Friday, August 27, 2010

August 2010: Independent Stores

After reading my July letter, my friend Caroline Greatrex wrote and recommended that I read a book Zen and the Art of Happiness by Chris Prentiss. Valuing Caroline’s opinion I checked it out on Amazon. I am pretty sure that Caroline thought I was being too hard on myself and that I need to lighten up and enjoy the journey more (ah yes, I can see a future letter coming out of this very sentence).

Before clicking the “buy” button, I decided to buy it locally under the guise that I would start reading that if I bought the book immediately it would be days, weeks, or months it might become if I had to wait a few days for the book to arrive.

While I frequent Amazon.com on-line, I go to Barnes & Noble in the real world. I got used to Barnes & Noble while working at Colgate-Palmolive in Manhattan. The mother of all Barnes & Noble’s was a few blocks away on 5th Avenue between 45th and 46th Streets. I could walk there at lunch, on a break, or on the way to the train. It was quite convenient. Also, in many places, Barnes & Noble is the only choice when it comes to bookstores.

I went to New York in 1990. Barnes and Noble was then emerging as the category killer. By the time I had left in 2006, the category was killed and most places I go now are serviced primarily by Barnes and Noble stores. A category killer is defined as:

A large retail chain store that is dominant in its product category. This type of store generally offers an extensive selection of merchandise at prices so low that smaller stores cannot compete. http://retail.about.com/od/glossary/g/category_killer.htm

Category killers put the independent, Mom and Pop, stores out of business. They simply cannot compete on price, selection, buying power, and management talent. The phenomenon is not limited to the bookstore category. CVS and Walgreen’s are category killers in the drug store and convenience store category. It is darn right impossible to find an independently owned pharmacy and it is becoming that way with “convenience” stores as well. Home Depot and Loews are category killers in hardware. Independent hardware stores that are not Ace or Tru-Value affiliates are very hard to find. Starbucks created and killed the coffee shop category. PetSmart and Bed, Bath & Beyond did the same in their categories. Of course, Wal-Mart is the biggest category killer of all.

Things change very quickly. The longevity of category killers is not assured by any means. As Barnes and Noble was killing the traditional bookstore category, Amazon was emerging and offering stay at on-line shopping for book buyers. While, I would frequent the Barnes and Noble while in New York and now in Chicagoland, I use Amazon quite often. While in Buenos Aires or Caracas, I could order a book or three on-line and they would be waiting for me at home or at my office when I returned.

On July 22, the following was reported:

It is an announcement that will provoke horror among those who can think of nothing better than spending an afternoon rummaging around a musty old bookshop. In what could be a watershed for the publishing industry, Amazon said sales of digital books have outstripped US sales of hardbacks on its website for the first time.

Amazon claims to have sold 143 digital books for its e-reader, the Kindle, for every 100 hardback books over the past three months. The pace of change is also accelerating. Amazon said that in the most recent four weeks, the rate reached 180 ebooks for every 100 hardbacks sold. Jeff Bezos, founder of Amazon, said sales of the Kindle and ebooks had reached a "tipping point", with five authors including Steig Larsson, the writer of Girl with a Dragon Tattoo, and Stephenie Meyer, who penned the Twilight series, each selling more than 500,000 digital books. Earlier this month, Hachette said that James Patterson had sold 1.1m ebooks to date. http://www.guardian.co.uk/books/2010/jul/20/amazon-ebook-digital-sales-hardbacks-us
I did not want to write about the half-life of category killers. That is actually a forthcoming topic on our business blog: http://blog.demandcaster.com/

This was not the main point of this letter but rather a reflection on the days when there were mostly independent stores in the majority of categories. I am old enough to remember this, my children are not. It was not the revelation of Amazon selling more e-books than hardcover books. It was rather my decision to buy the book Caroline suggested on coincidently the same day as reading the news about the e-book sales.

My schedule was such that I could not get to any of the Barnes and Noble stores that are near my house. I had to go to one closer to where I teach at the College of Lake County in Grayslake, IL. Fair enough, I went to the Barnes and Noble website and employed the store locator application. I was surprised to find that there were essentially no Barnes and Noble stores north and northeast or where I live.

Why is that? I reflected on it and realized that there are three large stores within six miles of my house. They are west and south of me in towns where the demographics favors book readers and buyers. I was surprised by it. North of me, the demographics change, and I am guessing that those communities are less affluent and less educated. This was the only explanation I could conjure up.

So, I searched for other bookstores on-line and found one right in Grayslake less than two miles from the college. Not surprisingly, as it was an independent, the bookstore I found was an independent. This Old Book opened in June 2003 and run by Dick Navarre who appeared to be my age and have had a fascination and love of both books and bookstores. Buying and selling books on-line was a hobby and avocation. Upon his retirement from a career as a hospital administrator, he realized his dream and opened up this brick and mortar book store. He only sells used books.

