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Bye-Bye Book Stores

It looks as if the book store as we know it is doomed. National statistics on book stores show that they peaked, in terms of number of stores, in 1994 and have been pretty much falling in number ever since. Now, these data only extend through 2007 (data for years after 2007 in the chart are forecasts only). That means that the impact of the “Great Recession” is not captured in these data, nor is the rapidly growing impact of eBooks.

Number of book stores by store front

Nonetheless, we see that a downward trajectory had already set in before 2007. The chart also shows another pattern, namely the pattern of growth in the size of stores over this whole period. On average book stores employed 6 people per store in 1982 and by 2007 they employed 14.5 per store (shown as blue dots on the chart). So, in the 1980s book stores were humming along, their numbers stable or growing slightly but their per store size remained reasonably steady. We know that the large book stores were already busy acquiring existing stores and expanding their holdings, their retail chains. But, it wasn’t until the 1990s that these big book stores started to have an impact on the average size of book stores. This occurred when they began consolidating stores and expanding some into the big box super stores outlet that were so typical of the retail sector generally in the 1990s. This we can see by the rising average number of employees per store which starts in 1990 and never stops rising.

Independent book stores have been struggling for years. An Internet search for articles about “book store closings” will produce a mind-numbing list of stories about the demise of independent booksellers of all sorts and kinds, many quite well-established institutions in their communities. The articles date back, for the most part, to the mid 1990s, to that spot on the chart where the bars begin to decline.

What has changed about the flood of book store closings in the last couple of years is the fact that they are happening across the sector. The independents continue to close in large numbers but now so do stores that are part of the big book store chains.

While there is a lot of talk about eBooks these days, the fact is that at 3% of the market in 2009 they were not yet a large enough part of the market to have played a big role in the dramatic decline of book stores through last year. It isn’t eBooks that are killing off book stores (at least to date) it is the complete restructuring of the book distribution business.

Two things explain the shift. The online sale of print books and the ready availabilityof all the best sellers—at big discounts and in huge numbers— in general merchandising outlets everywhere; Walmart, Target, Costco, Sam’s, etc.

We found this out by reading lots and lots of articles about book store closings. A theme emerged. Here are four quotes that show that theme (citations for each are provided below in the Source Note section):

“…customers told him (the owner of a closing bookstore) they were being “good stewards” of their money by buying The Purpose Driven Life or the latest Max Lucado book at Wal-Mart for 40 percent off the retail price. (1)

“People would come to the bookshop with their notepad, make notes of what they wanted and then go buy it somewhere else,” Wilbert Hasbrouck (co-owner of a closing bookstore) said last week. (2)

“It’s touch and go right now… The walk-in trade hasn’t changed. People come and browse here and then go home and order the book on the net.” Quote from a bookstore owner still struggling to keep the store open. (3)

“It’s not that surprising. As great an indy store as Pages is, it’s not cheap. It has become, like many bookstores – independent or not – a place to browse what you’re going to buy at Amazon for far less… I know many people who shopped there regularly before the era of online bookstores, and tried to stay loyal, but couldn’t justify the added cost. (4)

What seems clear is that while we moan, complain, protest, and cry about the loss of book stores, we are—the book buying public—actually unwilling to pay a little extra for books in order to maintain all the other benefits that come from having a book store near by. Then again, it is human nature to take things for granted until they’re gone. Nonetheless, we appear to be a people who will shift our buying patterns to save a buck pretty easily.

Into this retail environment we add the whole issue of eBooks. The signs of impending doom only get clearer. This is the daunting future that has booksellers concerned, and publishers too. In a very interesting article on this subject, available here, industry analyst Mike Shatzkin presents some numbers—calculates what current industry assumptions about the shift to electronic books will really mean to book stores.

The assumptions he uses, and considers conservative, are these:
(you know what eBooks are and pBooks here mean print books)

Industry Assumptions about eBooks

Given these assumptions, by the year 2015 bricks-and-mortar book stores can be expected to see their portion of the market shrink to 25% of all pBook sales (that’s print books and doesn’t include the book stores’ own electronic sales). That represents a two thirds drop in market share, from approximately 72% of the market to 25% of the market in a mere 5 years. No wonder Barnes & Noble and Borders are scrambling to make themselves into online booksellers. But, what is an independent bookseller to do with this sort of forecast? Nick-knacks, greeting cards, and scones will only make up for a fraction of the likely decline in sales. Besides, if many people are using the local book store as a sort of live catalog, good for browsing but not good enough to purchase from, doesn’t it make more sense to start looking into other businesses?

