Five ideas that can help Powell's Books avoid bankruptcy

Powell's Books, a nearly 40-year-old book retailer with six stores in the Portland area, including the 68,000-square-foot flagship, Powell's City of Books, which is described as "the most vaunted brand in the independent bookstore world", is in trouble.

According to article on the OregonLive.com, about two weeks ago Powell's laid off 31 employees due to a drop in 2010 sales - In an email memo they sent to their employees, the company explained that "sales for this fiscal year are down and we expect this trend will continue. The largest decreases have been in new book sales". The company also announced it is taking other measures such as suspending company 401k contributions for a minimum of a year and a pay freeze will go into effect July 1st for a minimum of a year.

The problems of Powell's are not very different from other book retailers, both independent and large ones and Tom Gillpatrick, a retail marketing professor at Portland State University explains it very clearly in the article: "The Powell's model that has been so successful is really being challenged by new competitors, new technology and new shopping habits. They need to go back and rethink that business model, otherwise it'll just be ratcheting down and down - unless there's some huge wave of nostalgia."

It's clear that the problems in Powell's Books are structural ones and that if no major steps will be taken in the next year or two, Powell's with their 400 to 600 employees (depending on season) and $68.4 million in revenues (source: Hoover's), will be in a much more difficult situation that might jeopardize its future.

So what Powell's Books can do to reverse this unfortunate but nevertheless foreseen trend? I'm not sure we got all the answers but here are five ideas that might be helpful:

1. Make a better use of your strengths - Integrate your digital and brick and mortar strengths - If you offer great service in the stores, try to offer it online (how about online live help to find the right book)? If you offer a great web experience on your website, why not make it even greater for your stores' customers with exclusive materials available only for those who visit Powell's stores (just like Starbucks for example)?

2. Provide local incentives - It's obvious that Powell's can't compete on price, and it's also clear that Powell's want to increase sales at stores as they don't want to stay an online business. To get there they need to extend their best comparative advantage - being a local business in Portland. The problem is that just being a local business is usually not enough and works in very few places (see Greenlight Books for example).

Powell's should adopt a strategy that is based on providing local incentives - for example partnering with other local businesses and offering discount coupons for customers who purchase in Powell's stores (get a $5 discount in a local coffee shop for every 3 books you buy for example) and in these local businesses (get a $10 discount at Powell's for every 5 coffees you order in your local coffee shop). This way customers will know they support local businesses and profit out of it at the same time.

3. Get POD into your stores (at least to one of them at first) by adding the Espresso Book Machine (check at McNally Jackson in New York). This machine can print in minutes affordable, library-quality paperbacks and can also print anything in the public domain, increasing the store's inventory by over 4 million potential titles. This is something that can really increase the value of a visit in your stores for your customers.

4. Offer a CSA-based program - If there's a place for a local supported bakery and a local supported beer, there's definitely a place for a local supported bookstore program. Just find the right way to make people enthusiastic and involved just like with CSA programs.

5. Find other uses for your space or reduce it - In the near future bookstores will see a decrease in their brick and mortar sales - more people will buy online both e-books and paper books. Therefore, Powell's should look for alternative uses of its space and will provide real value, or if there's no other choice close some of its stores. No matter how you look at it, supply must adjust itself to demand.

We want to see Powell's Books thriving and continuing to be "the most vaunted brand in the independent bookstore world", so I hope our ideas might be helpful and in any event I hope Powell's will consider and implement new and innovative ideas because it has to in order to survive.

Yours,
Raz @ Eco-Libris

Eco-Libris: Working to green the book industry!

The funniest bookstore in America!

Where? In Portlandia of course. See for yourself:



And here's another proof (if you still need one..):



Portlandia is a 6-part IFC Original short-based comedy series, created, written by and starring Fred Armisen (SNL) and Carrie Brownstein (vocalist/guitarist, WILD FLAG, Sleater-Kinney). Portlandia is the creators' dreamy and absurd rendering of Portland, Oregon.

You can watch it on IFC channel on Fridays at 10:30 PM ET/PT. Two episodes were already broadcast, so don't miss the rest of this great series!

Yours,
Raz @ Eco-Libris

Eco-Libris: Promoting sustainable reading!

The future of bookstores - business as unusual, local solutions and positioning for success

Three articles I read in the last couple of days reflected three different perspectives on the present situation and the future of Independent bookstores:

1. Business as Unusual - I learned from Publishers Weekly last week that NYC indie bookseller McNally Jackson will be getting an Espresso Book Machine, which prints POD books while you wait, by 2011.

Why this is business as unusual? The New York Observer explains:

Currently McNally will order a book for a customer if a desired copy is not on hand. With the EBM, the store would be able to print one out right there. Buyer John Turner sees the machine as a way to expand inventory. It also reduces the hassle and wait time associated with ordering books by request.

