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