There will be creative types who figure out a way to make the book store work— but those new book stores aren’t really going to be what we now think of as book stores. The march of change continues…

This restructuring of the whole system of book distribution has profound implications for publishers too, of course. A good topic for another day.

Source Note:

Quotes taken from the following:

1- “Locking the Doors for the Last Time,” by Cindy Crosby, available online here.

2- “ Chicago’s great architectural bookshop facing the end of its own long story,” Chicago Tribune, available online here.

3- “Tough times, but some bookstores have a different story – Some face closure, while others expand,” by Vit Wagner, published in The Star (Toronto, Canada), available online here.

4- A reader’s reply online to the article “Pages Books of Toronto to Close,” by Core Doctorow, available online here.

Book Store Statistics – Part 3

Today we’ll match up Census Bureau statistics on the U.S. retail book industry with the sales reported by the top three booksellers—Barnes & Noble, Amazon, and Borders—in their respective Annual Reports.

Top Bookseller Stats

In order to try and capture the rising importance of eBooks in the overall book selling business, we have used Census Bureau data on the Retail Book Store industry and combined it with the book portion of the Electronic Shopping and Mail-Order House industry. Census data is not broken out by product except in Census years and therefore we extrapolated the book portion of the Electronic Shopping industry for non census years based on their percentage of the industry in census years. These extrapolations are shown in detail in the table at the bottom of this post.

We thought it was particularly interesting that the top three booksellers, together, grew to represent 55% of book sales in the United States in 2008, up from 46% of the market in 2001. Thus, all other booksellers have seen their combined market share fall to 45%.

The experience of each of the top three booksellers between 2001 and 2008 has, of course, differed greatly. While Barnes & Noble’s market share has held steady at approximately 20% from 2001 to 2008, Borders saw its share shrink from 16.7% to 12.6%. Over the same period, Amazon has more than doubled its market share, from 9.6% in 2001 to 21.7% in 2008.

Here are the detailed figures used in the graph above:

Top Bookseller Stat Table

Note on age of data.

In a day and age when we are all quite accustomed to being able to get almost instant satisfaction to any question we may have—just check the global brain, the Internet—it is understandable that many people find it very hard to appreciate that when it comes to national economic statistics, real data takes several years to collect and compile. Thus, in this world, 2008 data is, actually, quite current. During 2010, the 2009 data are being collected from thousands of entities, compiled, standardized and checked. They’ll be reported on, at the earliest, in December 2010 and more likely in early 2011. Educated guesses on what happened in 2009, based on surveys, for example, can, of course, be made. But, do not mistake those guesses with actual census data! Patience… the picture will become clearer in time.

Source Note:

2002 Census data:
here

2007 Census data:
here

Annual Retail Sales data 1992 – 2008
here

Barnes & Noble Annual Reports:
here

Borders Annual Reports:
here

Amazon Annual Reports:
here

Book Store Statistics – Part 2b

It occured to us when considering the last post—which seemed pretty obvious, really—that books are sold by a lot of retail outlets, not just book stores, book clubs and online. Gas stations and truck stops sell books, audio books for the most part. Airport shops sell books. Office supply stores sell all sorts of computer manuals and business books. Then there are all those topic specific and how-to books sold at places such as health spas, building materials stores, and craft stores. So, before moving on to a closer look at book stores specifically, we wanted to finish the picture on where we buy books. We dug around in the rich data made available by the Census Bureau and came up with the following detailed breakdown of book sales by retail outlet.

