The Final Chapter for Bookshops?

Written October 2013

With challenges seemingly coming from all directions, significant changes in the book industry mean times are tough for bricks and mortar booksellers. Are they still relevant, and what does their future look like? Brittany Stewart reports.

As I enter her living room, it’s clear straight away that Julie McInnes is a serious book lover. After offering me a seat on a comfy-looking sofa, she settles down in an armchair next to a large, full bookcase that stands almost floor to ceiling. Various genres, new and well-worn titles poke out from the shelves and fill the room with character and colour. Some stand side by side neatly and regimented, while others are piled high on top of each other vying for space. Even the cushion decorating her armchair is covered with pictures of books. Having worked for over 30 years in libraries and five years as the owner of a bookshop, it’s not really surprising.

“I’ve always been a huge reader, mostly because I was really sick when I was younger, so I spent half of my early childhood in hospital. Reading became my passion because it was really the only thing I could do. I probably decided from 10 years of age that I wanted to work in something with books.”

After 30 years working in libraries, McInnes opened Matilda’s Books in the South Eastern suburb of Mount Waverley. Located close to her home, the shop had been the village’s local bookshop for a number of years before it went on the market, and with some increased creativity and refurbishment, McInnes thought it had potential.

After five years in business, McInnes made the hard decision to close the business and Matilda’s Books ceased trading earlier this year.

McInnes attributes her decision to a number of factors, including salaries and high rent cost. But it was the general move away from the strip shop that really made the difference.

“The biggest negative was people moving away from the strip shop. During the time that I had Matilda’s Books, there were many shops in the area that closed down, some of which had been there for 30 to 40 years.”

Now McInnes’ career has come full circle, as she continues to work with books, but this time as Team Manager at Clayton Library.

But Matilda’s Books is not alone. The past few years have seen the closure of a number of bookstores, including the two large chains Borders and Angus & Robertson.

In 2011, The Daily Telegraph reported that Small Business Minister Nick Sherry had told a conference in Canberra “In five years time, other than a few specialty book shops in capital cities, you will not see a bookstore. They will cease to exist”.

CEO of the Australian Booksellers Association (ABA), Joel Becker, says it was this “nonsensical” comment that inspired him to establish National Bookshop Day, an annual event designed to celebrate Australian bookshops and recognize the role they play in local communities.

Celebrating it’s third year this year, the ABA held a promotion to find Australia’s favourite bookstore. Over 20,000 votes were taken online, and any member of the ABA was eligible.

State winners included Dymocks and Robinsons Frankston, but the real surprise came when the overall winner was announced.

Australians voted Booktopia, an online bookseller, as the nation’s favourite bookshop. Many book lovers and voters took to social media to express their surprise and confusion, saying that while they liked Booktopia, the fact that an online bookshop won was “lame” and “made a joke out of National Bookshop Day”.

Managing Director of independent bookstore Readings, Mark Rubbo, agrees.

“I thought the idea was a silly one. National Bookshop Day is a great initiative but pitting bookshops against each other went against that. It made the whole concept look silly, celebrating bookshops and an online one won”.

Becker says while it’s a reflection of the fact that entries were submitted online, it’s also a constructive message of how important it is for bookshops to have an online presence.

“We could have had a competition that was only open to bricks and mortar bookshops, but we said it was open to any member shop and Booktopia is one. Some booksellers might not want me to say that, but it is a bookshop. And really, it was also a one off – we’ll do a different promotion next year as we did the year before, to promote books”.

Booktopia’s customer base includes customers in many rural areas, who after the closure of Angus and Robertson may no longer have a local bookstore.

Created in 2004, Booktopia is Australian owned and operated, with an office and warehouse based in Sydney. The website ships over 600,000 parcels to Australian addresses, over 75% of which are stocked on site at their Sydney warehouse. The remaining titles are sourced from publishers around Australia, the UK and the US.

While the recipient of a number of business industry and online retailing awards, the National Bookshop Day win was Booktopia’s first award from the book industry, something CEO Tony Nash was “humbled” by.

