The demise of the bookshop is here
May 07 2014
The factors squeezing margins in my local bookshop are similar to those that are shaking up retailing in countries that allow cross-border deliveries of goods and foreign direct investment in B2C. Many bookshop owners cannot escape the cold wind of competition brought about by globalisation. Amazon’s wide product range, fast delivery and low prices are an example of the nightmare for many shops.
In addition, some countries such as India have been chary about allowing in foreign retailers, fearing that their efficient operations allow for deep discounts that will eventually drive uncompetitive local shops out of business. My local bookshop, then, is at the sharp end of a worldwide phenomenon.
Before we go any further, for heaven’s sake don’t feel sorry for my local bookshop. The same book often costs between 50 per cent and 100 per cent more in Switzerland than in the UK. Plus, when I first moved to Switzerland, you had to wait four to six weeks for delivery of a specially ordered book. Quite frankly, booksellers benefited from protectionist regulations and treated many customers shabbily. Bear this in mind when you hear someone getting all sentimental about the decline of traditional booksellers. For sure, books are part of our culture, but at the price of gouging customers?
Will bookshops survive? I have my doubts. Let’s consider the options. First, bookshops could shift from selling products to offering an experience customers are prepared to pay for. Call it the Starbucks model if you wish. Bookshops could encourage customers to form reading groups, supplying not only the books but also food and drink. Here bookshops would become fashionable places to spend time and money.
There are probably two hitches with this first option. Customers could organise reading clubs over the internet, buy the books online, and meet in any number of places, including their homes. Moreover, different customer segments may not want to be seen together. The young, for example, may not want to be seen with their parents and other older people.
Perhaps, the best way to start describing the second option is to start with the expression “don’t judge a book by its cover.” The very nature of a book is that readers won’t know its contents — and how good it really is —until they’ve read the book. For sure, there are book reviews but they may not be particularly reliable. Staff in bookshops that have read many books and keep up to date with new books can make recommendations to customers that best meet their preferences. On this view, if the chance of disappointment is lower, customers may be more willing to buy books in the first place.
Now many companies make money by credibly helping customers overcome the inevitable doubts that arise when the quality of a good or service isn’t known for certain. There are two reasons why bookshops probably cannot pull this off. Nothing prevents customers from receiving advice in store and then buying the book online. As soon as the price online is much lower than in the shop, the incentives are clear: take the free advice and run!
Another problem is that smart and dedicated enough staff that gives up-to-date advice on books published are almost certainly going to be in demand from other employers. It is more costly to retain such staff, forcing up bookshops costs and their prices, which in turn creates a stronger incentive to buy elsewhere.
The traditional business model for selling books is flawed — and that’s without contemplating the consequences of e-books and shifts in reading habits towards shorter texts. Some specialist booksellers will survive but probably because their owners take little in pay, effectively treating their job as a hobby. The pain faced by booksellers won’t be lost on other retailers, many of whom make fat margins and so have the resources to encourage policymakers and regulators to limit competition. The demise of bookshops is just the first round in the next battle over globalisation.
(The writer is a professor of international trade
and economic development at University of St Gallen, Switzerland)