Citing slim margins, high returns and the increased cost of maintaining inventory, company founder and CEO Sandy Jaffe announced that Booksource will close its retail distribution division as of December 23. The company will continue to distribute to the k—12 educational market and will continue to operate its library-binding division, San Val Inc., and its publishing division, Peaceable Kingdom Press.

"This was an extremely difficult decision," Jaffe said. "However, the economics of the situation make servicing retail bookstores economically unfeasible. So much of the business is being consolidated into the chains and the larger independents, and they buy direct. I don't feel like there's great opportunity in distribution. We're just fighting an unwinnable battle."

The decision to exit the retail market reverses the strategy Booksource began about one year ago, when it expanded its retail operations and opened a warehouse in Fresno, Calif. "It sounded like a good opportunity, but it wasn't as easy as we thought it would be," Jaffe told PW. "We didn't get enough growth to support the warehouse volume." The company closed its Fresno operation November 19 and laid off a dozen employees. Jaffe said the wholesaler will reduce its title base from between 45,000 and 55,000 to roughly 25,000 titles.

Jaffe, who in recent years had ceded much of the day-to-day running of the company to his three children, will cut back to part time. "My main responsibility is running the retail side of it. But I'm still the majority stockholder," he said. Neil Jaffe, president, will continue to run the book bindery and the educational market, while COO Gary Jaffe will oversee warehousing. Donna Jaffe is general manager of Peaceable Kingdom Press.

The Booksource will continue to receive returns at its St. Louis warehouse until January 28. The closure of the Fresno facility, coupled with the bankruptcy of Bookpeople this summer, leaves Partners/West Book Distributing in Renton, Wash., as the only general independent wholesaler on the West Coast.