E-books are affecting bargain books, like everything else in the publishing industry. But the growth of e-book sales and consequent drop off in physical book sales doesn’t necessarily sound the death knell for bargain. Although most industry insiders anticipate a shakeout beyond last year’s closing of Fairmount Books in Buffalo, N.Y., many wholesalers are adapting, and some are doing so by taking a page out of their retail customers’ playbooks. “Bargain’s been struggling along at a very slow pace,” said Mel Shapiro, longtime president and CEO of bargain books wholesaler Book Sales. “But then the whole publishing industry is slow. People are going into stationery, games, and puzzles, just like Barnes & Noble.”
Shrinking shelf space at brick-and-mortar bookstores, the closing of Borders in fall 2011, and deeply discounted new titles with prices close to those of bargain books on Amazon have also contributed to what Jeff Press, president of World Publications Group, described as a general “nervousness” or “uncertainty” about where bargain is heading. Yet a number of wholesalers remain optimistic. “After undergoing a warehouse purchase, rehab, and move in 2009 and 2010, our wholesale sales have increased in each of the last two years by about 5%,” said Gene Pacquette, v-p of Powell’s Books Wholesale in Chicago. “And we expect that trend to continue in 2013.” Even with the loss of some of its independent customers, the remainder house, which deals primarily with scholarly, academic, and quality trade titles, has seen stronger sales to the remaining independent bookstores. In addition, Powell’s has grown its sales to online booksellers, museum shops, and international accounts.
“Our 2012 sales were rather flat, as several of our European customers had budgetary concerns,” explained James Crates, general manager of Dallas-based Texas Bookman, sister company to the used bookstore chain Half-Price Books. “This year started off well. We’ve picked up a couple of large new customers and distributors as well as numerous independents.” Texas Bookman is also branching out into nonbook items like CDs, DVDs, audiobooks, stationery, and gifts, as well as selling to museum shops, gift shops, and craft stores. “We want to keep doing what we have always been good at, namely going after quality books in our traditional specialty areas [visual arts, crafts, and children’s books]. But we also want to give our customers a bigger choice of merchandise as they retool their inventories to keep up with the changing world of bookselling.”
“My business has exceeded my expectations,” said Albert Haug, who founded U.S. Media Partners in Centerport, N.Y., in early 2006, after his noncompete clause expired with Book Club of America. U.S. Media Partners had its best year to date in 2010 and although sales are down 15% from that high, Haug said business overall is still higher than he ever planned. “I never would have imagined it would grow to such a level,” he added. Haug attributed part of U.S. Media’s success to a steady supply of product from exclusive contracts with publishers, a concept he helped pioneer in 1996. “The supply is the most crucial aspect of the business nowadays,” he noted.
One change Haug’s noticed in recent years is that stores are more selective about what they want to buy and what they want to pay. “All the customers want the key authors,” said Haug. “They just sell them at a lower price than before.” He’s no longer able to make as many as 300,000 copies of a book “disappear” by selling them into nontraditional bookstores like close-out retailers and drug stores. Now he finds it difficult to sell more than 100,000 or 150,000 copies of a single book—but then publishers no longer ask him to take more than that.
Like U.S. Media, Book Country Clearing House, which has a 450,000 sq. ft. warehouse in McKeesport, Pa., and a standing inventory of 10 million books, relies on exclusives—in its case with eight publishers. Sales rose 15% in the first quarter of 2013, according to co-owner Richard Roberts, and have rebounded since the company experienced a drop of 20%–25% in the fourth quarter of 2010. Unlike some wholesalers that concentrate only on the U.S., Roberts works with off-price regional retailers around the world. “We sell in almost every country in the world. We have reps in Southeast Asia and Europe,” he said, adding, “probably the only common language is ‘a bargain.’ ”
Changing It Up
While many wholesalers are moving into retail, selling direct, and nonbook items, New York City–based Book Sales, a separate company within Quayside Publishing Group, is taking a different tack. Book Sales has long been known for reprints and promotional publishing. Last year it moved into trade publishing with the launch of Race Point. The press, which specializes in illustrated books on art, cooking, crafts, and pop culture, is part of Book Sales, but is distributed to the trade as a Quayside imprint.
World Publications already has its own publishing imprint, JG Press Publishing. “By printing for ourselves, it allows us to continually keep our inventory fresh,” said Press, who has become more aggressive about promotional publishing. “We’ve tried to fill more niches than ever. If the remainder works, we’ll try to reprint it. We work very closely in partnership with various publishers. This really keeps us tapped into highly desirable brand names and licenses and lets us repurpose great material for the bargain market.”
At Daedalus Books & Music in Columbia, Md., co-owner Robin Moody relies on diversification to maintain sales. “We’re broadening our title base as our bookstore clientele seems to be broadening theirs,” he said. “We’re moving into carrying more sidelines, as bookstores are clamoring for such things.” Not only is Daedalus stocking reading glasses and puzzles, but it also prints its own line of journals with faux-leather covers. And it has begun focusing more on history and art titles and less on fiction. In addition, it has grown its direct-mail sales, which now account for 60% of its sales overall.
“The customer base is changing and the demands have increased substantially,” said Mike Paper, owner of Pittsburgh-based Bradley’s Book Outlet, who feels a squeeze from other wholesalers competing to buy the same books: children’s titles and cookbooks. He, too, is meeting the challenge by diversifying, but in his case that means getting back to Bradley’s roots as a bookseller. He opened his first bookstore in a former Atlantic Book Store location in downtown Pittsburgh 20 years ago, before moving into wholesale. In 2010, Bradley’s had five stores and was about to close one. “I swore I wanted to get out of [retail],” said Paper. Instead, when Borders began closing stores, Bradley’s took over several Borders Express locations, and now has 10 stores within a two-hour radius of Pittsburgh.
Jason Zutaut, president of Book Enterprises in Fall River, Mass., began testing the retail waters post-Borders and opened the Book Shack with his brother-in-law, Erik Christensen, in fall 2011 in a former Borders store at the Independence Mall in Kingston, Mass. The pair added two more stores and has since closed one. “Bargain is definitely our niche, and what gets people in the door,” said Christensen, who said that he wants to get “retail right” in the 23,000 sq. ft. Kingston store before expanding the Book Shack concept, which includes a 200-seat OnStage Events room for author talks, plus music and comedy performances. The store is also developing a new Web site in conjunction with the American Booksellers Association’s IndieCommerce platform.
So can bargain survive? No matter how much diversification or modification wholesalers make, bargain relies on print. “There will always be a market for [print] books,” said Bradley’s Paper. “The question is, will it be profitable to sell them from a publisher’s standpoint.”