Independent Bookstores vs. Barnes and Noble, Borders

As stores like Borders and Barnes and Noble continue to dominate an increasingly competitive booksellers market, independent bookstores are finding it harder than ever just to survive. Yet these locally owned businesses contribute far more to the local economy than retail chains, according to several studies by the American Bookseller Association.

Traditional "Main Street" businesses have been replaced by "big-box" national retailers, and bookstores are no exception. Even mega-stores like Wal-Mart and Target are taking sales from independent bookstores and there is ongoing pressure from online giant Amazon.com.

In some areas of the country, independents not only survive, but thrive. In San Francisco, for example, independents account for 55% of book sales, compared to 10% nationwide, according to the San Francisco Retail Diversity Study. Yet many other major metropolitan areas like Dallas-Ft. Worth have almost no independent booksellers at all.

Major retailers present some obvious advantages to consumers. Barnes and Noble stores, for example, offer everything from books to music to movies, and sell coffee as well. Their children's section is larger than many independents' entire store. And they offer deep discounts that smaller business often cannot match. Both Barnes and Noble and rival Borders offer a comfortable environment, with large overstuffed chairs where customers can browse through books before making a purchase.

But there are costs to such convenience that are not so obvious. National chains take far more out of a community economically than they ever put back in. According to a study conducted by the firm Civic Economics in the Andersonville neighborhood of Chicago, trading independent retailers for big-box chains weakens the local economy. This occurs because while local stores recycle a much larger share of their sales revenue back into the local economy, chains siphon most of the dollars spent at their stores out of the community, sending them back to corporate headquarters or to distant suppliers.

The study applies to all local businesses, not only bookstores, but bookstores are a part of the local economy, and therefore the findings are worth considering. The study found that spending $100 at one of the neighborhood's independent businesses created $68 in additional local economic activity, while spending $100 at a chain produced only $43 worth of local impact. The difference was due to four factors:

Local Payroll: The locally owned businesses spent a larger share of their revenue on local labor (29% vs. 23%), because they carried out all management functions on-site, rather than at a corporate headquarters.

Procurement: The local retailers spent more than twice as much buying goods and services from other local businesses. They banked locally; hired local accountants, attorneys, designers, and other professionals; advertised in local media; and where possible ordered inventory from local firms.

Profits: Because their owners live in the area, a larger portion of the local retailers' profits stayed within the local economy.

Charitable giving: The local retailers donated more on average to local charities and community organizations than the chains did.

Beyond the economic impact, the Andersonville study found that over 70% of the people surveyed actually prefer to patronize local businesses and 80% prefer traditional urban business districts. Surveys have shown that people prefer a more unique store and more personal interaction to the cookie-cutter, impersonal feel present in many large retailers.

There is still hope for a resurgence by independent booksellers. An American Booksellers Association press release earlier this year announced that 97 new member stores opened in 2006. That news counters the many end-of-year "independent bookstore closing" reports in the media.

"The number of new stores, and the intelligence and professionalism of these new owners, clearly demonstrates that independent bookselling is very much alive and well in the 21st century," Avin Mark Domnitz, American Booksellers Association CEO, said in the release. "Happily, the reports of the decline of independents have, again, been exaggerated."

For both independent bookseller and the communities they serve, that is very good news indeed.

Sources:

American Booksellers Association, URL: http://www.bookweb.org

American Booksellers Association, "A Plethora of New Independent Bookstores Open in 2006."
URL: http://www.bookweb.org/about/press/release072.html

San Francisco Retail Diversity Study, URL: http://www.civiceconomics.com/SF/

American Booksellers Association, "Economic Studies."
URL: http://dev.bookweb.org/advocacy/studies.html

Civic Economics, "Andersonville Study of Retail Economics."
URL: http://www.andersonvillestudy.com/AndersonvilleSummary.pdf