November 30, 2011
Is the bookstore dead?
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.
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.”