Religion Publishing: These Little Stores Went to Market--Together
Angie Kiesling -- 1/15/01
Christian indies find marketing groups the way to stand up to the competition

Imprinted catalogues are a primary benefit marketing groups offer stores.
For many independent booksellers, staying solvent is a daily battle for business in the land of the giants. Pitted against the retail Goliaths of Barnes & Noble, Borders, Books-a-Million and other national chains, it's no wonder they've resorted to scrappy and creative battle tactics. And one of the smoothest stones in their slingshot is the marketing group.
While collective marketing vehicles are now a mainstay of the ABA--through its Book Sense program--and the New Age market--via the Coalition of Visionary Retailers (see sidebar)--organized marketing groups appear to be the sole proprietorship of independent Christian booksellers, who compete not only with general-market bookstore chains but also with a handful of growing Christian chains.

According to figures gathered in mid-December, nearly one-third ($975 million) of the estimated $3 billion in revenues in the CBA market is generated by the three leading marketing groups in that industry: The Parable Group, Munce Marketing Group and The Covenant Group. Together the three organizations comprise about 925 retail outlets ranging in annual sales from under $250,000 to more than $7 million. Group benefits vary from the staple marketing tool offered by all three--the imprinted catalogue--to special merchandising bags, in-store signage, national advertising, exclusive products and e-commerce sites with unique online "storefronts."

In This Article:
Also, Making Sense of Bookselling

Already forced to stretch their marketing dollars, some retailers lament that they can't afford to do business with a group, said Jack Savage, owner of Jack's Religious Gift Shop in Salisbury, Md. But, said the Munce-affiliated retailer, "I believe the marketing groups will be the salvation of a lot of independents. They can't afford not to join."

The Parable ParadigmThe Parable Group, the granddaddy of the three CBA marketing groups, was created "quite by accident" in the mid-1980s by Steve Potratz, a former bookstore manager who while driving through San Luis Obispo, Calif., with his wife in the early '80s spotted an independent Christian bookstore for sale. Drawn to the area, the couple made an offer on the store and hunkered down to the business of growing it. For the next couple of years Potratz printed up advertising flyers and sent them out to his customers, whose addresses he captured when they made a purchase.

In 1984 another owner at a Christian bookstore in Northern California saw what Potratz was doing and asked to have his name imprinted on some of the flyers. In return, he would split the costs. From that small beginning The Parable Group grew to 10 stores for the first Christmas (1985) catalogue. By the second Christmas 50 stores had signed on with the group, and that figure soon jumped to 150. Within 10 years Parable ballooned to more than 300 stores.

Today Parable claims 330 member stores, which post $425 million in annual sales. The group distributes 30 million catalogues, newspaper inserts and promotional postcards a year, with costs ranging from 2 cents apiece for some of the newspaper inserts to 14 cents for the larger seasonal catalogues. Parable's mind-boggling list of optional member benefits includes in-store merchandising kits, telephone on-hold messaging, special events, gift wrap, data management and activated product tags for security, to name a few.

"The early response from vendors was just tremendous," Jim Seybert, Parable's v-p of marketing, said of that fledgling Christmas catalogue. "As far as I know, the only other catalogue being done at the time was by [wholesaler] Spring Arbor. The very first catalogues had the individual stores' logos imprinted on the cover after the catalogue was printed and stitched. It didn't look like a rubber stamp because Steve has always had a high appreciation for quality. Nowadays the catalogues are not only personalized with the logo, but we give each store an opportunity to personalize the value of the coupons." In some instances, he added, retailers are able to set prices--especially on the cover items featured in the catalogue. They can also inkjet personal messages to customers on the catalogues and enter their store's Internet URL.

To join The Parable Group, stores must post at least $350,000 in annual sales, demonstrate creditworthiness, have access to the Internet and possess a computerized inventory control system. Retailers are required to participate in four catalogues per year out of a list of 25. According to Seybert, most stores take part in eight or nine. Though Parable charges no annual dues or percentage of sales, it collects a $500 deposit "against services rendered" when stores join the group, and the contract is renewed once a year.

