Rocket Bomber - article - commentary - retail - Rethinking the Box: Taking Stock.

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. Location, Location, Location. 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. Try calculating your upper-limit affordable rent and the revenue from inventory (with a side of coffee) and compare your numbers to average industry per-storefront sales.

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And I’m back: for those of us in retail, December starts in late October and doesn’t end on the 26th; it keeps rolling until the last of the holiday clearance is either sold or otherwise disposed of. I’ve been busy.

In the interim, I did find one excellent info-tidbit — National average rents, from Bloomberg

At some point in the near future (February) I’d like to post a rundown of Just The Numbers — anticipated monthly expenses: rent & utilities, payroll, cost of new stock and replenishment of older titles, inventory shrink, and marketing. (…OK, so maybe March. Late March. Maybe May.)

And figuring out anticipated expenses is certainly valid; I’m going to need that number. But even before we open there are other inventory considerations.

Namely, buying inventory.

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Way back in August I detailed quite a few categories and some anticipated stocking strategies — quick summary:

[a blockquote with significant edits, please ref. the original post]

Art Technique:
500 titles at $20 avg per title = $10,000 of stock. sales of 1/2 volume per annum = contribution to sales of $5000.
—
Art Surveys and Collections:
500 titles at $40 per = $20,000 of stock. 1/2 vol per annum = contrib. of $10,000.
I’d be willing to stretch that to 1000 titles, but I’m not sure 1000 suitable titles are out there.
—
Architecture:
500 titles at $40 per, etc. etc. for the same $10,000 in annual sales.
—
Artists:
1000 titles at $40 per, 1/2 vol per annum = $20,000 in annual sales
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Graphic Design:
250 titles at $30 per, 1/2 vol per annum = $3750 in yearly sales.
—
Travel:
500 titles. $40 per and a turn of .5 nets another $10,000 in sales.
If the business is worth pursuing, I could see devoting double the space — particularly if the turn rate is much closer to (or exceeds) one.
—
Fashion:
Say 250 vols @ $30 per, at 1/2 vol per annum, $3750 in annual sales
—
Photography:
250 volumes, at $40 each, and a turn rate of .5, for a contribution of $5000 to annual sales.
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Periodicals (non-‘comic’)
From Wired to Shonen Jump, from Otaku USA to Yen+, from Wizard (so long as they still publish) to Playstation the Magazine, there are a number of periodicals that are worth stocking that have nothing to do with DC and Marvel.
I can find room for 100 of these titles in my store, I’m sure. It’d be a magazine rack about 12 feet long, with nine shelves. No matter how many of each title I stock, assuming I could sell just one of each every month, at $4 per these shelves would generate $4800 in sales. Obviously, we’d be looking to sell more than one copy of SJ and ¥+ each month.
—
Periodicals (comics)
I’d be tempted to just match the magazines, but let’s say we double them: 200 titles at $3 at one copy (average, per title stocked) per month = $7200 a year, gross.
That’s as much gray-matter as I feel like spending on the floppies, actually. I’m sure I could find 50 titles a week in Previews; I don’t know that it matters which 50 I’d pick. One presents the comics to the customer base; either customers request something else (which will change the order next month) or they buy what you’ve got. There’s a learning curve out there and I hope I have enough cash reserves (or other sales) that I can afford to teach myself this business.
But as stated, it’s not about chasing or appeasing the Wednesday crowd; there’s the LCS for that, after all. Just a good mix of generally well-known subjects and perenials (Simpsons, Archie, Spider-Man, Batman, + whatever Hollywood is making a movie of) and I know this is the cretin’s path, devoid of any love for the medium and strictly mercenary, asking first ‘what sells’ and screwing the rest.
But in my mind, the love and dedication to the artwork are what the collected trades (and trade paperback originals) are for. I’m not going to save the industry with floppies.
In a bookstore of the size imagined to date: 24 feet of floor space for a couple hundred comics — I’d plan to set aside 10 times that for seating and tables; so I’m sure we can spare a pretty large corner for a comics rack. It may be a loss. But that’s Fine. Newspapers are also a loss-leader; you don’t stop selling newspapers just because you can’t make money on them.
[well… we haven’t stopped selling them yet]
Part of the stocking strategy is the Face you present to the Public, and for a ‘graphic novel bookstore’ some portion of the public will expect the monthlies — they like to see them, even if they’re buying the trades.
For the current math problem, I’ll assume one sale a month on each of 200 comics titles (or 0 sales of everything else but 200 sales of an Obama cover; whichever, whatever) — so, a contribution of $7200 a year from ‘comic books’.
—
Graphic Novels:
And here we go.
This is what I mean by a graphic novel bookstore:
3 copies each of at least 20,000 graphic novels. Are there 20,000 graphic novels? Actually, I hope there are 30k; if not now, than soon. Amazon lists 100,000, but so many of those are false hits and errors it gives me a headache—on a weekly basis—when I look at Amazon and try to compile the aggregate sales rankings.
A lot of these you stock just to have a complete run of a series, or a complete catalogue of a particular publisher. Nothing wrong with that, and the investment is hardly wasted: nothing sells books like more books.
60,000 volumes at a turn rate of .25 at an average price of $10 = $150,000 in annual sales.

