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Canada’s Indie vs. Chain Store Battle: Who’s Winning Where?

News broke yesterday that Greenwood’s Bookshoppe, one of two major remaining independent bookstores in Edmonton, will be closing in 7-10 days. This will leave the city with only one major independent bookstore.

“We’re going to seduce them with our square footage, and our discounts, and our deep armchairs”
The closure of independent stores, ostensibly because of competition from chain stores offering bigger selection, lower prices, and more amenities, is nothing new (though today, the squeeze is as likely to come iBooks, iTunes, online retailers, and increased online sharing). That quote comes from the 1998 movie You’ve Got Mail, where the owner of a major book chain opens a superstore on Manhattan’s Upper West Side. Of course, his store puts a second-generation independent book seller out of business, and then they meet over the internet and start dating. The tension between chain stores and locally-owned businesses plays into this romantic comedy which I imagine would feel dated to watch 14 years after its release. But I digress.

Books
Flickr/Ricky Leong
A sign in the window at Pages on Kensington, a popular independent bookstore in Calgary.

The Indie vs. Chain Battle Today
With the Greenwoods closure on my mind, I wanted to see what I could find out about the state of book and music stores in Canada. Using information on trade bookstores from the Canadian Booksellers’ Association, and information on participating stores in Record Store Day, I identified a number of independent (and small chain) stores in each major Census Metropolitan Area. In the end, 12 metros (of the 15 largest) had more than 5 combined.

I also wanted to see what kind of relationship existed between independent stores, and major chains. Attrition has left only one major chain in each industry, so I counted Chapters/Indigo/Coles locations and HMV stores as well.

Metros with the Most Independent Book and Music Stores

Metros with the Most Big Chains

The Relationship Between Indie and Chain Stores
With a few exceptions, most metros don’t have a huge variation between the number of indie and chain stores.

Here is a list of the 12 metros with their number of independent and major chain stores:

The first thing that stands out is how both Edmonton and Calgary have a significantly higher number of chain stores. If you want one reason Greenwood’s went out of business, think about this. Metro Edmonton, with a little under half the population, has the same number of Chapters/Indigo/Coles locations as Metro Vancouver.

The rest of the metros on this list don’t see a significant difference (except indie store hotbeds of Kitchener-Waterloo and London, Ontario). Of course, this doesn’t speak to the stability, or profitability of independent stores. It’s also worth noting that Edmonton independent record store ranking is in the second cluster of cities trailing the big three (Toronto, Montreal, Vancouver). Perhaps, as Andy posited, the problem in Edmonton is with the shops, not the market itself.

More to the point, as I alluded to earlier, both independent and chain stores are under threat from a changing industry and consumer habits. I wrote about the changing bookstore, with some ideas for future models, in May. Book (or record) stores will be around in some form, but likely in smaller numbers, at least for the foreseeable future.

Given that, what I do feel confident in saying is that, unless they continue to adapt and evolve, consumers shouldn’t be surprised to see their favorite book or music store – independent or chain – close up shop.

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Reimagining the Bookstore

I read a story yesterday proposing a new model for bookstores. That bookstores have struggled in recent years is a secret to no one, with high-profile closures like the Borders chain making headlines, to say nothing of the many communities that have lost long-time independent shops.

The author of this post was writing about one of those stores in his community. His new model was summarized as follows:

Once past the bestsellers, you find an Espresso Book Machine, churning out volumes that customers have special-ordered. (In his post at Digital Digest, Sanfilippo indicates that three million titles are available for printing on demand, but in an e-mail note he tells me it’s actually seven million.)

That Book Place also has shelves and shelves carrying a mixture of new and used books, with price stickers giving the customer a variety of options. You can have a brand-new copy shipped to you the next day, or buy it used, or rent it, or get it as an e-book. If you take out a membership in the store, you can borrow a book for free, or get a copy without the Digital Rights Management (DRM) scheme that limits it to use on a specific kind of device.

In effect, the bookstore becomes a combination lending library and product showroom. “The books in the store shouldn’t be the focus of the revenue,” writes Sanfilippo. “Instead, the revenue might come from membership fees, book rentals, and referral fees for drop shipped new copies or e-book sales.”

To this, Mary Churchill, who tweeted the link, added the idea of “tables with e-readers embedded and of course, drinks and magazines”

These all struck me as good ideas, and things that . As this article points out, independent bookstores have been resilient, holding most of their business. Yet, it remains to be seen how long this can last in the face of growing e-commerce and e-reading.

Powell's Bookstore
Powell’s Bookstore in Portland, the largest independent book seller.

I enjoy visiting bookstores, and think they have a lot to offer to customers and to the community. While some will always be able to survive as general book stores, I see a handful of strategies that can help independent stores prosper going forward.

Become More of a Third Place
Rather than simply offering items for sale, bookstores can become gathering places, encouraging customers to spend more time there for more different purposes. Mary’s suggestion of drinks for sale is a natural step in this direction; while many booksellers have a coffee bar already, it’s adjoining rather than embedded in the store. A greater integration would encourage customers to spend more time in the store, and draw potential new ones in as well. The provision of communal space that can be used for meetings and events is another possibly avenue.

Embrace Technology
Similarly, the suggestion of e-readers would make a lot of sense. It would be a way for customers to browse before purchasing titles, and access newspaper/magazine subscriptions (perhaps under the membership model suggested below). Having bookstores facilitate downloads of e-books/articles is an opportunity as well.

Specialize
Physical stores will never compete with the selection of online sellers, but they can develop niches in the marketplace, and stock well in those areas. Which leads to the next point…

Add Value Through Knowledge and Expertise
The biggest competitive advantage a store can offer is knowledge and expertise. This comes from employing and cultivating knowledgeable staff who are passionate about books and reading. One of my favorite activities at a bookstore is simply browsing and discovering new titles. Having staff who are familiar with them, and can recommend new work based on my interests, is an invaluable service, far beyond Amazon’s “Customers Who Bought This Item Also Bought” function.

Give Your Customers a Stake in Your Success
I like the idea of selling memberships (a co-operative model, or membership-based non-profit/non-dividend structure may work well). Author talks, access to staff expertise, and access to books/magazines would help sell. For example, if my bookstore had e-readers (or physical copies, I suppose) where I could access a number of magazines on-site, as noted above that would be worthwhile (assuming a cost savings compared to subscribing on my own). Independent stores are unlikely to compete on price, so other benefits to members and customers are essential to succeeding.

These are just a few ideas. As much as the bookstore business facing challenges, I also see a lot of opportunity to evolve and succeed going forward.