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JewishJournal.com

November 30, 2011

Is the bookstore dead?

http://www.jewishjournal.com/los_angeles/article/the_bookstore_is_dead_20111130

The Barnes & Noble bookstore at Pico and Westwood boulevards, scheduled to close on Dec. 31. Photos by Jonah Lowenfeld

The Barnes & Noble bookstore at Pico and Westwood boulevards, scheduled to close on Dec. 31. Photos by Jonah Lowenfeld

On Dec. 31, when the Barnes & Noble at the corner of Pico and Westwood boulevards closes its doors for the last time, the “people of the book” and everyone else who lives on the Westside of Los Angeles will move one step closer to becoming the “people without a bookstore.”

“Are you serious?” asked Danielle Villapando, who was at the store with her family one evening last month. Villapando used to shop at the three Borders bookstores that had been located nearby — that chain went bankrupt last July. Villapando, who was in Barnes & Noble to pick up the newest “Diary of a Wimpy Kid” book for her 7-year-old son, knew what this store’s closure meant: No more trips to bookstores.

“There’s the one in Marina del Rey near Costco, but I’m not driving all the way there,” Villapando said. “Plus, it’s not nearly this big.” One also remains in Santa Monica.

But on Jan. 1, for the first time in recent memory, no major corporate bookseller will exist in the swath of Los Angeles between the coastal cities and The Grove.

“With no more bookstores in West Los Angeles, we are going to be relegated to a literature-less existence,” said Lee Shapiro, who was at Barnes & Noble on a recent evening. He had come with his wife, Miki, to look at books about landscape design.

The truth is, “literature-less” is something of an overstatement. For bookish folks in the area — including many Jewish residents who, on the whole, buy as many, if not more, books than the average consumer — four independent bookshops stand at the ready to help all comers, including two general-interest bookshops (Book Soup on Sunset Boulevard in West Hollywood and Diesel in Brentwood), a children’s bookstore (Children’s Book World on Pico Boulevard) and the UCLA campus bookstore.

Still, it’s a major shift in just a few months. So how did this come to be?

For Howard Davidowitz, who has been following the book retailing business for 30 years, the question is a no-brainer with a one-word answer: Amazon.

Davidowitz is chairman of Davidowitz & Associates, a retail consulting and investment-banking firm headquartered in New York. Amazon, he said, began to take bigger and bigger chunks of the book market at precisely the moment when people started cutting down on the number of books they were reading overall. Of those still reading books, Davidowitz said, an ever-growing number have moved to e-books — most of them bought from Amazon for its e-reader, the Kindle. And many of the folks who do buy books in print are buying them online — if not from Amazon, then from some other Web-based retailer.

Amazon was, in short, a triple whammy for traditional bookstores. Borders, Davidowitz said, didn’t dedicate major resources to Web-based retailing and digital reading, and went bust as a result.

“Barnes & Noble is still alive because they did the Nook,” Davidowitz said, referring to the electronic reader developed by the last remaining national chain of brick-and-mortar booksellers.

The Barnes & Noble bookstore at Pico and Westwood boulevards, scheduled to close on Dec. 31.

Davidowitz’s account of the slow demise of the book business is convincing, particularly when it comes to the rise of digital reading. In May of this year, Amazon announced that it had sold more e-books for its Kindle e-reader than printed books — and that was before the company released the newest generation of the device, the Kindle Fire, in November. Today, Barnes & Noble stores are filled with advertisements for the company’s own e-reader-turned-tablet computer, the Nook Tablet.

But even if digital reading is the future, it’s not clear how much of these companies’ current revenues come from the sales of e-books and readers. Amazon, which didn’t provide sales data with its announcement earlier this year, prices some of its e-books as low as 99 cents and, according to a recent report, is selling the Kindle Fire at a small loss in an effort to lure customers into buying it.

Barnes & Noble’s Web-based retailing and digital reading businesses are growing, but according to Peter Wahlstrom, a consumer analyst who covers the bookseller for investment research firm Morningstar, that side of the company “isn’t profitable at this point.”

“The bread and butter, where they still make a lot of their money, is on the individual books that are not bestsellers,” Wahlstrom said, adding that the typical customer often comes in without a specific title in mind. 

Which may help explain why Mitchell Klipper, the CEO of Barnes & Noble stores, said that the reason his company is shuttering the Pico-Westwood store — which has operated, apparently successfully, in that location for more than 15 years — can be boiled down to a single word: Rent.

