New Star Blogs

My Careen as a Bookseller (6) :: The Returns Boom

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A brief moment in time, it turns out: the Book Ware­house in Yale­town.
Pho­to by Jor­dan Dawe.

My pre­vi­ous digres­sion in this series con­cerned the intro­duc­tion of “ratio­nal” dis­tri­b­u­tion and retail prac­tices to the book trade, and the resul­tant growth of book­store chains through­out the 1980s and 1990s. These changes increased the shelf space giv­en over to books, but it also rad­i­cal­ly changed the rules of com­pe­ti­tion for access to that shelf space. This marked a dynas­tic shift tak­ing place in North Amer­i­can busi­ness, as man­u­fac­tur­ing lost its lead­ing role and was sup­plant­ed by finance. The “big iron” that used to call the shots — Detroit, US Steel, &c. — was pushed aside, as Citibank et al. took con­trol.

North America’s post-war sub­ur­ban build­ing boom, and high­er uni­ver­si­ty and col­lege enrol­ment dri­ven by gov­ern­ment pro­grams, had done much to increase the num­ber of book­shops through­out North Amer­i­ca. The chain store boom that began in the 1970s brought on anoth­er surge of growth in the mar­ket­place, and the large-for­mat stores that appeared at the end of the 1980s cre­at­ed what seemed like a glut of shelf space. But the glut was illu­so­ry, con­sist­ing large­ly of miles and miles of dis­play shelves that were effec­tive­ly cloned copies of the same much small­er stretch of shelves; and access to that dis­play space for books was now cen­tral­ly con­trolled from the upper right­hand cor­ner of the con­ti­nent. Mean­while, the peo­ple decid­ing which prod­uct went onto those shelves tend­ed more and more to believe they were deal­ing with gro­ceries — the back­ground, indeed, of many of the new execs now run­ning the big book retail­ers

The ratio­nal­iza­tion tak­ing place with­in the book trade put enor­mous pres­sure on inde­pen­dent press­es to turn their dis­tri­b­u­tion over to cen­tral­ized book dis­tri­b­u­tion ware­hous­es. The num­ber of books in print had in the mean­time swelled to over a mil­lion, while a typ­i­cal book­store had room for some­where between 5,000 and 35,000 titles (for a Duthie class store). Book­sellers couldn’t be expect­ed to main­tain hun­dreds of sep­a­rate accounts with all their pub­lish­er-sup­pli­ers. The mid­dle­men dis­trib­u­tors and whole­salers would be able to offer effi­cien­cies to both ends — book­sellers, pub­lish­ers — and the abil­i­ty to order New Star’s books from the same ware­house that car­ried the offer­ings of the big­ger pub­lish­ers was going to be mutu­al­ly advan­ta­geous. The buzz phrase of the day was “just in time” inven­to­ry.

One of the unan­tic­i­pat­ed con­se­quences of this arrange­ment is a phe­nom­e­non of “churn­ing” stock. The book­seller needs to get in some copies of The Book Everybody’s Talk­ing About. But they’re at their cred­it lim­it with the dis­trib­u­tor, and there’s no cash lying around. Solu­tion: round up a bunch of books sup­plied by the same dis­trib­u­tor, and return those books to free up the cred­it you need. Book­Man­ag­er, the local­ly devel­oped soft­ware pro­gram used by about 250 Cana­di­an inde­pen­dents to man­age their inven­to­ry, even has an impres­sive set of tools designed for this pur­pose.

It sounds like I’m talk­ing about inde­pen­dent book­sellers here. But the techique was pio­neered by the chains, who used returns to, nom­i­nal­ly, keep with­in the terms of sale they had agreed to (though in prac­tice, these are changed to their spec­i­fi­ca­tions when­ev­er the old terms prove incon­ve­nient). Inde­pen­dents who ramped up their returns were mere­ly fol­low­ing the trail blazed for them by their big broth­ers — anoth­er instance of “Mon­ey see, mon­ey do.”

This sig­naled a sig­nif­i­cant change in the way the book­stores oper­at­ed. For the first time, books began to be returned to their sup­pli­er, not because they had failed to sell in a rea­son­able peri­od of time (about a year), but because they hap­pened to be shipped by a dis­trib­u­tor with some­thing poten­tial­ly more lucra­tive in the ware­house. While the prac­tices of the big chains have dri­ven the returns boom, inde­pen­dents adopt­ed the same big-box prac­tices, and return rates from inde­pen­dents have been every bit as high if not even high­er.

The his­tor­i­cal­ly high rate of returns we enjoy today are a phe­nom­e­non of mod­ern book retail prac­tices — which have been large­ly dri­ven by changes in dis­tri­b­u­tion prac­tices, not by  con­sumer pref­er­ences — and are an arte­fact of the mod­ern sup­ply chain. But returns are not some­thing books do; they are some­thing booksell­ers do. Today’s extrav­a­gant return rates are not a sign that acqui­si­tions edi­tors, book­sellers, or read­ers are stu­pid­er than ever.

One phe­nom­e­non of this post-1980s com­mand econ­o­my that char­ac­ter­ized the book trade is the remain­der mar­ket and stores like Book Ware­house, which flour­ished dur­ing this era. This sec­tor of the mar­ket depend­ed on the over-pro­duc­tion of skids of this year’s $40 best­sellers for their avail­abil­i­ty next year at $6.99 while the paper­back sells for $10.99, or $19. (It is the remain­dera­mas of the world that are now being imper­illed by e-books, which so far are mak­ing sig­nif­i­cant inroads only in this sec­tor of the trade. E-books may not end up doing as much dam­age to the book trade as claimed, but they were sure­ly a fac­tor in the demise of the Book Ware­house remain­der chain.)

The decline in ini­tial orders for new books, com­bined with the greater propen­si­ty on the part of book­sellers to return soon­er and in greater quan­ti­ties, as they in turn expe­ri­ence the pres­sures of “ratio­nal­iza­tion”, was by the mid­dle of the 1990s pos­ing a threat to New Star’s exis­tence. Book­sellers that in 1980 had read­i­ly tak­en 10 or 15 or 20 copies of a new New Star title more or less on spec, and return­ing no more than 10 or 15 per­cent of them, were by the end of the decade tak­ing 1, 2, or 3 copies, and return­ing upwards of 30 per­cent or more for cred­it after a few months.

This was not just facil­i­tat­ed but fueled by cen­tral­ized book dis­tri­b­u­tion. Even stores that thought of them­selves as sup­port­ing small press­es were exhibit­ing these symp­toms. The People’s Co-op, which used to sell $1K to $2K a year’s worth of New Star titles in a year, installed Book­Man­ag­er in the late 1980s, and adopt­ed the prac­tices built into that soft­ware. By 1997, New Star’s sales through the People’s Co-op, employ­ing the lat­est in inven­to­ry man­age­ment tech­niques, had fall­en to under $300 a year.

My response to all this was Plan A, a con­sign­ment pro­gram that saved the press a few years lat­er when our trade dis­trib­u­tor lost the Man­date of Finance, and was put out of busi­ness in 2001.

Con­tin­ue read­ing My Careen as a Book­seller (7) ::  Plan A

Start from the begin­ning: My Careen as a Book­sellers (1) :: Before It All Began