They are large and small, urban and rural, but they share the uncertainty of being independent bookstores in the midst of an unprecedented crisis. A PW survey of nearly three dozen bookstores with more than a thousand years of bookselling experience between them shows how the new coronavirus outbreak has altered the work that they do, placing abrupt pressures on a sector of the American literary economy that had been experiencing a major resurgence in recent years.
Booksellers from New York, Maine, California, Missouri, Washington, and 14 other states contributed preliminary financial estimates on March sales, showing how their businesses were transformed by a month in which readers went from living their daily lives to spending weeks sheltered in place. Booksellers also shared their fears about what is yet to come. Taken together, the results suggest extreme decreases in profit margins and largely insufficient online sales to make up for the decreased margins. The results are layoffs and furloughs at more than 80% of the bookstores who took part in the survey.
According to the survey, sales in March 2020 fell an average of 9.4% compared with the previous March, and were down 6.5% from February 2020, which is traditionally the month with the lowest sales. Despite the declines, quick action by booksellers, the American Booksellers Association, and regional associations likely staved off even worse sales drops.
As government orders became more restrictive, many bookstores successfully appealed to readers to stock up on books before staying at home, encouraged gift card purchases, offered curbside and home delivery, and got readers to shop online for books and audiobooks. As a result, not all stores saw a steep drop in sales, and a handful even saw record-high sales. One store reported a 1500% increase in gift card sales alone.
March online sales rose steadily to a minimum of 34.8% of total sales, with many stores still processing orders at the time of the survey. However, online sales come at a cost. Twenty percent of respondents began using the new indie online ordering platform Bookshop.org during the month, but even with the generous terms extended by the company in response to the outbreak, the margins on sales through the website are approximately 25% below those of direct sales. Margins are also lower through wholesale direct fulfillment from vendors such as Ingram Direct to Home.
Even if margins were not impacted, the rapid transition to online sales has a radical affect on cash flow for booksellers, who traditionally collect margin and cost of goods in the full purchase price of a book and now only receive the profit margin. Taken together, the loss of margin and disruption to cash flow are two reasons that layoffs and furloughs at stores have been so severe.
While some stores have furloughed staff solely because of state stay-at-home orders—and despite the outpouring of customer support for indies throughout the month—many have been unable to retain employees. More than half of respondents have fired or furloughed 50%-100% of their employees. Among the stores that reported no layoffs or suspensions, many were either owner-operated or made pay cuts by as much as 40% for all employees.
For remaining employees, the challenges are significant. They are already grappling with a crush of online orders, for which they expressed gratitude, but sales will have to continue to rise substantially to make up for the loss of all in-store business. If those orders come, they will do so at a time in which the absence of adequate staffing means grueling schedules that entail shipping, processing new orders, online marketing to customers, and navigating a flawed roll-out of financial supports from the federal government.
Along with concerns about providing for employees and families, meeting rent, and covering the cost of books, booksellers expressed fears that any disruptions to the existing supply chain could cause irrevocable damage to their businesses. They also described growing frustration at the slow pace and unclear messaging on the terms of the federal government’s bailout initiatives. Perhaps most of all, they fear that the goodwill of customers could fade during a prolonged crisis.
“We have no plan for May and beyond,” said one respondent. “Our customers are starting to be laid off if they weren't already, and will have little disposable income soon.”