“We don’t like closing stores,” Klipper said of the 28,000-square-foot retail space, which includes a cafe with a killer view straight up Westwood Boulevard. “If the rent was lower, we wouldn’t be leaving.”

Those who know the book business know that at one time, major booksellers might have been able to count on a big break in rent from a mall owner.

Doug Dutton, the owner of the former Dutton’s bookstore in Brentwood, remembers how it worked, perhaps to his disadvantage. His store was a home for book lovers from the time it opened, in 1984, until it closed — to the great dismay of many Angelenos — in 2008. “I can’t say that in my negotiations I necessarily got a better deal,” Dutton said. But in the 1990s, “when Barnes & Noble and Borders were sort of duking it out with one another, I understood that there were some very lovely sweetheart deals being offered to both in order to get them into a retail area.”

Rachel Rosenberg, executive vice president at RKF, a commercial real-estate broker specializing in retail sales and leasing, confirmed what Dutton had heard.

“Absolutely,” she said. “These tenants were major draws.” This was, Rosenberg explained, in part because unlike the department stores that also occupy very large spaces in shopping centers, Borders and Barnes & Noble weren’t selling clothes.

“It’s just like putting a grocer to anchor a project, or a gym,” Rosenberg said, mentioning the businesses that today have begun occupying large retail spaces at shopping centers, bringing people in on a weekly, or even daily, basis. “Bookstores were once that. It was a go-to.”

So, did the Westside Pavilion just stop offering a “sweetheart deal” to its longtime tenant? It’s hard to say, because all that Barnes & Noble’s Klipper would offer was that he imagines the new tenant — a furniture store, called Urban Home, which is scheduled to open in summer 2012 — “paid probably double what we paid.”

Since nobody involved in the deal will disclose exact numbers, it’s equally possible that large bookstores like Barnes & Noble — despite their high traffic — have just become less- or unprofitable. “What I can tell you,” said Ryan Hursh, senior property manager at the Westside Pavilion, “is our real estate department worked with Barnes & Noble’s real estate department and tried to come to an agreement. But, in the end, it was Barnes & Noble’s decision to leave the property.”

A discount clothing retailer replaces the Borders bookstore on Westwood Boulevard.

The Encino Barnes & Noble closed under similar circumstances at the end of 2010. But unlike the vague sense of sadness that people express hearing the news of the Pico-Westwood store’s closing, in Encino, when the news broke that Barnes & Noble and Caruso Affiliated, its landlord, were unable to reach a rental agreement, it set off a firestorm of protest.

In August 2010, Robin Permaul found out that the store she used to come to “every day” with her kids was on the corporate chopping block. “I heard it from somebody, and I thought, ‘That’s not true,’ ” Permaul said. “This is a busy Barnes & Noble.”

But it was true, and in late September, Permaul launched a Facebook page titled “Save Our Encino Barnes & Nobles.”

“It took off,” she said recently. “I was as shocked as anyone else. I remember when we hit 100 people, and 1,000 people, and 2,000 people, and 3,000 people.” The group protested en masse at Barnes & Noble a few times over those months, and the postings on the Facebook page show that most of their frustration wasn’t aimed at Barnes & Noble, but instead at the landlord and at CVS, the tenant set to take over the space.

“There’s a CVS within two miles in either direction,” Permaul said. “We didn’t need another pharmacy there.”

“They love the store,” Klipper said of the Encino customers who rallied unsuccessfully to stop the inevitable — in the end, Barnes & Noble moved out and CVS moved in. “They don’t really care that the landlord can make more money selling toothpaste than selling books.”
That’s the thing: Bookstores, even corporate ones, are really special places for the people who frequent them. They’re not like other businesses.

John Evans, who co-owns Diesel bookstores in Brentwood, Malibu and Oakland, describes what he does as “non-mercenary community service.”

“At independent bookstores, they don’t call the books ‘products,’ and they don’t call their customers ‘consumers,’ ” Evans said. “It’s a different kind of model. It’s a non-business business model.”

As evidence of this, one need only look at the circumstances under which Evans opened his Brentwood store three years ago. Dutton’s was about to close, and a local developer invited Evans to open a small store in Brentwood.

Evans called Dutton to see if he was planning on staying in the book business. “Basically, getting his blessing,” Evans explained.

