Robert Wilkie, The Texas Bookman
Keeps Playing to Their Strengths
"From the supply side, the future looks strong," says Robert Wilkie, general manager of the Texas Bookman, based in Dallas. "There are a tremendous number of good quality books up for remainder from both large and small publishers and I don't see that changing in the near future." Texas Bookman currently carries titles from some 50 publishers ranging from Yale University Press, Rizzoli and HarperCollins to Oxford and Shambala. As far as demand goes, Wilkie adds, "It's a bit more difficult to predict. I would be lying if I didn't say that I'm concerned about the loss of certain independents. It remains to be seen what the bookselling landscape will look like five years from now, but I think there will always be a place for bargain books in stores of every shape and size. How large a place is the big question."
But the challenges of tough competition and an uncertain economy don't give Wilkie pause. In times like this, he believes, a business should concentrate on doing what it does best. "We have no plans to change anything drastically or embark on any major ad campaigns or special offers—just great books, great prices and great service."
The Texas Bookman will have 800 titles on display at CIROBE 2003 and has increased its space by two tables for this year's show. Wilkie reports that history titles have been consistent sellers for the last several years. "We always do well with ancient and medieval history, although World War II and Civil War have cooled considerably. Art books are steady, but customers have become quite conservative in buying them due to their higher prices." He sees craft books coming back strong after several years of cool sales and notes a glut of cookbooks—"people are being very choosy about what they carry." As always, the company guarantees that all CIROBE orders will be shipped before Thanksgiving, ensuring, says Wilkie "that booksellers will have some new titles for their shelves and tables during the late holiday shopping season."
While Wilkie does not predict any significant changes in the bargain book industry in the next several years, he does believe that "everyone involved, both retailers and vendors, will need to examine who their customers are and concentrate on servicing that market. I don't envision a tremendous growth in new customers so we'll all have to deal with what is out there now. With more and more small bookstores attempting to supplement sales through the Internet, specialized selling (e.g., military history, music, film, etc.) could develop and become an area of moderate growth for all involved." —Lucinda Dyer
Dee Mitchell, Half-Price Books
Poor Economy = Good Business
Dee Mitchell, executive v-p for acquisitions and proprietary publishing at Half-Price Books, the Dallas-based chain, has seen his company grow over the course of three decades from a secondhand book business with one retail outlet to an 80-store chain that offers a mix of remaindered titles and off-price books as well as used titles, audio, video and software. As of two years ago, there's also an online site, halfpricebooks.com, which showcases 20,000 book titles and 3,000—4,000 audio and video titles. "There seems to be no shortage of material," Mitchell says, reflecting on the current state of the business. "We've been offered as good as any in our history and we're taking advantage of it, buying as much as we can."
A lot of people are selling, he says, allowing the company to make more buys in the used-book area than ever before. He describes Half-Price as "pretty aggressive" in what the buyers look at and bring in. Especially strong right now is the children's division, Mitchell says, with customers—parents and grandparents—taking advantage of low prices and plentiful merchandise to snap up "armfuls of books at $4.98—$7.98 each when they see they don't have to spend $20 on a new title." The kids' department, like the adults', carries software and DVDs, an area which Mitchell calls a growing aspect of the business "but still fractional compared to book sales."
What's doing well? Books on yoga and Pilates, and the perennial favorites of cooking, crafts and university press titles on art, philosophy and history. "More and more people are doing yoga, but suddenly the market's becoming saturated," Mitchell says. "You can't sell every single yoga title." One surprise, he says, is the success of boxed sets, books that come with added features ranging from juggling balls to sushi rollers, card tricks, tarot packs and voodoo dolls. "I resisted the sets at first, but they are an area that has suddenly taken off. I thought they would just take up space and come open in the stores. Instead, you just sell them all day long. This sort of packaging began to appear last year and has proved to be some of the most successful new product on the bargain market."
Overall, Mitchell explains, Half-Price buyers are watching specific titles' sales more closely than in the past. "We have in place systems that allow individual markets to reorder on an as-needed basis from a dozen or so of our major vendors. The immediacy of this system is keeping a steady flow of each market's most sought-after material in constant supply."
Mitchell characterizes the bargain book business as more fun than other aspects of publishing. "There's more activity. We're not waiting for the next Harry Potter to come out. There's always something we can take advantage of." A lagging economy is good for his business, he says. "People are watching their money, and they can watch themselves saving money while buying bargain books."—Suzanne Mantell
Tamara Stock, Daedalus Books
Missing the Large Independents
PW caught up with Tamara Stock, co-owner of Daedalus Books in Columbia, Md., as she was preparing for her autumnal sojourn to remainder trade shows. In the weeks before CIROBE, Stock, like most other executives in this business, will do a sweep through Europe—land in London for CIANA, hop over to Frankfurt for the BookMesse—and then fly back to Chicago just in time for the show.