Books Sold by Retail Outlet

Once again, this graphic reaffirms what we’ve already seen in recent posts. Book stores have lost ground in terms of the percentage of all books sold that they sell. Electronic outlets—read online sales— have gained ground but not only against book stores but also as compared to all outlets selling books, all that is other than used merchandise stores. “Electronic shopping and mail-order houses” and “used merchandise stores” are the only two categories that saw growth in their share of the total book selling market between 1997 and 2007. Granted, “used merchandise stores” only saw their book sales grow from 2.2% of the market to 2.6%, this was the only category other than electronic shoppping and mail-order houses that grew at all. And the e-commerce and mail-order category, well, it grew from 11.5% of the book selling market to 30.9% in 2007, and has only grown since then.

For the even more detailed figures, here is the table we keyed in order to produce the chart above.

Detailed Retail data on books

Source Note:

Data for 2007: “2007 Economic Census — Sector 44: EC074413: Retail Trade: Industry Series: Preliminary Product Lines Statistics by Kind of Business for the United States: 2007” available online here.

Data for 2002: “2002 Economic Census — Sector 44: Retail Trade: Industry Series: Product Lines by Kind of Business for the United States: 2002” available online here.

Data for 1997: “1997 Economic Census — Sector 44: Retail Trade: Merchanide Line Sales: Merchandise Lines by Kind of Business: 1997” available online here.

Book Store Statistics – Part 2

We pick up again on the topic we started way back on June 30, namely, how are books sold these days? In our first look at the economic statistics available on U.S. book stores we saw three very interesting things.

1. That while book store sales between 1997 and 2007 rose by 35.4% the sale of actual books rose by far less (25.1%).

2. That sales of things other than books grew fastest, increasing 71.7% between 1997 and 2007.

3. That within the book category, textbooks by far outpaced all other books in terms of dollar sales growth, in fact, text book sales grew by 123.2% while the sale of all non textbook books actually declined by 0.9%.

Now, because these data do not include coverage of eBooks, we decided to try and look into those as well. What we found is that they are still very, very hard to track through any reliable, national level statistics, yet. The U.S. Census Bureau has begun to track eBooks but it will take a few years before their survey data provides us with the sort of detail we need in order to make sense of this crazy time of transition.

In the meantime, we can take a look at books sold electronically and add those to the overall sale of books through book stores.

Book Sales by Outlet

Books have long been sold by book stores as well as outlets other than book stores, like catalog companies, book clubs and since the mid-1990 electronically through the Internet. The bar chart above shows the dollar value of books sold through book stores (including text books) and books sold electronically and through mail order houses. The U.S. Census Bureau has been tracking retail sales through these different outlets for some time now. What is not clear yet is how much of the eBook market is being captured by these Census Bureau categories. We suspect that it does not yet capture eBook sales reliably.

Nonetheless, what is abundantly clear from these data already—and is hardly surprising to anyone following this subject—is the fact that more and more of the books we buy we are buying electronically, online.

Worth noting is the fact that some of the electronic sales measured in the data graphed here are, in fact, electronic sales made by companies that also operate physical book stores. The gorilla in the market is, however, Amazon which has overtaken Barnes & Noble to become the largest book retailer in the United States. This occurred in each company’s fiscal 2009 when Amazon had net, North American “media” sales of $5.96 billion and Barnes & Noble’s sales totaled $5.12 billon (figures come from each company’s SEC filing for 2009).

Perhaps we should try charting some of these corporate sales figures against some of the Census data in our next post.

Source Note:

1997 Census Data here

2002 Census Data here

2007 Census Data here

Graphic Novels, Manga, and Comic Books

We are finally wrapping up the other projects that have kept us from pursuing our Dwarf Planet Press projects. So, next week we’ll get back to our study of the publishing and book selling businesses through a close look at statistics. We’ll also be preparing the third book in the magnificent Gulf Genes trilogy for publication.

In the meantime, and because it is fitting, here’s a copy of today’s post from our MarketSize blog, a place where we post a small market size item each day charting the size of all sorts of markets and industries.

GraphicNovelImage

The market for what is now referred to broadly as “graphic novels” has grown strongly since 2000. Many factors are contributing to this growth. They include such things as (1) an explosive growth in the number of unique book titles published annually, (2) the resounding success of super hero movies in the last few decades, (3) technological advances that have produced amazing tools for graphic artists of all sorts, and (4) a growing influence in graphic artistry from the comic arts scenes in other countries where it is a strong cultural outlet. In terms of revenue produced by the sales of these graphic products, market share breaks down by category as follows: comic periodicals, 27.5%; Manga, 12.4%, and other graphic novels, 60.2%.

