The Death Of The Book Store Again By Guest Blogger Sreeny Cherukuri

The Second Essential Scary Truth

The other day I stopped by my local Barnes & Noble to pick up Escape from Camp 14 (very interesting read – but that’s another story).    While shopping I noticed that the in-store price was about 40% higher than the on-line price.  And no, B&N does not match the on-line price.

At first you think this policy is just going to piss everyone off.  But peer beneath the surface you can see that B&N is in effect throwing down the gauntlet to the American consumer like no other company has done in recent year.

The American shopping class is always lamenting the loss of some failed institution, without ever looking at its own behavior.  We all miss the local hardware store, and run to home depot to save a nickel.  Nobody actually likes Walmart or Walgreens, yet they are everywhere, while the locals have been killed off.  People claim to value service, ambiance, and quailty – but their spending habits prove just the opposite.  Every town in America laments the loss of their “own” Department Store, yet every town has been just at successful at driving them into the ground – to go shop at the GAP or Men’s Wearhouse.

As big box chains went, B&N, and it’s departed rival Borders, were different.   They were welcomed and/or pursued as a cultural uplift to the neighborhoods where they opened.  And for many years they thrived, until Amazon.

Though the brick and mortars could match the online convenience and price, ultimately Border’s could not compete with the fact that Amazon was sales tax exempt in most markets, while Borders, with stores in every state was forced to collect.  Both Borders and B&N were pushed to the brink with one liquidating and the other closing numerous stores.

As always, no matter what customers say they want, their shopping habits betray their sentiments.  Borders discovered that no matter how much the communities claimed to love their stores, it wasn’t worth an extra $1 of tax on a 17.99 best seller.

Fast-forward 9 months; Borders is gone.  Barnes & Noble is the only game in town.  On the web, they are in competition with Amazon book for book, kindle vs nook.

On the web they are matching every Amazon price  (though they are still stuck with the sales tax burden).  But B&N is pursuing a strategy to position themselves as the anti-Amazon – striking up strategic partnerships with Microsoft among others.

In the stores, it is clear the decision lies with the consumers.  B&N’s accounting staff is apparently very aware of the cost of running the stores, and is expecting to extract that cost from the sales of the individual store.  Stores that aren’t profitable are being dumped at lease end or sooner.  Barnes and Noble has reduced store count by 5% since last year, despite being the prime beneficiary of foot traffic that used to go to Borders.

Why is this interesting?  In past people have blamed everybody else for the demise of this or that beloved chain or local outlet.   This time however, Customers and their neighbors are being presented with the exact cost of having a bookstore.  The store closing decisions will be granular, not chain wide – since the economies of scale in the back office will still exist for the rest of the BN.com business.

So shoppers, when your local store closes it will only be a reflection you and your neighbors buying habits.   We always like to say that we would pay a premium for service and selection now we will see what that means?   I would be curious to know what my cost will be to keep my store open.

For the record – I did pay the extra 40% for Escape from Camp 14, about $8.