Stock does not place much, er, stock in prognostications about the future of the bargain book business. "There are changes all the time," she says, "but in the long run, not much of it is lasting and nothing really changes." As co-owner of the second oldest remainder firm (Book Sales being #1), Stock has seen plenty come and plenty go. "A company can be huge, dominant in its sector, as B. Dalton was in the '80s, then over the years just kind of go away. Twenty years ago, it would have been hard for me to believe that Dalton now only accounts for a minuscule percentage of Barnes & Noble sales." Yet everything, somehow, remains the same. "Either the industry is consolidating," she says—referring to the events of the last several years, which saw the absorption of booksellers and publishers large and small by bigger fish—"or it's spinning off and decentralizing. Vivendi's recent sale of Houghton Mifflin is a case in point."
"If you had asked me just five years ago about the state of the industry, I would have told you that we were all going to be out of business soon because of the e-book and print-on-demand technology. But it didn't happen, happily, because great fiction and art books, the kind of titles that are our specialty, are resistant to the new technology. And people still want those books."
According to Stock, only one development over the years appears to be a permanent fact of life today. "Our customer base of large independent stores has considerably diminished and I don't see it returning," she tells PW. "The actual number of accounts that we have has remained stable, but the number of accounts ordering $1,500 net and above has dropped considerably. I personally wish things were the way they were 25 years ago," she says wistfully, "but they aren't, and it's not the end of the world. We are finding other markets, new publishers and unexpected opportunities all of the time; that keeps us going."
If she has any concerns about recent trends, they are chain stores' undue influence on publishing decisions and the lack of exposure of younger booksellers to a variety of small presses. "The rumors one hears about chains dumbing down the books being published is worrisome, but I also see new small presses doing original and interesting things. These are the kinds of books we're interested in, but I'm not sure new booksellers are seeing the new small press titles or appreciating them." —Margaret Langstaff
Shinu Gupta, A1 Overstock
"Something About Books Is Unbeatable"
For Shinu Gupta, chairman of the Internet-based remainder wholesaler A1 Overstock, headquartered in New Jersey, the future of the bargain book business is wide open, with the expansion of the chains driving the supply. "Hurt books have really increased for remainder wholesalers because of the chains," he says. "They return a lot to publishers and those books are available to us, so as long as the chains keep expanding their business, the future looks good."
The Internet, too, has helped to push the business forward, Gupta says. "We get hundreds of people showing up at CIROBE, including many mom-and-pop operations. They'll buy 500 books to put on Amazon Marketplace. These people place good orders and come back month after month. It's meaningful business." He lauds CIROBE as a driving force: "It's the most important trade show in the world for remainder wholesalers and will continue despite competition from other shows. It's got great timing and a great location."
Among the company's strongest categories are art, sciences, photography, architecture and some literature. Business books are currently doing well too, along with cooking, books about house and home, women's health, parenting and self-help.
Gupta and his associate, v-p Ben Archer, concur that the perennial gloom and doom prognostications about the end of the book never come true: book sales keep going up and up. "Something about books is unbeatable," Archer says. "Bargain books fit into that scenario. How can you beat the value of a dictionary for $10 or a novel for $5? We have a very good feeling about the future. Twenty-three percent of Amazon's business is coming through the used-book end at Amazon Marketplace."
A1, which is online at A1books.com, started as an Internet-focused and Internet-based business, and about 60% of its business is done via the Internet, including by people who come to CIROBE. But, says Gupta, A1, like other remainder wholesalers, also sells out of its warehouse via appointment. "We did this from the beginning. It helps to have the Internet because of the live inventory online function. But people like to see and order in person, too. They like to see what's coming off the truck." The warehouse is 30 minutes west of New York City, in Fairfield, N.J.
Gupta says the company's best strategy is its great technology. "We have really good data in place. We watch bestsellers by category. We can snap up books others might miss because we know what's selling well." Among other features, the A1 Web site has a "new arrivals" function that allows buyers to see all the titles that came in since they last looked. "Our strategy," Gupta tells PW, "is to grow the company with more quantities and bigger buys."
