Here is a sneek peak of my latest article for CBA. I will pull the post soon until it gets published in February.
Please note, in this article I go back to basics as in previous articles, I have discussed the digital impact. In the future, I will seek to opine more on the role of the publishers, music companies, radio stations, etc. on this.
It is also important to note that the CBA industry bookstores traditionally offers more than just books. They offer, music, movies, and an assortment of gifts. So, point #1 plays off of this. However, the point is valid in its purest sense with regards to adaptation to traditional and primarily book centric product mixes at bookstores who don’t offer these other categories.
But for now, here are my unedited two cents…
Can the independent bookstore survive much longer?
At any mention of ideas for how a bookstore can survive, the overwhelming and immediate response is either silence, or no way. Now, it’s not that these voices want them to go away, it’s just that they see it as unavoidable within this digital environment and shrinking margin shares.
However, I have said in the past and will continue to say… no one can communicate with the consumer better than the retailer and in this discussion… no once can communicate with the book buyer better than the book reading employee.
And there lies point #1 for independent bookstores to survive, you better, if you haven’t already, take a long hard look at who you have on the schedule.
Do you love to read? You’re hired!
I recall the impact the iPod revolution had on bookstores who sold music. It was the holidays of 2004 that saw a whole lot of people enter 2005 with a new way to listen to music between their ears and in their pockets. Of course, over time, at least where I was, we saw our music sales fall from 21-22% of total overall sales within our regional chain to 14-15% almost overnight.
In this day and age… every point of margin counts. Matter of fact, many are still running their business today completely unaware of both category margin of sales as well as profit margins within the categories. But, I will leave that for another point.
With music sales dropping so significantly so fast, we tried everything to fill those holes. Yet still, where did the sky is falling mindset lead us? Into a deeper hole.
As the category sales shifted away from CD’s, but remained solid in books and Bibles, one thing that did not change was who was on the schedule to work.
I recently asked a CEO from one of the top publishers on their thoughts as to how bookstores can be profitable in the future. Here is their reply:
“I think we will see a revival in local bookstores, provided they create an inviting space where people can discover great new books and talk about them. The problem with the chain bookstores is that they are generally not staffed by bookers. As a result, they end up competing against Amazon on price and selection—two things they can never win on.”
Did you read that closely? For years, we have been speaking a lot about the impact of price and selection via Amazon or even the Big Box stores out there. But, what I love about this quote is the mention of the need to staff bookers.
As I had surveyed in the past how we were scheduling our stores and with whom, I had noticed in some cases that though music had leveled off at 12% of total sales for a particular store, we were still spending 50-60% of payroll dollars to these stores staffing music lovers, not readers. Great people, but, when we are selling a myriad of core products as we historically have, we must staff accordingly to more accurately reflect category shares within our stores.
In this, we must return to our roots. We must major in the majors because in our industry, our majors are our niche. Why chase down all these smaller undeveloped niches when we haven’t even mastered our major?
I still believe that if you have a knowledgeable staff person that can communicate with people effectively, and yes, they can be found without paying a zillion dollars per hour, they will become your customers best friend because they will know their stuff, your customer will love that they know their stuff, and add ons will occur more naturally (as well as more regularly)
I know you understand this, but how do we hire this way?
In my experience, the stores that staffed this way… ALWAYS had the edge over the other stores.
However, to hire accordingly and to know how to best spend your available payroll dollars, you must also know your business. I know this sounds extremely basic, but… if you do not know your business, you will eventually have no business.
Which brings us to point #2… Know your business.
How many pennies do you have left in your pocket?
Do you know what percentage of sales each of your categories is carrying?
Do you know what your profit margin is for each of these categories?
Do you know your product turns of each category?
What about the sub-categories?
Do you know who is purchasing these categories and how often?
Does your in stock inventory reflect this data?
I spoke recently at a mini forum for retailers with a friend of mine who runs a great group of regional stores. It is his belief that we essentially are in a game of numbers. In this, many stores, without knowing it, are within 2-3% points of either succeeding or closing.
2-3% points! Is that all?
Of course, when you are counting pennies on the dollar with how much it costs to run your business, I do realize it is a lot more than just publisher core lists and margins offered. But, it does all apply.
How much are you getting out of each penny you spend? There is no room to sweep a few pennies under the carpet and not worry about them.
You only have so many pennies to spend, make the most of them.
Of course, some you can control and some you cannot as they are fixed costs. In this, all the more reason for mastering point #1 above.
At closer look at the data, you may find that you…
Are not getting enough out of certain categories
Are not getting enough out of your payroll allotment
May need to adopt a bargain skid strategy to your assortment
May not have any more pennies left to give
Whichever the case, know your business. If my friend is anywhere close, take a moment to catch your breath. Can you find 2-3% of margin? Do you know what you are looking for? If not, ask.
But, know your business first. In this, it is your competitive edge when meeting with your suppliers. only you know what YOUR core list is and who YOUR core customers are as well as how YOU best communicate with them.
Which brings me to my final point…
How exactly do you communicate with your customers?
If you haven’t noticed, the shift is not only on… it has already happened. Gone are the days of our only option being the traditional one way call to action marketing strategies.
In many channels, some still can be effective. However, there is a new game in town and it is much more than a one way monologue. It is dialogue, it is digital, and it is not going away.
I think what makes this new game unique is that the more you talk about the price, the selection, the whatever… the more it is a turn off. However, the more you interact with your community, the more capital you will gain to then offer your price and selection.
In this, do you know how effective your marketing channels are? Are you spending accordingly? Are you shifting any of those dollars towards new media?
A recent survey of marketers found the following:
The most popular new media tools were 88% Twitter and 87% Facebook among the top 2. When asked where they planned to increase usage of these platforms, they responded with: 71% increased Twitter usage, 76% increased Facebook usage, 67% increased usage on LinkedIn, and 73% increased usage on You Tube and other video services.
How does this play with your current direct mail, radio, or TV marketing efforts?
There is a reason why they are all going there. With over 500 million people on Facebook and Twitter the fastest growing search engine on the net, there is a lot of business to be done there.
That being said, is that where your customers are? If so, you better get there and get to know them better.
However, with that many people on there and so many marketing efforts direct there, how will you stand out?
My two cents…
Be relational more often and informational less often. (but not all together, you are still a business, after all)
If you choose to utilize the more traditional methods of marketing, don’t just sell out to the highest bidder or who will give you the most co-op for the campaign. Often times, it comes off that way with the customers, too. Just because you are marketing to them, doesn’t mean you are marketing to them what they want. Which, goes back to the importance of point #2 in knowing your business.
Know what your customers want and then go get accordingly what you need. No one wants to waste money on marketing efforts for the sake of making an effort.
In the end, as you seek to communicate with your customers, be relevant, know where they hang out and know what they want.
Otherwise, it will be like the person who posted a comment on my Facebook wall recently that had nothing to do with the conversation another person and I were having. Instead, it was an awful attempt at being conversational with something not relevant that came off being very rude and interruptive.
In the end, do you want customers that are loyal or rather superficial? Sow what you want to reap or you will reap what you don’t even realize your are sowing.
In the end, these are just a few thoughts I have with regards to an industry I care much about. In past articles, we have discussed many ideas concerning this digital nation we are fast becoming and what that means. In this article, I simply want to just return to basic principles.
The ones we too often and quickly forget in our pursuit of the NEXT BIG THING.
Do your thing right, and perhaps you just might not be called a survivor, but a conquerer, too. (at least until they stop printing them and no more used books are left in circulation.)