August 26, 2012
“One of the biggest screw-ups in the history of book retail”?
by Dennis Johnson
A recent Simba Information report (subscription required) “posits that the decrease in the number of bookstores that we saw in 2011 did not lead to a corresponding growth in ebook sales,” notes Brian Howard in a story for Book Business magazine. “This suggests that the showroom effect — where customers discover books at a bricks-and-mortar store and then buy them online — is real, and etailers have a vested interest in the success of physical bookstores.”
The observation prompts Howard to speak with Michael Norris, one of Simba’s senior analysts, who details the notion with some remarkable observations — including that “The growth in digital hasn’t been making up for losses in print sales,” because ebooks “haven’t really, by themselves, created new readers. They’ve altered the DNA of the consumers the industry already has.”
Particularly trenchant — and merciless — are his comments about the implications of showrooming on the current bricks-and-mortar retail scene:
The thing that I worry about with Barnes & Noble is that they have a tremendous asset in their stores, and their stores are exactly why the NOOK has done so well up to this point. They need to figure out ways to make the two divisions work more closely together, as opposed to working on an odd solution to separate the NOOK business from everything else.
He’s even tougher on Waterstones, confirming your worst concern about its decision to partner with Amazon:
Also, retailers need to know what their value is, and not partner with companies that want to exploit that, like with [UK retailer] Waterstones’ deal with Amazon. Waterstones is going to be selling Kindles in the fall, and I’ve really got to hand it to companies like Amazon, they know how to kill a competitor and make it look like suicide. The thing people need to understand here is Waterstones thinks they can outsource their ebook sales to Amazon the way Borders thought they could outsource their e-commerce to Amazon.
… If Waterstones starts selling Kindles, we can expect bad comparable store sales, ineffective loyalty programs and customers who think it’s okay to walk into a store staffed by people Amazon does not pay and ask them what they can put on their Kindles. It’s culturalizing what’s already happening now. It’s going to be one of the biggest screw-ups in the history of book retail.
Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House.