When another book store moves to town it's good news!

If a chain moves to town, you’ll go out of business, right?

WRONG. You may even make more money than you do now!

Chains don’t move into markets where they don’t expect to turn a  profit.  They moved in by you because you’ve established there IS a market for a bookstore… and they’re convinced that there’s enough demand that they can turn a profit even with another bookstore nearby.  They’ll probably even turn a better profit by having you nearby.

Look at any retail sector selling mass goods.  Only small differences tell them apart.  Fast food is a particularly good example.  Look along any stretch of highway and McDonalds is right next to Burger King is right next Wendy’s is right next to Jack in the Box and so on and so forth. If there’s that much demand for fast food, why isn’t there just one really big McDonalds?   A large percentage of what each of these chains sells is interchangeable.  They spend a lot of time trying to prove that really small differences matter.  Our burger has SPECIAL SAUCE!

Yet, despite selling items that are very similar, they all choose to build near each other.  On a long strip of highway, the fast food will all be near each other.  Ditto for expensive items.  Car dealers tend to build near each other.  It’s not simply zoning or highway access.  Why does New York have a Diamond District? Jewelers could easily set up anywhere in New York.  Why be right next to someone that sells the same thing?

Being next to another store of the same type drives demand for goods.  People in the mood for X go to X… but may be seduced to its competitor if its right next door.  Two stores selling X type of goods that are right next to each other will often sell more than if they were widely separated. Those tiny differences are what drive consumption.  Until the second store of type X is built, there isn’t demand for it.  This is the entire driving force behind the enclosed shopping mall.   Like stores grouped together drive sales for all similar stores.  This works for any good that is not a necessity.  Two stores selling nothing but septic tanks probably won’t benefit from being next to each.  People really only need so many septic tanks and probably won’t remodel the one they have to make it more fashionable.

What does this mean for you?  If a chain (or another independent) moves in down the street, be prepared to experience a temporary dip in sales.  People love the new and novel.  Even your regular customers may be seduced by the call of the new store, but they’ll likely be back and you’ll see new people as well.

This may require adjusting what exactly you sell a bit.  If a chain moves in and you’re a new bookstore, you may want to back off on the number of new bestsellers you offer.  The chain can probably offer them at a bigger discount than you can and you won’t be able to compete in a price war. You’ll sell less of that type of book.  However, the chain only has so much floorspace.  While you may see the sales for the latest bestseller by big name author slide, you may see the earlier books by that same author fly off the shelves because the big chain next door won’t stock them all.  (and keep in mind that the chain is often selling those brand new bestsellers at near cost to lure in customers)

If your new neighbor is an independent specialist, you may need to adjust stock to trim down the section they specialize in.  Or maybe not.  If you’re both new book dealers, you’ll need to trim because you’re going to carry the same stock because you’ll probably have similar sources.  If you’re both used dealers, or one of you is new and the other used, you may not need to change a thing because you’ll have such different inventories because they’re drawn from different sources.

So long as you have something memorable and different about your store than your neighbor, you’ll still do fine if you can survive a temporary cash flow crunch.  If you don’t have anything as a hook to make you stand out, you will be crushed.  This can be anything from a specialty, to a book club, to weird decor.  Hooks are wide and varied.  They key is that it either offers a different product OR a different experience.  Either is valuable.

Eventually you’ll hit a limit on how many stores of X type can be housed together… but it’s probably a lot further off than you think.  My own store is in a town of just under 19,000 and has four independent book stores in a two block area. The youngest store is 5 years old.  Nobody has gone out of business, despite being on top of each other.  Another nearby town has 200+ full or part time antiques dealers… or roughly one antiques dealer for every 42 people.  If the variety is wide enough, having that many stores of one type may actually be a boon for everyone.  Scotland actually has a National Booktown with 20 dealers in a town of a mere 1,000 people.

So when another bookstores movs to town, get ready to grow in new directions and you’ll be fine.  And if you’re looking to start your own bookstore and had been avoiding being too close to another bookstore, you may want to reconsider your choice.  Maybe being right next to another bookstore will be profitable for you both…

1 thought on “When another book store moves to town it's good news!”

  1. Visionary Business by Marc Allen, the co-founder of New World Library with Shakti Gawain provides 3 great tips.

    Love Change – welcome the opportunities new challenges present to you – they provide you and your business a change to grow – if you adapt.
    Learn to Dance – go with the flow and learn to interact smoothly with each of your customers and your suppliers. You are all engaged in the same dance after all.
    Leave J. Edgar Hoover behind – J. Edgar was famous for many things but one of the main things was his top down management style where everything had to go through him. Hire and nurture staff – don’t control them.

    Unfortunately, even though I seem to be the only one who has any real idea of how to run a book business (LOL) – there is always some other upstart upsetting my cart – they buy books I could sell, they steal my customers, they disparage rather than admire my efforts, and they interrupt my cash flow just when I really need the money.

    Bookbuying is an impulsive act – the more opportunities people have to buy books, the more they will buy and that should expand the market. Someone opening next door to you will cut into your short term revenues but they will attract more customers to your area. If you stay in a position to absorb the short term hit there will be long term gain.

    Stubborness and persistence applied properly can be great attributes but working harder is seldom a mistake.

    There are a lot of smart people out there looking for the easy bucks but not many of them are hard workers nor do they have more than a glimmer of an idea how much work is actually involved in operating a well run bookstore. So … if you are a hard worker you may soon see all your so-called competion fade away and the market they helped expand could soon be left for only you to serve.

    Be happy this is not easy – if it was everyone would be doing it.

Comments are closed.