The company is also venturing into the brick-and-mortar world: its first outlet, a 3,200-square-foot store called A1 Value Books, with 12,000 titles, opened last month opposite a branch of Barnes & Noble in Morris Plains, N.J. If things go well, more retail shops will follow. —Suzanne Mantell
Jeff Press, World Publications
It's All in the Family
In the 19 years since Jeff Press and his wife, Gail Press, founded World Publications, the company has grown from their garage in Bridgewater, Mass., to a 250,000-square-foot facility in North Dighton, Mass., and a showroom in New York City. Press's roots in the remainder business go back even farther—his father, Bernie, founded Modern Book Distributors, which closed in 1984, and his brother Mitchell owns West Coast Bargain Books in Bellingham, Wash.
For Press, one key to a successful bargain book business is breadth in inventory. "We're really quite diverse," he says. "We carry everything from coffee-table books to children's books. We're heavy in novels, former bestsellers, hurts, everything. We stay away from textbooks and mass market paperbacks." Even so, he notes that customers have become much more selective. "More and more, even in bargain, everybody wants the A titles. You can't sell a title if nobody remembers it. Titles we may have bought in the past, B titles, we don't buy much; nobody wants C titles."
In addition to buying up bargains and hurts, World Publications publishes promotional titles under JG Press. "We have a library of 500 titles we picked up over the years from bankruptcies and companies that have gone out of business," says Press. Our Times: The Illustrated History of the Twentieth Century, a photo-packed book that cost its original publisher, Turner Publishing, $2 million to produce in 1995, has become one of World's bestsellers. Last year World re-released it as Twentieth Century and sold 200,000 copies. Now, says Press, "we're repositioning it as Our Lives and Times and updating it to include the war in Iraq. It's a unique way to give new life to a book." Other promotional successes include History of the World, which sold 100,000 copies last year, and books on the military, such as rejacketed and updated editions of James M. Morris's History of the U.S. Army and History of the U.S. Navy, Jack Murphy's History of the U.S. Marines and John Westwood's History of the Middle East Wars. "Promotional books are something you can count on," says Press. "Right now it's less than 20% of our business, but we plan to grow it."
As for the bargain business overall, Press is more pessimistic. "Usually when the economy is down, bargain seems to do better. This year I'm not so sure," he says, although he notes that World Publications is holding its own. "The first half of the year nobody did well. The book business itself is just so unhealthy. Temporarily if publishers are in trouble, they have books to dump. But long term, if publishers aren't healthy, bargain won't be. The joke is that ultimately there will be one publisher and one account." The corollary, which Press neglects to mention, is that publisher and account will be one and the same. —Judith Rosen
Deborah Hastings, Federal Street Press
Backed by a Respected Brand
Federal Street Press, the promotional imprint of Merriam-Webster, published its first title in 1998. As publisher Deborah Hastings explains, "We took the solid, respected and continually updated Merriam-Webster database and created high quality reference works at low prices. The consumer quickly realized that our products were better and more reliable than what was out there and that our prices were really fantastic." Before Merriam's move in this direction, Hastings tells PW, the company "really had ceded the promotional book market to others." With Federal Street Press, Merriam-Webster now has a presence in all markets.
The big picture in promotional publishing these days, Hastings says, is shadowed by the fact that the large bookstore chains are beginning to do more and more proprietary publishing themselves in order to beef up their profit margins on products by reducing the cost of goods sold. This is shutting out some promotional publishers altogether, and heating up the competition among those still in the game. "We've worked with a number of bookstore chains on a proprietary basis to help them produce under their own private label dictionaries and reference works," Hastings says. "It's a fact of life; the chains want to have their own publishing programs because they think it's in their best interests. Their markups on products they manufacture themselves is much higher than books they retail from publishers. If a promotional publisher can work with this reality profitably by somehow helping the chains accomplish this, all the better."
Another inescapable reality of the promotional publishing scene today, Hastings says, is the intense price war going on among packagers who create four-color bargain books. "The fierce competition in this area is a factor for everybody in this business,"she says. "Publishers' margins are being affected by forcing prices down as low as possible, I'm sure. But, on the other hand, they're also getting certain production economies, which are helping them lower the prices.
When I talk to retailers about prices, they say prices for promotional books are about the same as they were 15 years ago, some even lower. More efficient technology for book production has made this possible. Chains that do private-label titles sometimes do their own printing when it makes sense. In this end of the industry, as everyone knows who's been in it for a while, the cost of materials and manufacturing is pivotal. Most content is obtained through work for hire, licensing or from material in the public domain. This is more of a commodity business than trade publishing."
Hastings has learned a number of valuable lessons in the five years since the imprint's launch—fortunately, none of them have been painful or expensive. "Some of our initial assumptions weren't accurate," she says. "We thought we'd do more with retailers as a percentage of our total sales, but the demand for our books in the educational market has been much stronger than we anticipated. The brand name is something all educators instantly recognize and trust, and with our promotional pricing, they can get more copies of our $8—$10 dictionaries in classrooms and stay within budget."