He did not carry the book I was looking for but I was glad to find the store. He gave me a little tour. I did not buy anything. I put my name on hi s e-mail list and will definitely return.
The week before, I went to another independent bookstore. This one was in the Lincolnwood section of Chicago an urban chic neighborhood of cafes, coffee houses, and interesting shops. The Book Cellar is one of the interesting shops. I went to this bookstore for a meet the author book reading. David Herlihy gave a presentation on his latest book, The Lost Cyclist. I will blog about this book later.

Being at a meet the author book reading, I bought the book. The price was $24.95 which was full price. I commented, mischievously, as I handed my credit card to the cashier that “Wow, full price. I would never pay that at amazon.com or Barnes & Noble.” My mischievous nature was way too subtle on this lady and she (allow me to use the technical term here) freaked out. She launched into what I believe was an oft given lecture on the nature of independent businesses, how hard it to compete, and how they offer a unique and quite pleasant venue.

The owner, running the other cash register, noticed my smile and glint in my eye. She realized I was kidding around and calmed her ace number one assistance down. We chatted and I was informed that they had just heard that too much in that week from customers that were quite rude about it. We laughed and I complemented them on having such a nice store.

In mid-August, I came to learn that Barnes & Noble has put itself up for sale. The stock price is down and clearly Amazon.com and both the Kindle and iPad have dampened the sales of the Barnes and Noble. Barnes and Noble was the company, the category killer, most responsible for the demise of the independent bookstores.

Oddly, most of the books I buy on Amazon .com these days are used and from independent bookstores all over the country. Why by a new book when I can buy a use one in excellent shape at a fraction of the price? This market is changing very fast.

An article in the August 18, 2010 Wall Street Journal suggest that independent bookstores might actually make a return with the stumble and possible demise of Barnes & Noble. Based on my experience at Amazon.com and a few bookstores like This Old Book and a delightful used bookstore, Renaissance Book Shop, at the Milwaukee Airport, there are thriving independents out there. The independents that survived the category killing fields have learned to thrive and prosper on-line mostly are merchants on amazon.com. http://online.wsj.com/article/SB10001424052748703824304575435512550936090.html

As stated above, I did not intend to write so much about category killers, e-books, Barnes & Noble, and such. I had simply wanted to express some observations about the shopping in chain stores versus independent shops. I realized some differences when I visited This Old Book in Grayslake.

There is a certain comfort in walking into any chain from Starbucks and Panera to Loews and TJ Maxx. The look and feel is the same. Independents vary much more dramatically. Chains have the same d├ęcor, lighting, offerings, displays, music, and uniforms that the employees wear. Independent stores can be lighter or darker, have vastly different shelving and layouts. Employees probably do not wear the same uniforms.

The biggest difference, and I had forgotten all about this, is the interaction with an “associate” versus an owner. The associate of a chain store will try to help you. They will listen to you and then help you find want you want or need. If asked they will recommend an alternative or two. They are doing their job. When the chain has good hiring practices, good training, and inspired managers, the experience can be very nice indeed.

In an independent, all of the above can definitely be true. Owners are very interested in helping you find what you want. They are very interested in not only helping you but in getting you make a purchase. When I was being shown around This Old Book, I was interested in some old maps. I found some reasonable priced old, school book style, maps of Mexico, Central America, and South America. I was leaning toward buying one with the goal of framing it and hanging in my office as a reminder of the places I have visited and grown fond of. The owner, Dick Navarre, saw my interest and did what many owners would do. He told me that I didn’t really want to by those cheaper plainer antique maps and steered me more expensive and admittedly better looking antique maps. He lost a $20 sale by pushing a $75-120 one.

I really had forgotten how independents push sales. Chain stores often facilitate sales without pressure. I realized that I liked the latter approach much more. The down side of chain stores, when not adequately staffed and managed, is that low pressure sales can easily become a problem of not being able to find someone:
1. To help you
2. Knowledgeable and conscientious to help you
3. To take your payment so you can leave.
Now don’t get me wrong, I was not upset in any way with Dick Navarre. He was quite nice and, as stated before, I will return to his shop and spend some money there. I was simply surprised by a practice that I had all but forgotten about. It made me remember the individually owned clothing stores where the owner would welcome you and really not let you leave until he made a sale. To find that kind of sales approach you have to go to a certain kind of car dealership.

There was a Toyota dealership in Westport, CT that embodied this extreme. They believed that if you visited and left without making a purchase, you would not come back. Well, it made them adopt really high pressure sales tactics. The high pressure sales made their belief a self fulfilling prophecy. I had a neighbor who was a pretty hard nosed investment banker. She wheeled and dealed with the best of them but upon casually visiting this car dealership she was “intimidated and frightened off.” She never went back.

