At a time when many bookstores are struggling, Half Price Books, based in Dallas and the largest family-owned independent bookstore chain in the country, continues to post steady growth, with sales between 2005 and 2009 increasing 44%, to $204.4 million. According to president and CEO Sharon Anderson Wright, sales are up 9% through March for the fiscal year ending June 30, and comp store sales grew 6%.
As its name implies, Half Price sells remainders, hurts, and used books at 50% off, except for collectibles. It also carries discounted games, CDs, DVDs, and, increasingly, vinyl records. Offering inexpensive entertainment has been one reason Half Price has gained during the recession. The economic downturn has also led to more inventory as people are selling Half Price good books, Wright says. In addition, Half Price's philosophy of recycling, which led Ken Gjemre and Pat Anderson, Wright's mother, to start the first Half Price used bookstore with $4,000 in a converted Laundromat in 1972, fits today's zeitgeist. But for Wright, there's another reason that the company has succeeded. "We're conservative. We've never borrowed money. We only do what we can afford, and we promote from within. Even the IT guys came up through the ranks," says Wright, who has worked at Half Price since she was a teen. "We have extreme loyalty. We have 2,605 people, and they solve the problems internally." The fact that profits are shared with employees quarterly further contributes to morale, and many staff members have been with the chain for 20 years.
"We act independently, judge situations, and respond accordingly. It's a huge sense of freedom," continues Wright. That freedom extends to employees at each store, who are responsible for purchasing 70% of the inventory, as long as it fits Half Price's broad acquisition guidelines: anything printed or recorded, except yesterday's newspapers. Obviously, not all purchases work out. Last year, Half Price had 17 million items that didn't sell, many of which it donated. Still, it sold over 48.2 million books chainwide. Used books represented 72% of sales last year, with remainders generating 28%.
With its policy of cautious expansion, Half Price now has stores in 16 states as it works its way north and east. Currently the company is looking at expanding into Philadelphia and St. Louis and recently scouted sites in Atlanta and Nashville. The chain looks for densely populated communities with high income, affordable real estate, and parking lots. The average store size is 8,000–10,000 sq. ft. Earlier this month, it opened its sixth Chicagoland location in Orland Square Park, its 109th. It is tentatively scheduled to open its 110th store in Oklahoma City, Okla., in August and will take possession of leases for at least another five stores, which could open by the end of the year. In addition, the chain has taken advantage of the depressed real estate market and will relocate four stores in 2010, including its Brookfield, Wis., location, which will take over the site formerly occupied by Harry W. Schwartz Bookshop on August 5.
There is one place, however, where Wright has been reluctant to expand: online. In 2001, the chain tested an e-commerce site, but closed it three years later. "We'll probably get back around to it," she says. For now, its own Web site (www.HalfPriceBooks.com) links to Amazon as an affiliate, and the chain has begun experimenting with selling high-end books and textbooks through Amazon.com, Alibris.com, Half.com, and AbeBooks.com.
Last year, as a step toward having better control over its inventory and pricing, Half Price started bar coding books at its store at the Firewheel Plaza in Garland, Tex., and linking to Amazon. Over the course of the next 12 months, Wright plans to add four more stores to this program, with the goal of eventually bar coding books at all locations.
Despite the iPad, Nook, and other e-reading devices, Wright is not concerned about physical books disappearing. "It remains to be seen what will happen with e-readers," she says. "At least with a paperback, your battery doesn't stop running. I think there are going to be people who like paper. You can own it and sell it." She also believes that the advantages of bricks-and-mortar stores outweigh online. "It's probably the same with other independents," she says. "Everybody who works here has a pride with what they do. We have great customer service, and there's the excitement that you never know what you'll see."