few ifs — then I can see this working. And working well.

I only wish it would work as a bar-and-bookstore. That’s the store I was born to run.

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*the Peoria citation is not a crack on what I’m sure are very fine comic shops in Illinois, but rather a reference to the century-old question “Will It Play in Peoria?”