Wired for the WebIn today's retail climate, the popular notion is that any bookseller must have a presence on the Web. Even if a store operator d sn't agree with this line of thinking, chances are his customers do.

Investing in that philosophy, Parable sank millions of dollars into an e-commerce system called the Private Label Estore Program. "A Parable store can have a Private Label site that looks, tastes and feels like their own site, but all of the back-end work is done by Parable," Seybert told PW.

About 100 Parable stores have invested in the clicks-and-mortar storefront, which carries a $495 application fee. The marketing group works with stores to build customized sites; retailers promote their site to local customers, but orders are processed centrally through The Parable Group, which handles all inventory, fulfillment, credit card authorization, customer service and shipping. Packages are labeled with the local store's name, then drop-shipped directly to the customer from the nearest of Ingram's seven distribution centers. For every sale generated by its site, a store receives 20% of the margin, dispersed quarterly. The Web site expands a retailer's inventory to 70,000 products--something most independents can't afford to stock on their own.

Gary and Margie W hrmann, owners of Grapevine Books Inc. in Houston, said slick, professional catalogues are the biggest benefit of being Parable members, but they found a bonus niche market when they launched their store's Web site: men. "Men don't seem to mind paying the shipping cost," Margie W hrmann told PW. "They like convenience, and they don't have the time to shop."

Future upgrades to the Estore program will likely include a tighter link between e-commerce and in-store sales. Parable is working with several POS vendors to build a system that will do real-time checking of inventory levels at the stores. Once that system is in place, customers could shop online and pick up their merchandise at a local store.

Making 'Muncemeat' of CostsWhile Parable changed the paradigm for doing business as an independent retailer in the CBA market, Munce Marketing made a name for itself by cutting the cost of catalogue production in half.

A former missionary to Kenya, Bob Munce stumbled into bookselling the way many people do--unintentionally. During his stay in Kenya an African church asked him to start a Christian bookstore, and Munce took it on as a personal challenge. "I had no experience running a bookstore, but I thought it was a great idea, so I just learned on the job," he said. "After some time we were operating five bookstores. Our goal, however, was to develop bookstores and pass them to local ownership. In essence I was planning for the eventual elimination of my own job."

What he didn't realize was that his on-the-job training in Africa was laying the cornerstone for his future livelihood across the Atlantic. From his bookselling experience, Munce established relationships with book distributors in England, India and the United States. Once he and his wife moved back to the States, he acted as a distributor of Christian books to third world countries.

The catalogue business--the main focus of Munce Marketing--grew out of a need Munce spotted in the marketplace. "I realized the mom-and-pop Christian bookstores were having difficulty competing against the national chains," he told PW. "To their advantage, the mom-and-pop stores stocked more religious products than a Barnes & Noble or Borders, but consumers didn't know that."

Starting with a group of 22 retailers, Munce launched his no-frills marketing group in 1991, and from the outset he earned a reputation for bottom-line-friendly production costs. So much so, in fact, that the group membership surpassed its biggest competitor, Parable, by the late 1990s. At press time Munce Marketing claimed more than 540 stores throughout North America--a figure Munce expects to top 600 at this year's CBA Expo trade show January 29-February 2 in Louisville, Ky. Average store sales for Munce retailers is $750,000; 38% of stores post sales of $500,000-$999,000, and 16% bring in over $1 million.

Retailers pay an enrollment fee of $200 to join the group, and they can get out of the contract "on a handshake," Munce said. In 2001 the group will produce 14 catalogues, priced at 7 cents apiece for the larger spring and Christmas catalogues and 5 cents each for the other 12. The group d s not charge extra for imprinting, and it plans to announce an e-commerce venture later this month at CBA Expo.

Covenant's Eight EliteThe smallest of the CBA marketing groups is also the largest in terms of average store sales. Founded in the early 1990s by Chuck Wallington of Christian Supply in Spartanburg, S.C., The Covenant Group counts only eight members on its roster, but together those members account for 52 retail outlets and $150 million in annual sales.

