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Village Books and an Economic History of Independent Booksellers

Village Books in Fairhaven, a historic part of Bellingham, is the center of life and a community meeting point for the area’s residents and book lovers. To say that Village Books is at the heart of Fairhaven, if not Bellingham, would not be hyperbole, and today in Professor Hart Hodges’s MBA microeconomics class at the College of Business and Economics here at Western Washington University we were visited by one of Village Books’s owners, Chuck Robinson.

Chuck spent an hour dropping wisdom on the decisions that he and his wife and co-owner Dee made throughout the growth of Village Books and the evolution of the book-selling trade during their ownership of this iconic store.

Village Books opened its doors in 1980. In 1982, it went from 1500 to 2200 square feet, and through successive remodelings in 1985, 1990 and 2004, grew to be the 10,000 square foot bookstore that we know now.

Prior to the 80s, retail book sales were dominated by department stores. Even places like Nordstrom’s were selling books. In the 1970s, bookstores in malls really took off with shops like B. Dalton’s and Waldenbooks. Walden was owned by Nieman Marcus, then K-mart, later rolled into Borders, which went public, and famously went out of business earlier this year. Chuck is not happy that Borders went away; he misses their camaraderie and their competition. Borders itself started off as an independent bookstore in Ann Arbor, Michigan in 1971 and made a name for itself by having a larger ordering system relevant to other bookstores and also was interconnected to other independent stores through this search system.

To paint a picture of how the business of selling books has changed, Chuck related that in 1990 the market share of independent bookstores was 33% and now it is just 10%. During that same time, the number of bookstores listed in the bookstore association dropped from 5200 to 1400. Some of the those 5200 were not so serious bookstores or operated in very small markets in isolated towns, but needless to say, those 1400 that remain in this country have to be very serious to survive the competition and changes in the industry. To give a comparison from other industries, independent retailers like clothing dropped from 59% of the market share to 48%, and in the food industry, from 71% to 64%, all due to the efficiencies or perceived efficiencies of larger operations.

It is notable to remark that Bellingham is the number 2 city in the United States in terms of concentration of independent businesses, which shows in the wealth of independent restaurants, clothing and toy stores we have in this town.

During the 20-some years between 1990 and now, massive technological changes in distribution and computerized inventories have shaped the book industry. Not to mention the gigantic elephant in the closet known as the internet. Village Books was ahead of the game with computerized inventories, which they began employing in their daily work as of 1985. Having a computerized inventory makes for much more efficient turnover. Many other bookstores didn’t follow this trend, and it is safe to say that they were some of 2800 bookstores that have ceased to exist since 1990.

One of the questions asked by the students was: “Why did you grow?” Chuck’s very simple response, “To get more profitable,” is a bit more complicated than it sounds because, as he mentioned, there are times when it seems like just operating an internet business through a phone booth would have been smarter in terms of profits. Village Books needed to take over a niche that might have been filled by other bookstores and, by growing, they could expand without letting others creep into their own business.

Books aren’t an item to make profits on. With an industry average of a 2% net profit, those that sell books do it for the love of the craft. In fact, the vast majority of books sold report negative margins. Reading between the lines, it’s the political tell-alls, the thriller bestsellers, the Steve Jobs biographies that keep bookstores open so that the rest of us who like real books can still read.

Chuck also spoke to the other big specter that haunts booksellers: e-books. As he said, they really are not as recent as a phenomenon as people think. Chuck recalled a big meeting he had with publishers from an industry council in 1997. Consultants from McKinsey and Company, one of the biggest and most expensive business consulting groups in the country, warned that “E-books would be some proportion of the market soon.” The phrase that stuck with Chuck, though, was McKinsey’s cautionary words, “But in fairness, we were also the people who told the phone companies that cell phones wouldn’t catch on.”

Although still more print books are sold in the United States, behemoths like Amazon are selling more e-books. Chuck wasn’t shy in his pointing his finger at Amazon as the company that most threatens his own. The big problem, as he put it, was that by undercutting prices Amazon had taken the value out of the book so that it’s nothing but a $9.95 slab of cardboard. Since Amazon’s rise, every publishing company in the world has had to downsize and lay off editors and others who add value to the business of books.

Chuck wasn’t slow to catch onto e-books. Through a partnership with Google e-books, who approached the American Booksellers’ Association, Chuck somewhat paradoxically sells just what might put him out of business. But he really has no choice in the matter. The e-books that independent bookstores like Village Books sell work on all e-reader devices except for the Kindle.

When it comes down to it, books are books and Chuck doesn’t really make a distinction between e-books and print books. Village Books sells more print books, but if the readers of the world continue to change over to e-readers in greater and greater numbers, it will be very hard for Chuck to justify having 10,000 square feet to sell e-books.

Interestingly, Village Books was selling books online before Amazon, which isn’t much more than a glorified Sears, a catalogue company that undercuts its competition in its own self-interest. All they’ve changed is the system, for better or worse. While they’ve helped some, Amazon has also made a lot of enemies. Undoubtedly, they have changed the way the book industry operates. When they started, books all came from the same warehouse, whether they were ordered by Village Books, Amazon, or any other bookseller.

All e-books are sold at the same price and you get the same electronic delivery but the choice of which bookseller you’d like to support. The only device you won’t get any choice from is a Kindle, though. Those who sell e-books get 23% of the price. E-books still represent less than 1% of Village Books’ sales.

E-readers like the ultra-low priced Kindle and now the Nook, coming in at $95, are simply following the model of Gillette that gives away the razors and sells the blades. By giving away the readers and selling the books, it will be interesting to see what the future of libraries and bookstores will be with readers. Chuck mentioned the Open Course Library, a set of textbooks that the state of Washington will be experimenting with next year, but it is commonly known that three quarters of students prefer books to online resources. As an educator myself, I’d like to see a better stab at using electronic materials in classrooms instead of the overpriced textbooks we are currently forced to buy, which have really put a damper on students (18% of our educational costs) in a time when it’s already expensive enough as it is to go to school.

What Village Books does better than Amazon or any other bookseller for that matter, its core competency in business-speak, is the ambience and sense of community it creates for the city of Bellingham and the Fairhaven community. The people who work there are more knowledgeable and more personable than any Amazon algorithms and the store is a beautiful space to have a cup of coffee, read, and write.

They also do an excellent job of promoting local authors like myself. I’ll be at Village Books January 14th at 7pm promoting my book Pick-Up Dogs, an adventure road trip story about the healing power of dogs. By that time I’ll have the e-book version of my book available. Although I go through about 50 to 100 books a year and at any one time  the pile of books on my nightstand is several feet high, I still haven’t made the jump to get an e-book. But I’m probably not the ideal customer, as I get most of my books at the library. But after meeting Chuck, I’ll make a point to get the few books I buy a year from Village Books.

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