Lessons In Reinventing Local Retail: How Independent Bookstores Turned the Tide
In the mid-90s, the American Booksellers Association (ABA) reported that over 4,000 independent bookstores were in operation. Then came Amazon. Within its first month of online sales, Amazon had sold books to every state and 45 different countries, and they were just getting warmed up. By 2009 43% of independent booksellers had closed.
Not even the big box stores were spared. Borders shut down in 2011, and Barnes & Noble has closed almost 100 stores since 2010. The retail apocalypse hit booksellers hard, and experts warned that brick and mortar stores were a thing of the past. But then the tide turned.
Between 2009 and 2019, the ABA reported a 52% increase in the number of independent booksellers, from 1,651 stores to 2,524. While Barnes & Noble reported a 3% decrease in revenues in 2019, the ABA reports that its members are seeing revenue increase by as much as 5% per year.
But how did these indie booksellers survive, and even thrive in the face of the behemoth that is Amazon? And what can their successes teach you when you decide to start a business of your own?
Cultivate a Distinct Identity in Your Community
Instead of trying to compete with Amazon, successful booksellers have been focusing on curating not only their offerings, but also their community identity. Bookstores can find success with niche or hard to find local history, art, or cookbooks. Where Amazon offers almost unlimited offerings, indie bookstores are able to personally expose readers to local authors and steer readers towards other purchases they might not otherwise make.
Studies show that for every $100 spent at a local business, $68 stays in the community, compared with just $43 when customers shop big box stores. When small business owners communicate the value of community, they encourage customers to participate in the local economy. According to Harvard researcher Ryan Raffaelli, bookstores have been at the forefront of the “buy local” movement. “Lessons we can learn from independent bookstores have implications for a wide array of traditional brick-and-mortar businesses facing technological change,” Raffaelli says. They have embraced events such as Small-Business Saturday and Independent Bookstore Day, two events that remind customers to shop local. These events also allow customers to feel good about keeping money in the community, and encourage people to frequent other local businesses. Raffaelli says that “It’s almost like a social movement… indie bookstores are anchors of authenticity in an ever-increasing digital and disconnected world.”
Experiment With Old and New Practices
Local bookstores responded to Amazon by digging deep into the practices that had previously brought success. You can buy your favorite author’s book on Amazon, but can you have them sign it after a reading? Bookstores realized they had an advantage over Amazon. Shopping online is impersonal. Customers simply point, click, and type in their payment information. Independent bookstores capture the local audience by hosting readings, author signings, lectures, game nights, children’s story hour, book clubs, open mic nights, and so much more. One Minnesota bookstore, Cream & Amber, not only sells books, but they offer local coffee and craft beer. Some have even hosted date nights and trivia. Thinking outside the box and trying new things can allow a small business to open up new avenues for revenue.
Embrace Modern Technology
Using social media to connect with local customers is an obvious choice for small businesses. For instance, the Instagram hashtag #bookstagram has been tagged almost 40 million times, and some stores have upwards of sixty thousand followers. Whether it’s food, travel, live music, or gardening, the new generation of customer wants to document their authenticity. When an Instagram user takes a photo in front of Spokane’s Auntie’s Bookstore holiday display, that photo not only cements Auntie’s as a local business, but it alerts other local social media users to Auntie’s perceived authenticity. Bookstores have recognized this trend and have used it to their benefit by installing colorful Instagram-worthy displays.
Employing frequent buyer apps like Shopkick or FiveStar make it easy for both the business and the customer to keep track of rewards. Beyond saving money, these programs make customers feel invested and welcomed by their local businesses. According to consulting firm Bain & Co., a 5% increase in customer retention can add over 25% to a business’s annual sales. The existing research points to the idea that customer retention is far more financially sound for businesses because acquiring new customers can cost five times more than simply working to retain an existing one.
Online retail isn’t going anywhere. Businesses, large and small, that don’t embrace challenges and find new and creative ways to appeal to and grow their customer base risk extinction. The resurgence of independent bookstores can be traced to their ability to be resilient. Where they tapped into the consumer’s desire to shop within the community, and by promoting their importance to the community, independent booksellers were able to differentiate themselves from Amazon and the big box heavyweights.
Up for reading more on why it pays for small businesses to be resilient in the face of overwhelming odds? Check out “Resilience in the Business World,” a blog by our Chief Legal Strategy Officer, Drake Forester.
