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Sector Spotlight: Book Stores

As the charm of independent bookshops comes back into the public’s consciousness, the balance might be tipping back in favor of physical books

Bookstores in Canada continue to fight against a consumer sway towards ordering books online for a cheaper price, as well as favoring e-books and electronic readers.

However, there is some confidence in the balance tipping back in favor of hardback and paperback books in the near future as the charm of independent bookshops comes back into the public’s consciousness.

Facts and figures

Overview

There is nothing better for a booklover than hours spent poring over titles in their favorite bookstore.

Unfortunately, the chance of this happening has reduced as the popularity of reading on electronic devices increases, and the number of books bought online rises - in turn, forcing small, independently-owned bookstores to close.

While the danger of online sales overtaking sales from bricks-and-mortar stores is still valid, luckily for bookstores, the growth of e-book sales appears to have plateaued.

This means that the bookstores who have survived the online onslaught are likely to continue to thrive, although product diversification is key to this.

Trends

As actual book sales continue to decrease, bookstores are having to diversify and offer alternative products such as toys, stationary, clothes, gifts, cards, art and craft materials and gadgets.

Some are even capitalizing on the café culture boom and introducing coffee shops.

If Canadian bookstores follow the trends seen in the US, some stores may start to open restaurants on their premises which also serve alcohol in an attempt to entice more customers.

Challenges

In the digital age, getting customers over the threshold will be the first step, and a larger and more diverse inventory may be the way to do this successfully.

Amazon is the main competitor, offering books at a fraction of the cost - they are also planning on opening bricks-and-mortar stores in the neighboring US in the next few years.

The ever-rising rental prices of brick-and-mortar shops are also becoming an issue for small, independent retailers.

In Toronto, for example, commercial rents could rise by as much as 50% in the next three years, catching up with major US cities like New York.

A recent report by real estate company Jones Lang Lasalle states that these massive rent increases are predicted ‘in all the major markets across Canada, Montreal, Toronto, Vancouver and even Calgary’ where they can see a strong demand.

Further stating that ‘the current environment is the perfect breeding ground for rental growth, and allows Toronto to catch-up with the major U.S. cities.’ 

Creating a community

Independent bookstores are often at the heart of the community in which they sit and, in turn, locally minded communities often help to sustain them.

Several ways in which bookstores are expanding is through events such as author talks, themed evenings, supper clubs and spoken word gigs, drawing in a different crowd.

There is also a national day, Independent Bookstore Day, which runs on the last Saturday of April each year.

Samantha Schoech, director of the Independent Bookstore Day program stated in the Daily Beast that her aim was to “change the tired narrative of bookstores hanging on by a thread and being these musty throwback shops”.

With backing from hundreds of authors, another grassroots initiative, Authors for Indies, runs a yearly event in Canada.

Urging other authors to volunteer as guest booksellers, Canadian author, Guy Gavriel Kay describes how bookstores are an integral part of the community.

“Local indie bookstores are islands of light and knowledge in the communities lucky enough to still have them. We can walk in and be surrounded by the words and thoughts and images of centuries - or of this week. The best things humankind has written, or the funniest, sexiest, most timely and informative, most keep-you-up-at-night. All of the above.”

“So, if we support independent bookstores we aren't doing so as a benevolent act, we are doing it for ourselves, our children, our neighbourhoods, the richness of community life.”

Licenses and Permissions

There are no special licenses required for opening a bookstore other than the usual ones for any business, for example, trading, employing others, health and safety etc.

If, however, you are considering incorporating a café or restaurant within your premises, then there will be additional considerations for selling food and beverages.

Essential Skills

It can be advantageous if you are thinking of opening a bookstore in Canada, to have worked in a bookstore before, or even just in retail in general.

You will probably have to plan to work long hours, as customers are more likely to want to shop after their work has finished, on weekends and on holidays. This can be difficult, although if you can find staff that are able to run the shop on their own, this will help.

Being able to source books that will keep customers returning is a skill in itself, albeit a fun one for book lovers. It is probably best to buy a mix of titles, not necessarily ones that you would choose for yourself, as you need to appeal to as many of your customers as possible.

Buying a business

If you are considering buying an existing bookstore,  you will need to do your homework. You should really ascertain the real reason for the sale, if it is because they are not making enough profit, you may also struggle.

However, if you can see improvements that can be made to the current set-up and your business plan includes diversification as well, it may be worth continuing regardless, but your due diligence should be thorough.

When looking for bookstore to purchase, location is key, ideally, you should be looking for somewhere that’s close to other retailers so that you will get more footfall. It will probably come at a higher ost, but could be worth it in the long run.

Remember, if you are buying an existing business, make sure you are buying for a good rate of investment, not just a good price. It is important not to leave yourself short of funds for both future expenses and inventory.



Melanie Luff

About the author

Mel wrote for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other global industry publications.

@Be_TheBoss

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