The low-key Covenant Group is structured for a niche market of stores, Wallington said: either large single stores with at least $3 million in sales volume or regional chains. The group formed when Wallington and two other retailers decided to pool their dollars to put out a catalogue. "These are fierce independents who didn't want to give over control such as pricing options," Wallington said. "We wanted to do something to market together, but some of the other groups were restrictive, wanted to have more control. We allow our members--who take large print runs of 40,000 to 350,000--to alter prices of anything in the catalogue. Munce and Parable produce a catalogue and set the price in there."

In addition to four seasonal catalogues, Covenant produces five or six tabloids that stores can insert in their local paper or use as a bulk mailer. The group also produces a 432-page church supply catalogue that sprang out of Wallington's own success with that segment of the CBA market. "It's the most exhaustive church supply catalogue in the industry," he noted, "and any retailer can buy it as a stand-alone piece."

Unlike the other two marketing groups, Covenant subsidizes the price of catalogues at various levels depending on each store's allotment--a figure arrived at based on store volume, Wallington said. He declined to give specific price ranges.

The Competitive EdgeThe fierce independent streak Wallington alluded to is one of the main ingredients of good retailing, but it's also why some store operators are cool to marketing groups. Still, a healthy bottom line is hard to ignore, and that numerical evidence is stacked in favor of stores that belong to marketing groups. For example, every independent store that made Christian Retailing's Top 100 listing for 2000 belonged to a marketing group. The balance of stores on the list belonged to retail chains, either national or regional.

Members say the catalogues are effective. According to owner Gerri Turner, sales at For Heaven's Sake in Conr , Tex., have increased 75% since October 1998, when the store first participated in a Parable promotion. Other retailers claim that sales often jump 40% after a mailing. But there's a downside to group membership as well. Stores are often required to stock large quantities of premium items featured in the catalogues, and, depending on the local market, those items may or may not move off the shelves.

Jack Savage, a former Parable member who switched to Munce Marketing two years ago, ran into that situation too many times in the past, he said. One particular product, a Thomas Kinkade gazebo figurine that Parable featured in its catalogue, languished on his shelves. "I've still got them," he added.

It's those downside traits that stir up competitive language particularly between Parable and Munce Marketing. Take for instance the issue of pricing. While Parable boasts the most impressive array of member benefits, including aesthetic items like seasonal aprons for store clerks, it charges twice as much for catalogues as Munce d s. But, according to Parable's Seybert, a proper evaluation of the two groups should take into account the total return on investment, or what he calls "the big picture."

"You get what you pay for," Seybert said. "We've studied the results and feel that a Parable catalogue pulls a higher response rate and brings more people in to buy more product than other catalogues. The success of Parable's program is that it's more than catalogues. It all g s back to our motto: We Help Stores Grow--rather than 'We help stores get by with as little as possible.'"

But the no-frills, low-cost approach was the ticket that convinced Chuck Milner of Tampa Christian Supply to change his membership from Parable to Munce Marketing, effective January 31. "All I want from those guys is a catalogue, not that other stuff," Milner said. "I wouldn't pay 40% more for a car, so why would I pay 40% more for a catalogue? It was a business decision."

Whither ABA?The most glaring question that arises from an overview of CBA marketing groups is: Why d sn't the ABA offer booksellers the same thing?

"I've asked myself that same question," said Scott McKinstry, communications manager for the ABA. "But it just seems that marketing groups are one thing in certain areas of retail and quite another thing somewhere else. For example, if you're selling dog food, it won't take retailers much to agree, 'Okay, we're going to buy 600 pounds of Kibbles 'n Bits.' But in the book world it's much more individual. The products and the people buying them are much more individual, so it becomes much more difficult to do bulk buying."

The more specialized booksellers become in subject areas, the easier it is to reach agreement, McKinstry surmised. "Maybe that's it--the CBA is a specialty organization, with a narrower focus of products."