Looking at this result, there is no doubt that the traditional way of purchasing and reading books is changing. While many view buying books online as a threat to physical bookshops, surely shopping at Australian online retailers such as Booktopia is better than choosing overseas online retailers?

Many Australians look to online giants such as Amazon and The Book Depository (which was bought by Amazon in 2011) for books, enticed by their low prices and free shipping.

As the advocate for the book industry, an equal tax burden is something the ABA is currently lobbying the government for.

Current tax legislation means that when Australians purchase goods from overseas retailers under the value of $1000, they’re GST free. This allows retailers like Amazon, who essentially already have a virtual monopoly on books online, to charge almost below Australian cost price, something that bricks and mortar bookshops in Australia just can’t compete with.

“I personally think it’s very unfair that large corporations based overseas can avoid paying Australian taxes”, says Rubbo.

“It’s difficult for us because we have to charge that tax, so it just makes the books that more expensive”.

But is there a viable solution?

Earlier this month, the French government introduced a bill designed to support and protect independent bookstores against competition from web-based retailers, after the country’s 3,000 independent bookshops complained they could not compete with cut price offers online.

If passed, the bill will prevent companies like Amazon from combining free delivery with discounts of up to five percent on books.

McInnes believes introducing something similar in Australia could ease the strain for physical bookshops.

Both Rubbo and Becker believe that the best option would be for the credit companies to collect the tax at the point of purchase.

“I guess this would be ideal because then you could collect it for e-books and physical books as well. I don’t know how feasible it is, but it would obviously be the better option for both”, says Rubbo.

Until that happens, the question remains why consumers should buy from physical bookstores when they can get buy their books much cheaper from overseas online retailers.

While online may offer cheaper prices, the experience of going into a bookshop has yet to be successfully replicated online.

Knowledgeable staff, personal recommendations, the ability to browse and the general experience of entering a physical bookstore and thumbing through the pages of a print book are still major draw cards for customers.

But what booksellers are increasingly seeing are potential customers visiting the shop and seeking advice from staff before going online to purchase the book at a lower price.

While this is not a practise they want to encourage, it shows that the human element of buying books and talking to knowledgeable staff is still in demand.

Again, it’s the impossibility of offering competitive pricing compared to the overseas online retailers that mean physical bookstores are losing out.

Many in the industry point to Readings as an example of a bookstore doing it right and doing well, although Rubbo admits the past two years have been really difficult.

“Certainly in the last couple of years we’ve seen a real decline in customers and sales. I’ve never experienced that before.”

Walking into the Readings Carlton store early Saturday morning, you’d be forgiven for not knowing this. Despite being just after 9:30am and the first day of sunshine in a while, the bookshop is buzzing and busy.

Opening in 1972, Rubbo bought Readings in 1976, selling books and vinyl. There are now six Readings stores, and the brand has established itself as a respected and influential bookshop.

“Readings is pretty funky and a great destination”, says bookseller Sharon Godwin. “They have knowledgeable staff and are quick to catch onto all the latest trends”.

“Part of it’s luck and where we’re positioned”, says Rubbo. “Our locations [near universities] were not a tactical decision, but it’s certainly been very beneficial. I think the Carlton location is the best place to sell books, because you have the wonderful [Melbourne University] campus up the road with people who are interested in good books.”

It’s greatly helped the Carlton shop, which is the driver of the business in terms of generating income.

An online and social media presence as well as regular events including launches and author talks are also part of Rubbo’s strategy, although they are getting harder to generate income from.

“Readings started their events program in 1985 but the emergence of The Wheeler Centre has kind of knocked us round a bit because they get a lot of authors we used to get. That’s confused us – how to respond to that.”

He believes that creating a good instore environment, stocking a range that’s relevant and pertinent, and continuing to engage with existing and potential customers as well as providing high levels of service are ways Readings can ensure they remain on the scene.

Add to this another challenge – the growing popularity of e-books and e-readers that threaten to kill the print book altogether.

The move of a significant number of the population to buying books in digital form is one of the biggest changes Becker has noticed in his 41 years in the

Starting with the release of the Amazon Kindle in 2007, there are now many e-reader options including the Kobo, Sony e-reader and iPad.