Let me cut it off there.

3 copies of every graphic novel. This was my first, gut impulse. I’m going to stand by that, now, even though back in August I almost immediately backtracked following comments by Hibbs and others.

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Before I get back to 3 Copies of Everything, I want to take some time — and space.

Your average Big Box Bookstore takes up 25,000 square feet and stocks 100,000 to 200,000 titles — individual titles, not just 100 copies each of the 1000 best selling books. Which of course means that for almost all titles stocked, we’ll only have one copy.

A daily frustration of mine (and a frustration of many booksellers) is finding that last copy of something. Sure, we have a sophisticated distribution chain that will deliver a book in scant days. We have fancy computers to track inventory, both coming in the back door and going out via a cash register. We employ several people just to continuously reorganize books — getting titles back to their sections, and back in order (alphabetical or otherwise). All this fails when compared to what just a few determined customers can do in a single afternoon. When I look something up and the computer tells me I actually do have a copy of a book, but only one, it’s almost like not having the book at all. Sure, I go look, while the querent waits on the phone or hovers over my shoulder; I know most customer habits and there are a few tricks (no one bends over to put a book back, they’ll just chunk it on the top—or eye-level—shelf whether it goes there or not) — and I even know a few of the more common mistakes made by my fellow booksellers; my favs this past year were Olive Kitteridge and Edgar Sawtelle (both titles, not authors, but it’s worth looking in both K and S, respectively, in these cases).

Say, four-fifths of the time, by hook or by crook, I find the damn things. But for a not-insignificant number of queries if there is only one copy left,

• it’s on hold for another customer
• someone was looking at it, but just dropped it off in some random section
• It was stolen
• no, really: customers refuse to believe it, “OMG! How could a popular book like that, one that was just publicized on Oprah, have been stolen! It Was Just On Oprah. You obviously aren’t looking hard enough.”
• It’s “in the back”

And let me insert another long aside: Apparently, at least in the perception of some of our customers, “The Back” is a mythical, idyllic land where any book can be had, conjured into existance by the mere mention of an author and the firm belief that the bookstore has Every Book, Ever, but intentionally hides them unless a crafty, intelligent, good-looking customer-in-the-know remembers to ask, “Well, are you sure you don’t have a copy in The Back?”

Our back room is a hell hole of bare concrete floors, bare metal shelving, a mountain of cardboard, 15 year old non-returnable merchandise, last month’s magazines (don’t get any ideas: we return or recycle these on a weekly-almost-daily basis, there are no back issues for sale “in the back”) and a couple of overworked, sarcastic booksellers stuck doing receiving and returns. Your book is not “in the back”. I’ll gladly make an offer to check the back room, as it is a natural part of customer service and about 3% of the time, sure, maybe I’ll find it — but unless it’s a brand new book that just came in this morning, you’re just wasting your time and mine by asking me to go look.

Sometimes a book is just missing. If I’m stocking 200,000 books, even an error rate of one-tenth of one percent is two thousand books I think I have, but don’t. The error may have originated at the warehouse, or in store, or in my computer system. Doesn’t matter where we place the blame; the book isn’t here.

Given human error and the inability of some (customers and employees alike) to put a book back exactly where it belongs, and the computer errors and theft, we’ll be ‘missing’ quite a few books on any given day. Misshelved books can take up to six weeks to relocate and reshelve (we rescan and reorganize the entire store on a six week cycle; some sections we’ll try and hit mid-cycle as well, but that means another smaller, less popular section has to wait even longer) and sometimes a ‘missing’ book is a missing book: we won’t know until our annual inventory.

An error rate of one-tenth of one percent: That’s a one-in-a-thousand error.

Which interactions do customers remember most? The 19 times I find the book with only minimal information? The one time in 20 that I know a book (and it’s location) off the top of my head and don’t even need to touch a keyboard? Or that one in a thousand error in the system that we ‘tease’ a customer with but can’t find?