With a strong brand and a well-thought-out product strategy, Hastings reports that planning for the future has become a fairly easy task. Demand for FSP titles remains strong, and she feels confident that the company has the information the consumer wants and appreciates. This is one Street, it seems, that knows where it's going.—Margaret Langstaff
Drew Montgomery, Chronicle Books
Plays the Bargain Book Show Trio
The first CIROBE, back in 1991, couldn't have arrived at a more propitious time for Chronicle Books, reports Drew Montgomery, director of inventory management. "The show started up when we were examining how best to deal with our overstock and it really helped us focus. CIROBE offered us new customers outside of the traditional remainder wholesalers while giving us the opportunity to really nurture relationships with the wholesalers."
These days, Montgomery and Chronicle attend all three industry shows (Atlanta, Nashville and Chicago). "Since these shows came along," says Montgomery, "we do the majority of our business there—maybe an odd remainder bidding between shows—but they offer us not just frequency but ease of dealing with people." At the recent show in Nashville, Chronicle offered some 150 titles from its adult trade, children's and gift lines. "Judging by the number of titles we sold in Nashville, there seems to be quite a demand from both retailers and consumers. Regardless of what else is going on with the economy, bargain book sales just play right along."
At the upcoming CIROBE, Montgomery anticipates offering between 100 and 130 titles. Hot for Chronicle this season are cooking titles ("we're known for the quality of our cookbooks"), how-to books and works on the Civil War. Montgomery also reports a demand for the publisher's Masterpiece Editions, which feature a DC Comics action figure and a book about that character. Chronicle first introduced their gift titles to CIROBE in the late '90s and now, reports Montgomery, "they are a very important part of our business."
Montgomery anticipates a repeat of Chronicle's successful appearance at last year's show. "As the company continues to grow and have more overstock," says Montgomery, "we've gotten much more aggressive about pricing. The result is that we're much happier about the overall quantities we've been able to sell." It's not just CIROBE's goal to sell overstock that has impressed Montgomery over the last decade—it's the people involved in the bargain book business. "Given the nature of the bidding process, the fact that this is a very fluid business without set rules—just an unwritten code of how everyone treats everyone else— it's filled with a lot of very nice people. This is a very competitive business, but everyone keeps a sense of humor about it."—Lucinda Dyer
Steven J. Wilson, Kudzu Book Traders, LLC
Spreading into Non-Bookstores
Like the vine for which it is named, Kudzu Book Traders in Cartersville, Ga., has found nourishment where other bargain wholesalers have failed to take root. "It's a changing world. The first eight months of 2003 posed many challenges," acknowledges president and CEO Steven J. Wilson. Nonetheless, Kudzu is poised for growth. Recently it hired long-time industry veteran Thomas F. Sack, who won a Distinguished Master Bookman Award in 2000, as v-p of procurement, in addition to three sales representatives to call on the nontraditional book market.
Kudzu is growing in other ways as well and is looking for new quarters that it won't have to share. Currently the company is housed in a 180,000-square-foot facility with two other Wilson businesses. "We plan to move into a much larger facility in the first half of the year," says Wilson, who is bullish on the state of the book business overall. "We wouldn't be moving if we weren't positive about the future. It is my opinion that the traditional book business will pull out of the recent slump in the fourth quarter of '03 and return to double-digit growth for all of '04." In other developments, Kudzu has begun developing a business-to-business Web site (www.kudzubooktraders.com), which Wilson anticipates will not be ready until the end of next year. For most customers, he finds it cheaper simply to make Kudzu's books available on Amazon.com. "Ever since Amazon came out with its zShops," he says, "we've found it much more advantageous to be in it."
In order for Kudzu to continue to expand, Wilson looks to the nontraditional book trade to pick up the slack. "We're trying to broaden our customer base and broaden the people we're buying from," he says. "We started with the retail outlet concept and we decided we were just going to concentrate in the core industry in the book market and then expand into Filene's Basement and Pottery Barn. It's been growing . I think we've all weathered the storm in the traditional book market, the businesses that are left. The traditional industry is going to continue on its path of superstores and fewer mall stores and mom-and-pop stores."
For Wilson, one element that is key to Kudzu's continued success in the bargain book business is keeping prices down. "It's hard for people to pay $24.95 for a book," says Wilson. "We're trying to deliver our product at a lower price to our customer. That's the philosophy we undertake. We try to have cost controls internally. The difference is whether we fly first class or coach to this show to provide the lowest cost to our customer so they can pass that on." —Judith Rosen