With the resurgence of print and the leveling off of e-books sales, indie bookstores are testing new business models, scouting new locations, and turning their stores into minichains to grow their businesses.
In March, Copperfield’s Books, based in Sebastopol, Calif., opened a new store in Novato, its eighth. Next month, Books Inc., headquartered in San Francisco, will add its 11th in Silicon Valley. In the fall, Book World, headquartered in Appleton, Wis., will open its largest store, its 45th, a 6,000-sq.-ft. location in DeKalb, Ill. And by the year’s end, Dallas-based Half Price Books, the country’s largest indie chain, will have 125 stores in 17 states.
“It’s basically a matter of taking what one knows and leveraging your strengths,” said Mitchell Kaplan, founder of the 34-year-old Books & Books, headquartered in Coral Gables, Fla. “I’ve learned to say, ‘Why not?’ ”
That’s how Kaplan ended up branching into film production, opening a small press, and piloting a hybrid bookstore in Miami last month with No Boundaries Sport, a bicycle store across the street from Kaplan’s flagship location, and with graffiti artist David “Lebo” Le Batard. The result is Books+Books+Bikes+Lebo. Kaplan, who believes that the local aspect of an independent is extremely important, has also formed affiliate relationships with four stores not directly in his area, including the Books & Books in Westhampton Beach, N.Y. He owns five stores.
“We’ve had top-line growth every year for the past six years,” said Mark Wilson, CEO of Joseph-Beth Booksellers. Yet he is concerned about creating bookstore models that are flexible enough to absorb what he regards as “curveballs,” such as the recent Department of Labor overtime rule, which goes into effect on December 1 and could greatly increase payroll costs.
For now, Wilson’s concerns have translated into remodeling the superstores Joseph-Beth already has—two in Kentucky and one in Ohio—rather than adding new ones. The mini-chain overhauled the kids’ section at its Lexington store last year, which is now 11,000 sq. ft. Next week it will begin remodeling the kids’ area in its Crestview Hills, Ky., store. In addition, Wilson is looking at growing Joseph-Beth’s smaller stores in the health market and plans to announce a new hospital store in the next few months. Joseph-Beth currently has two stores at the Christ Hospital in Cincinnati and one at the Cleveland Clinic.
The Paper Store, a card and gift chain based in Acton, Mass., which is on track to reach 100 stores in the next few years, has had success with its small book sections. The book departments at its current 64 locations range from a single humor table (in a store next to Barnes & Noble) to a 1,000 sq. ft. in a store in West Roxbury, Mass. A few years ago the Paper Store tried standardizing its book sections. But it’s found stronger sales by varying them based on the location.
“Our book departments fill a very important niche for both the communities and publishers,” book buyer Michael Joachim said. “My biggest problem is allocating space.” At the height of the Fifty Shades phenomenon, the Paper Store sold 10,000 books in the trilogy. More recently, it sold 5,000 copies of How to Tie a Scarf, published by Crown’s Potter Style imprint, which it displayed alongside its scarf selection.
A store doesn’t have to be in a populous urban area to thrive, as nine-year-old Phoenix Books in Essex, Vt., has found. Despite being located in the country’s second-least-populous state, Phoenix now has four stores with its recent purchase of Misty Valley Books in Chester. Like Kaplan, Phoenix co-owner Michael DeSanto is experimenting with ownership models, including co-ownership with store manager Tricia Hueber at its Rutland location.
“Mentally I’m in an expansion mode,” DeSanto said. “I’ve been inspired by the number of new stores opening in the 600-to-1,000-sq.-ft. range. The size being small makes it so much more efficient.”
“Our growth has really been organic,” said Paul Jaffe, president and co-owner of Copperfield’s. “Over the years I’ve learned how important timing is. The areas where we’re in have very few vacancies.”
After Borders closed its store in San Rafael, Copperfield’s opened there in 2013. The Novato store came after years of reviewing the demographic data from the Census Bureau, and a lunch with Novato’s mayor who convinced him that the community’s revitalized downtown meant that the timing was finally right.
But it’s not only timing. Affordability is also key, which is why Bradley Graham, co-owner of Politics & Prose in Washington, D.C., has chosen to “embed” 1,000-sq.-ft. (or smaller) book sections within three area Busboys & Poets restaurants, in lieu of opening more full-service branded bookstores. The Busboys locations give Politics & Prose an opportunity to have a presence in a different D.C. neighborhood without the encumbrance of leases or purchasing more fixtures.
“This is a great moment for bookstores to be expanding,” Graham said. “We’re certainly being presented with a number of opportunities. But even with the recent turnaround of independents, the profit margins remain very slim.”
Based on the American Booksellers Association’s Abacus survey, Graham said that even the most successful stores are only netting in the low to mid single digits. Although he appreciates HarperCollins’s new bookstore-development program, it’s not enough to test out a promising neighborhood. “You never know what’s around the corner that could cause a crisis,” he said.
Graham’s not alone in worrying about the end of the indie resurgence. “I always look at when it’s going to crash again,” said Michael Tucker, president and CEO of Books Inc. He built the indie chain back from two stores after it was forced to file for Chapter 11 bankruptcy protection in 1995.
“Retail has been flat since 2009,” Tucker said. “Here we’re having this huge economic boom. But we’re not making that much money. We have minimum wage going up to $13 in July.” Not that that’s stopped him, or other expansion-minded booksellers.