(any retailer will be able to tell you, actual inventory shrink is a lot more than 0.1%)

At a major chain bookstore, we’re victims of our own success: we’ve supplied so many books in the past, some customers expect us to have everything. Even 200K is just 3% of the (estimated 7 million) books available, or even less if one considers out-of-print titles, audio books, text books, print-on-demand titles, and the 200,000+ titles added to the total every year.

If I had a space the size of the Mall of America, maybe I could stock all books. Maybe. But we still wouldn’t be able to find them all each and every day.

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I’ll tell you how to fix this problem: Stock 3 of everything. One copy is “missing”. One just sold. And now, even if you just sold a copy of Moomin vol 4 and inexplicably someone else comes in the same afternoon looking for it: You have it. Heck, you might still have two. You don’t have to say no, you capture the immediate sale, you mint a Customer for Life.

This is also how you’ll compete with Big Box Books, down the street, and steal a march on Amazon and other online retailers to boot. If this is your niche, own it. Don’t say, “I can have it here in 3 or 4 days” — only your loyal customers will take you up on that. Stock everything, in multiples, and put the book in the customer’s hand. That’s awfully hard to say no to. “I asked for a book, and here it is!” It’s like magic.

Oh, it’s not a good solution: It’s expensive. About $1.5 Million — 3 copies each of 30,000 books that average $15. (that’s only $1.35M but as long as we’re spending, might as well chip in another $150,000 for slip-cased hardcover special editions)

If you were a major corporation with an ongoing book business and had years of sales data to fall back on, obviously you’d know which titles historically sell better, and you’d have a much better idea on how to set your stock counts: 20 copies of Watchmen, 8 copies each of Naruto volumes, 6 copies each of Bleach, 5 copies each of anything Batman, Death Note, or Fruits Basket… 1s and 2s of everything else

Even as a raw start-up, with no preconceptions and without any data on your local market, over time you’ll figure out what you need to stock. After a few years, you’ll be able to manage you inventory like a pro. But on Day One, Grand Opening? You have no idea what people will ask for.

(Unless you’ve been analyzing online sales for the past 2—and working on 3—years.

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You sell one copy of a book, that’s a mitzvah. Mazeltov! But if you bought three to begin with you don’t need to do anything yet.

You sell the second copy, and all of a sudden you have a sales trend. Did they sell in the same week? Great, order two more. Did they sell in the same month? Order one as a replacement, to keep your par count at 2.

You sell a third copy, and now we have points to plot on a graph.

At my current bookstore, we place orders daily. [but as a corporate store, most if not all of those are fulfilled internally so we can order single copies as they sell and take advantage of the economies-of-scale inherent in the set up] As an indy, you’ll likely place orders weekly with your major vendors, and a couple of regional distributors. Weekly orders are fine. Just remember to keep a two-week supply of any one book in stock (in case an order gets placed late, or you otherwise miss a week) and you’ll be fine.

And if your backstop is 2 or 3 copies of everything, that likely is your 2 week supply and then some. So you’ll be doing quite well on auto-pilot, and you only order in what sells, what’s new, and what your booksellers want to recommend. Your orders will be a fixed percentage of sales, a manageable ongoing cost of doing business.

[aside: and this is one other difference between selling graphic novels as books as opposed to running a comic shop: your business is the backlist. You don’t have to guess about new mini-series or cross-overs, or plastic ring promotions, you just stock proven titles and likely-looking manga and GN originals. Not an ideal situation, but one with some sales history behind it.]

That initial outlay of $1.5M, though? Gone. Sunk. You’re not getting it back, you can’t really amortize it, it’s going to sit there on shelves (and you’ll need to pay taxes on it) and this is just one more cost of doing business. If you balk at the initial investment, you’ll miss the opportunities it buys you: That one impossible sale, the unmistakable draw of a shop full of graphic novels, your reputation as a Landmark store pulling in shoppers from three states away, a growing legacy as a Expert in the field…

…and your only hope of directly competing with Amazon and Big Box Books. This is the sticker price on an entry to the game.

Yes, it’s a lot of money. (Damn it’s a lot of money) But: This is what I want. So long as I’m writing about hypotheticals anyway, I might as well dream Big. My Graphic Novel Bookstore Pipedream is a beast, the size of half a football field with at least $3 million in inventory and a coffee shop and restaurant besides (I’ll open a pub if I can get a liquor license) — and at that size, a good chunk of my hypothetical bookstore is going to be non-fiction and genre fiction and other add-ons that are only tangentially related to comics. It’s going to be a proud, handsome bookstore.

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This is also possible on a smaller scale. But you won’t be able to say “yes” to customers nearly so often. You will be just another comic shop, or just another bookstore. There isn’t anything ‘new’ here to recommend it, just business as usual and a couple dozen competitors. But, I wish you luck and I hope my columns have been at least marginally supportive.