“I think this is typical of what independent booksellers would do,” Dutton said. “They are loath to tread on the territory of another. That certainly wasn’t the case with the two huge chains.”

But today, even independents that have watched so many of their fellow independent sellers be undersold and undermined by big chain stores are shedding a tear for the Pico-Westwood Barnes & Noble.

“I never would’ve thought that I would feel so distressed,” said Sharon Hearn, owner of Children’s Book World, located just a few blocks east of Westside Pavilion. Hearn’s shop just celebrated its 25th anniversary, and over the years it has managed to survive the entrances into the market of discount booksellers, superstores and Internet retailers. Hearn is now guiding the store through its first recession.

Dismayed as she is about the Barnes & Noble closing, she said she is even more concerned about cuts to school library budgets by the Los Angeles Unified School District. With its dismissal of librarians, she said, “Where does the buzz for books come from? You don’t get that from the Internet.  In a way,” Hearn added, “it makes the stores that are left even more important.”

The bookstore devotees get it. Even after it became clear that the Encino Barnes & Noble couldn’t be saved, and the CVS couldn’t be stopped, Permaul and her fellow community organizers didn’t stop their efforts. After discussing the possibility and effectiveness of a boycott, the group decided to oppose CVS’ application for a liquor license.

“Because we knew that that was the only way to get their attention,” Permaul said. It did, and after negotiations with CVS, Permaul and her group allowed the liquor license to be issued. In exchange, CVS made what Permaul called a “substantial” contribution to a $2.5 million project at Balboa Park to help redo 40 acres of soccer fields.

“I have to tell you, whether we won or we lost,” Permaul said, thinking back on last year’s effort, “it brought the community together. The community stood up and fought for what it believed in, and that, in itself, is, I think, a huge accomplishment in this day and age, when people are so caught up in their own lives.”

On a recent Saturday evening, it appeared to be business as usual at the Barnes & Noble at Pico and Westwood. One of the couple dozen or so employees in the store at the time, who did not want to be named, said that over his tenure at the store he has actually seen an uptick in book sales.

“Books are selling more than they ever have, better than they ever have,” he said. He, too, said that the closing of this store shouldn’t be used to draw any grand conclusions about the company, or the book business as a whole.

“It’s really just this location,” he said. “Big picture, things are not as grim as they seem right now, but for this neighborhood, it’s really upsetting.”

These apparently isolated decisions are being made by Barnes & Noble at stores across the country as leases come due for renewal at a rate of about 100 each year, according to the company’s 2011 annual report. In what some might be tempted to call karma, one lease scheduled to expire this year is for the Barnes & Noble in Huntington Station, N.Y. — the store near Klipper’s own hometown. The landlord, Klipper said, asked for a 40 percent hike in monthly rent.

“It’s economics,” Klipper said, adding that he’s getting called at home by friends and neighbors who want to know about the store, and his wife gets stopped at the supermarket by people asking about it. “The last store I wanted to close is the one in my backyard,” Klipper said.

“Are we looking for a store to replace it? Absolutely,” Klipper said. “Are we looking for a place to replace the store at Pico and Westwood? Absolutely. And when we find the right location with the right economics, you’ll see another store open.”

Could an independent bookseller find a home now, and thrive, perhaps, in Los Angeles’ Westside area that the big corporate bookshops have cleared out of?

“It wouldn’t surprise me in the least if a bookstore opened in the area you’re talking about,” Diesel co-owner Evans said.

“These kinds of nutritious, basic, soulful things that people want to open — it’s not even a business,” he added. “It’s a way of life. But you have to be really clever to let that way of life continue.”

And for Evans, at least part of what will help sustain that way of life is digital. Since December 2010, he and other independent booksellers have been able to sell Google eBooks. It takes a certain degree of commitment, but with a few clicks from his or another bookstore’s Web site, readers can now purchase an e-book and ensure that the revenue from the sale goes to the local retailer.

Dutton, in fact, is less sanguine. “The whole world is changing so rapidly,” he said. “It sounds so platitudinous, but it’s the only way I know how to say it.”

As it happens, there is a small vacant storefront directly across the street from the Pico-Westwood Barnes & Noble. It’s pretty no-frills — it used to be a beauty supply shop — but there’s an easy way to spot it: It’s the storefront that sits beneath a massive billboard advertising the iPad 2.

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