Monday, February 22, 2010

8 Lessons from a Local Retailer's success

Over the past twelve months, many shop-fronts across the nation have gone dark. Restaurants, fashion boutiques, housewares, furniture and fixture shops. Yet some retailers continue to thrive, despite their high price points or seemingly luxury or non-essential offerings.

One business that is a true passion of the heart is the book selling business. While many businesses have been both created or rendered obsolete by technology, bookstores have certainly faced their set of challenges. First it was the big box giants like Barnes and Noble, where you could sip your Starbucks and cozy up on a couch and flip through discounted first run best sellers. Then it was Amazon with its convenience of online shopping, book reviews and, unbeatable prices and free shipping. And now, book stores have to brace for another challenge with the advent of the Kindle and iPad.

I’m sure all of us can name at least 2 or 3 of our favourite bookstores that have disappeared. Yet despite the odds, some independent bookstores continue to thrive. Or should I say survive? I doubt the bookstore business is a high margin business – far from it. Those who stay in business I’m sure are working on very thin margins.

One small chain with 11 stores in the Bay Area that has managed to thrive is Books Inc. What are the lessons that book stores, small chains or other independent retail businesses can learn from their success?

  1. Location: They stay away from malls and locate in communities with heavily foot-trafficked areas
  2. Footprint: They have found a smaller footprint (3500 square feet) works best
  3. Financial Management: They are scrupulous about costs – book returns, payroll, payroll hours allotted to each store
  4. Locally Relevant: Much attention is paid to the needs of the surrounding community. Books Inc. buys for each individual store (versus one size fits all). They also include special shopping nights with a portion of proceeds going to local schools and discounts for community book clubs
  5. Customer Service: Friendly and helpful is absolutely key as is staffing the store with people who are passionate about books and enjoy sharing their knowledge and passion with others.
  6. Books Inc. is a destination: They host numerous author readings and book clubs. Some of the clubs include: Classics I forgot to Read, Desert Island (the books you’d want to take on an island), and Down to Science. They also host kid clubs and a writer’s workshop
  7. Leveraging Technology versus Fighting it: While they’ll never be Amazon, they have developed their own affiliate program and you can download eBooks so customers don’t have to shop elsewhere.
  8. Civic-minded and Industry involved: Books Inc. is also very active civically and in their industry. Book Inc., as members of the American Booksellers Association, protested to The Department of Justice, challenging the predatory pricing of best-sellers from Big Box retailers - Walmart, Target & Amazon. Book Inc. are also advocates for shopping local and are members of
    "The mission of the IndieBound Community is to help people across the United States share and find independently-owned businesses. By connecting indie-conscious people with local businesses, we're working to strengthen the health of Main Street ecosystems across the United States".

Ultimately, people vote with their wallets. Every purchase directly impacts the composition and character of one's neighbourhood. If independents can't compete on price and in some instances convenience, then the added-value needs to come from somewhere else. The competitive advantage a local retailer owns is its closeness, connection and knowledge of its community.

So where will you cast your vote today?

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