The idea is very simple - adding a tool that can provide readers with the capabilities of Just In Time (JIT) inventory that is even better comparing to what they can get when buying over the Internet, as it's faster and might be also cheaper.

The Espresso Machine is not a killer app, but it's certainly an important addition to brick and mortar bookstores that want to compete in the digital age and meet the needs of readers that are shaped by the speed and the easiness of the Internet.

2. Looking for local support - Portland Tribune had an article about the challenges booksellers in the city are facing ("Booksellers face the E-challenge"). Portland is well known for its love for books and bookstores. According to a study mentioned in the article, per capita Portland had the eighth most bookstores in the nation.

Booksellers who were interviewed for the article talks about their difficulties because of "a rocky economy and the rise of E-books." The booksellers in Portland understand there's a need in change, but not sure what to do - Sellwood bookstore owner Karin Anna says for example that “I think we will have to change. How to do it is the question.”

Their direction though is very clear - looking for support of their community. Roberta Dyer, co-owner of Broadway Books in Northeast Portland, explained:

“There are certainly fewer of us (local bookstores) than there used to be. Those of us who have weathered the storm so far have found support from the community and in our little niche in the neighborhood. We have a loyal customer base.

The only problem is what you do to not only keep this base, but also to increase it. It's very clear that no matter how supportive the people in the community are, they will have increasing temptations to use other channels for their book purchasing, whether it's because they start reading e-books or they look for cheap deals online.

Prof. Charles Heying, a Portland State University professor of urban studies and planning, whose book “Brew to Bikes: Portland’s Artisan Economy” will be published in October by Ooligan Press, said in the article that "People here [in Portland] still appreciate the touch and feel of a book" – but is this enough? can bookstores in the city rely on it? I am not sure.

I believe looking for answers locally is the right way to go, but bookstores in Portland, as well as in other places, need to redefine their business model and provide more value to their customers to keep their business thriving. And by more value I don't mean more of a good feeling, but real incentives.

Couple of weeks ago I suggested here a model that will provide bookstores customers with both personal monetary benefits and the feeling that they're contributing to the prosperity of their own community. This model is based on creating a collaboration with other local businesses to enable these businesses to provide customers with discounts for each other.

This is just one example, but I believe that many more models can be developed on the basis of a win-win strategy that will provide customers with more than just appreciation to their local bookstores. Appreciation and even connectivity, which Prof. Heying talks about, might be good for now, but definitely far from being enough as the customer value proposition of independent bookstores for the near and long-term future.

3. Positioning for survival and success - Jolie Bosman reported yesterday on the New York Times ("Bookstore Arrives, and Sides Are Taken") about a new bookstore, Books & Books, that recently opened its doors in Westhampton Beach, N.Y., stirring animosity in a town that already had an independent bookstore.

The article is presenting the questions whether there was a room in this little town for another bookstore, when the older one, the Open Book, is already struggling. Right now, it seems that the two indie bookstores are in sort of a fight between them, which is of course bad for both. Don't get me wrong - competition is good, but fight is bad. In this situation, it may well be that as one of the residents there, James Kramon, predicted, both stores be here a year from now.

So what's the solution? Positioning. If there's a room for two bookstores in Westhampton Beach, it will be just if both will be positioned differently. If both bookstores will offer the same products, atmosphere and buying experience than there's a good chance one or even both won't make it. But, if each of the stores will have a different feels, it can work. In times of growing challenges, both the Open Book and Books & Books should look one at another as an opportunity and not as a risk. This is their way to success.

Yours,
Raz @ Eco-Libris

Eco-Libris: Plant a tree for every book you read

The sun shines on Powell's Books

Solar Daily reported last week (thanks to Grist for the info) that Powell's Books, one of the U.S. largest booksellers, will begin using solar power at their Portland-based warehouse next month.

According to the report, the 100-kilowatt photovoltaic system (including 540 solar panels) positioned on the roof of Powell's 60,000 square foot warehouse in NW Portland, is one of the largest solar electric installations in the State of Oregon.

This is a great way of course not only to support the environment but also to save eventually money by reducing energy costs (payback on the investment is expected within five years). Michael Powell explains on the article that "it made perfect sense for our business financially, and it supports our values as a company. We are continually looking for ways for our business to lessen its impact on the environment."

Kudos to Powell's Books efforts! We definitely hope to see more solar panels on many booksellers' roofs. Solar systems offer a win-win deal that both helps the environment and saves money, and you can even find today ways to bypass the burden of the relatively high initial investment that is required to start using the sun to light your bookstore.

Yours,
Raz @ Eco-Libris

Plant a tree for every book you read!