Certainly the ABA and the smaller, specialty New Age market offer booksellers marketing tools, but The Covenant Group's Wallington puts a different spin on the answer to "Why?" "I don't think the ABA is geared toward marketing groups," he said flatly. "I shop regularly at several [ABA] independents, and I don't recall getting more than one or two catalogues per year. I don't even know that those stores have my name and address. With catalogues, you've got to capture who's coming in and how often they're coming, or else you won't know who your best customers are. In our store, we capture about 85% of people at the point of sale. I can tell you not only who was in here last week, but what they bought."

Making Sense of Bookselling

Opening a bookstore is one thing, but getting those books into the hands of customers is quite another. Going head to head with chain booksellers, independents discover they must either get in the marketing trenches or go under.

While retailers in the CBA market have the option of joining organized marketing groups, general-market booksellers look to their own creative ideas, plus marketing vehicles such as the ABA's Book Sense program or the Coalition of Visionary Retailers (COVR), created for stores that specialize in the New Age market.

Oren Teicher, COO of the ABA, told PW,"Through Book Sense we encourage those attributes that customers admire about independent stores--the traits that made them shop there in the first place."

Among the tools available free to ABA members are the Book Sense 76 list, a national staff picks list that reflects the tastes of booksellers across the nation. Book Sense also offers its own bestseller list, culled from 400 stores that send in sales data every week.
A gift certificate program and the e-commerce component round out the Book Sense marketing tools. At press time about 200 stores had live Web sites, Teicher said--a figure he hopes to see grow dramatically as word of mouth fuels excitement for the e-commerce connection. Stores pay a sign-up fee of $350 to launch a Web site through the system and a monthly maintenance charge of $100. Through templated sites, booksellers can create unique online "storefronts," but ABA handles all back-end functions.
Lise Friedman, manager of Dutton's Brentwood Books in Los Angeles, said she gets a lot of mileage out of the gift certificate program--meaning most are redeemed in the store. But not everyone takes the same view of the gift certificate program.

Jeremy Ellis, marketing director for BookPeople in Austin, Tex., said the 27,000-square-foot store is proud to be a Book Sense member but looks askance at the gift certificates. "We do sell Book Sense gift certificates, but we don't advertise this fact," Ellis said. "With our own gift certificates, whatever is not redeemed (about 15%) g s to us; with Book Sense it g s to them. I can't imagine any independent bookstore that can afford to donate that extra money."

Another group that's found strength in numbers is COVR, established in 1998 at the International New Age Trade Show (INATS) and now totaling 150 member stores. The small specialty market, which counts about 7,000 stores nationwide, caters to customers of metaphysical books, music and gift items. Stores pay $65 a year to be a member of COVR. Based in Denver, COVR [800-710-8859] provides a quarterly newsletter, a retailer mentoring program and vendor discounts ranging from free shipping to additional percentages off when a certain dollar volume is ordered.

Lynn Merritt of Mystical Horizons in Old Mystic, Conn., said her store has been a COVR member for only six months, but already she's reaped benefits, albeit intangible ones. "I haven't gotten into the discounts yet--I have to do research into the companies that offer them--but it's good to have a community of people who do the same thing I do," Merritt said.

That community is COVR's chief asset, said COVR president and INATS show manager Susie Hare. "With the mentoring program, if a retailer is having a difficult time in, say, marketing, they can call someone and get help free of charge," Hare said.

In the absence of marketing groups--a collective group of independents who pool funds to produce catalogues--small and midsized ABA stores often turn to their regional bookselling association. That's what Friedman of Dutton's Brentwood Books d s. Unlike members of organized marketing groups, however, the store retains control of what titles it stocks.

Stores like BookPeople in Austin, which are large enough to produce their own catalogues, prefer the personal touch. "We do our own catalogue at Christmas and a newsletter each month," Ellis told PW. "And we use our own weekly and monthly bestseller lists. Our customers seem to want to see what other Austinites are reading."

Beyond catalogue and Book Sense marketing, BookPeople finds that old-fashioned creativity and community draw customers back again and again. On January 15 the store cooked up a vat of gumbo to host New Orleans author Pableaux Johnson. And on Valentine's Day? "We're having an erotica panel," Ellis said.
--Angie Kieslin