Geographic reference: United States
Year: 2009
Market size: 3,162 unique titles and $1.130 Billion sales
Source: Publishers Weekly, April 26, 2010, p. 12
Original Source: ICV2.com

Book Store Statistics – Part 1

One of the aspects of the book publishing industry which has seen the greatest changes in the last decade is how books are sold. Thus we thought a look at statistics on book stores may provide an interesting perspective on the business.

The following graph shows total retail sales at book stores for the period 1992 through 2009, both in and in inflation-adjusted dollars. There has been growth in sales over this period, although since 2000 that growth has stagnated and, in fact, has not kept up with inflation since 2004.

Retail Book Stores Sales

One thing that struck us in looking at these data was the fact that book store sales, as reported by the U.S. Census Bureau, include a whole lot of sales of things other than books. Stores sales are broken into categories. These categories, etablished by the Census Bureau, include such things as “groceries and other foods for human consumption,” “men’s wear, including accessories,” “women’s, juniors, and misses’ wear, including accessories,” “computer hardware, software, and supplies,” and “toys, hobby goods and game,” to name but a few. This caused us to look more deeply into the data and pull out book sales so we could look at those separately from non book sales hoping this would give us a better picture of what’s going on.

Book Stores Sales by Category

In order to get to the category-by-category breakdown of book store sales we had to limit ourselves to data for full Economic Census years, 1997, 2002, and 2007. What becomes clear looking at this second graph is the fact that the non-book sales have grown at a much faster clip (71.7% from 1997 to 2007) than have book sales (25.1%). Furthermore, the growth in book sales is dominated by increased sales of textbooks, which grew at a rate of 123.3% between 1997 and 2007 whereas all sales of books other than textbooks actually declined by 0.9% during the same period.

Food for thought.

Yes, yes, we know. These data do not cover eBook sales…which we have seen in prior posts are a category that’s still very hard to track. Also, as of 2009, eBooks represented 1.3% of actual book sales (see earlier post, here). So, while eBooks aren’t a part of this look at book retailing, these data are interesting, trustworthy, and provide a most fascinating picture of how book retailing is being done these days, not least the sorts of changes happening in this area.

We’ll look into comparing these data with online sales of books next.

Source Note:

Please note that the data in the first graphic are total book store sales whereas the data in the second graphic are total book stores product sales which are slightly different.

For those who are interested, here’s a table with the figures charted above.

Book Store Sales data in a table

The figures we used all come from U.S. Census Bureau reports available at the two following web sites:

Monthly & Annual Retail Trade data:
http://www.census.gov/retail/index.html#arts

Economic Census data:
http://www.census.gov/econ/census07/www/get_data.html

Still Tracking the eBook Market

Distracted by our paying work, we’ve been slow to follow up our post “eBook Sales versus Download” with any real statistics to help make sense of the subject. Another reason we haven’t presented more statistics on the subject has to do with the fact that we can not find any reliable stats on the subject.

To some extent this is not surprising. It takes time for the statistics gathering organiztions—Census Bureau, industry associations, large research firms—to build the necessary structures with which to track new industries properly. eBooks are relatively new and with the arrival of new players into the game—eReader device makers—there is no industry wide structure yet for tracking eBook sales and downloads. Further complicating matters is the fact that a small number of players control much right now and have no great interest in sharing their numbers. Some of these players are, in fact, intentionally mudding the waters by way of promoting their role in the industry and building the buzz. In time, statistical collection structures will be created.

In the meantime, while we wait for real figures, we’ll have to make sense of it all by trying to read between the lines of the statistical data that track the more traditional part of the publishing business, watching for changes in patterns and trying to figure out what’s behind them.

We’ll turn next to a look at booksellers over the last two decades.

In closing, a quote from Guy LeCharles Gonzalez, “Chief Executive Optimist,” Digital Book World speaking about this very topic:

“From consumer demand, to devices and DRM schemes, to piracy concerns and reliable sales data, the nascent but undeniably booming eBook market is becoming a smoke and mirrored mess for anyone looking for straight answers.”