Once I knew what this dealership was like, I enjoyed going in there when I was absolutely certain I was going to buy a car. I would go in on the last day or two of the month and embrace their model. I always go have some fun and get a good deal.

Insurance salesmen and aluminum siding salesmen were often depicted for pressuring, badgering, and finagling customers (dupes?) to drive sales. The movie Tin Men is a wonderfully entertaining depiction of the pushy and shady practices used. With corporatization of many stores that has kind of pressure has simply disappeared from most shopping venues.

I was in a Staples looking for some three ring binders, mechanical pencils, and a presentation remote control. While looking at some binders, a very pleasant associate asked me if I needed help. I was unsure of the price of the product in my hand so I asked her the price. She told me and then informed me of a wonderful offer that saved me money and no doubt cut the margin dramatically on my purchase. But, I was happy. An owner, may have, and I emphasize may have, just let me buy the more expensive alternative. I walked out happy. I walked out of This Old Book… empty handed.

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Some great independent family owned stores that I have great regard for:

Mardoian Brothers Foods: This one site supermarket and wholesale food distributer was run by my father in-law Harold Mardoian and his two brothers. When Harold passed away on July 26th of this year, many stories surfaced about what great business men they were and how much they were loved in the community for provide quality, value, and service. They helped poor families around their store with free groceries.

Adray Appliance Dearborn MI: Michael Adray founded this Dearborn icon in 1955. His wife and daughter ran it from 1992 when Mike passed away until 2009 when they closed their doors. I worked at Adray while in college. It was a place of great value, excellent customer service, and thus unbelievable customer loyalty. Mike supported youth athletics primarily baseball and hockey. It seemed like every boy in Dearborn and many surrounding communities wore Adray jerseys and t-shirts. It was great advertising born out of a genuine and passionate belief that sports was good for young people and in giving back to the community that helped make him a success. http://detnews.com/article/20090220/BIZ/902200395/Adray-Appliance-bids-adieu

Omni Foods Weston, MA: Right from their website, www.omnifoodssupermarket.com:
It all started in 1981 when Jack and Thelma Der Avedisian established Jackson's Star Market in Gilford, New Hampshire. The business began with a fundamental principle in mind that guided Jack for thirty years. The principle is that our customers are the most important ingredient to our success and we have adopted an attitude and belief that "WE CAN DO IT BETTER".

Jack and Thelma are the parents of my sister in-law Christine Mardoian. Omni Foods has a loyal following that is now operated by three generations of Der Avedissians. Their business and largesse is highlighted in Neil Cavuto’s book, More than Money: True Stories of People who Learned Life’s Ultimate Lesson. You can read the chapter on Omni Foods at http://tinyurl.com/36rwwfj

2 comments:

  1. Mark,

    Thanks very much for this newsletter ! I do have a real time example of an independent that we have switched to, along with most of the town, for all or the reasons listed below related to category killers. Park Avenue Appliances( on Bloomfield Avenue, actually ) is a breath of fresh air in terms of quality, service and even pricing. We recently replaced our oven and microwave and the process was actually a pleasure. The folks at Park Avenue were very attentive when we entered the store, not annoyingly so, and provided a ton of info and guidance. We made the purchase same day, roughly 35 minutes after closing on a Saturday with no one locking the doors and shuffling us out at closing time. The ovens were discounted twice for being a first time buyer and a resident( 10% each hit ), delivery and installation were only $US 50 and we received everything in three days ! No charge for disposal of the old ovens, no pressure to purchase extended warrantees, no extra charges related to late afternoon delivery, just a very friendly and reassuring comment that "our products are guaranteed to satisfy, we're here for the long run, and you will not be disappointed with this sale". Yes, nothing lasts forever and these guys could close tomorrow( doubt it though since the owner, his two middle aged sons and their sons in their 20's have been kept this shop vital since the 1950's and are very business savvy as well as customer focused ). I checked on pricing a few days later at our usual appliance haunts, Sears and Home Depot, and realized that we actually got a better deal at the independent overall ! We intend to replace our 20+ year old washer/dryer at Park Avenue later this year. They will see more of us and our neighbors over time because of the total satisfaction delivered.

    Just wanted to share this story with you - we need more of this small business attention to get further away from the "race" and into a slower paced, lower stress purchasing environment. Honestly I don't mind one-stop shopping and engage in it frequently, however, it was great to shop at Park Avenue and for appliances at least we won't go back to the category killers again.

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  2. Mark:

    If you are ever in Hyde Park, pop into THE SEMINARY BOOKSTORE, University and 57th Street, just across the Oriental Museum. It is outstanding; I think it is better than Blackwell's in Oxford and Heffer's in Cambridge.

    Also in Hyde Park, check out POWELL'S; it is also fantastic used-book store.

    Zaven

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