Becker looks to the US to watch and try to predict trends, the impact of e-books and the digitization of the industry started earlier.

The number of Americans owning e-readers grew from 18% in late 2011 to 33% in late 2012.

Convenient for travel and reading on the go, an e-reader can hold hundreds of books while taking up less space than a thin paperback.

E-book reading devices including iPads have been an increasingly popular addition to the classroom.

Naomi Louise, a middle years English teacher, prefers physical books but has seen great success in engaging reluctant readers with e-books.

“My school has an iPad program and we’ve seen much higher levels of engagement with literature and independent reading when students have access to E-books”.

While all believe encouraging reading on whatever format gets people reading is the most important, some have concerns that this early exposure to reading in a digital format could pose further problems for the physical bookshop and print book in the future, as the digital generation grows up.

“It is a threat”, Godwin says. “The more natural electronic readers are, the less likely people are to feel the need to pick up a paper book, and bookshops won’t survive without paper books”.

Interestingly though, the largest increase in the American demographic reading e-books has been seen in those between the ages of 30-49.

This is something Becker has noticed as well.

“I went to talk to a group of about 40 writing and editing students at Swinburne University, and one of the things I always ask at that start is how many of them have e-readers. The only hands that came up were the mature age students.”

He says the largest demographic buying e-readers are women over 50.

It’s the same demographic that helped spark the E.L James’ “Fifty Shades of Grey phenomenon” that exploded last year.

Originally published on a Twilight fan fiction website entitled Master of the Universe, the first of the Fifty Shades trilogy Fifty Shades of Grey was released as an e-book and a print on demand paperback by an Australian virtual publisher, The Writer’s Coffee Shop.

It became the first book to sell more than one million copies on the Amazon Kindle, and the fastest selling paperback ever, even beating out J.K Rowling’s Harry Potter.

Initially spread by word-of-mouth recommendations, its huge success has been attributed to the discreet nature of e-reading devices, selling six times more as an e-book than a print book.

As it became more and more popular and reached the mass market, people no longer felt the need to keep it to their e-reader, with print copies selling out in bookshops, and spotted everywhere.

It’s even given rise to a whole new genre, unofficially called “mummy porn” (officially called ‘new adult”) aimed at 20-40 year olds, offering different levels of erotic fiction.

While romance has always been a popular genre, the e-reader has certainly increased its popularity and brought what was previously considered taboo to the mainstream.

Although Fifty Shades of Grey is both a print and e-book success story, it’s unlikely it will be the fate for all books.

South Eastern Key Account Manager for publishers Simon and Schuster, Nikki Lambert, says examples like this mean publishers have to be able to sell their books in different ways.

We can also expect to see a lot of books following the non-traditional publishing pattern of E.L James.

“A lot of authors are getting published as e-books first, and then if they do really well they can move into paperbacks. Many authors are getting published because they were first an e-book”.

While e-books and e-readers definitely pose a growing challenge to print books, Becker thinks that their popularity is partly fuelled by the perception put out by the manufacturers that that’s the way things are going.

“Jeff Bezos [Amazon CEO] is one of the great marketers. He makes claims and no one asks for evidence – it becomes front-page news. (In 2010, Bezos claimed that in nine to 12 months, Kindle e-books would surpass paperback sales, and sometime after that the combination of hardcover and paperback). Because it becomes news, it becomes so. And people believe it. So they’re saying it has had an enormous impact, but it is ultimately marketing.”

Rubbo believes that e-reading devices are also changing the way we read.

“Certainly the success of digital has been largely due to genre books, so things like romance, crime fiction – stuff that’s consumable, that people devour and then it’s throwaway stuff that you don’t necessarily want to keep. Serious non-fiction sales on e-readers are not as popular”.

The ease of downloading books on e-readers, and the increase in self-published works that are often for free or very cheap, mean we’ve got into a practise of disposable reading, reading more but not necessarily remembering it all.

He also points out that with books, you’re competing for people’s time too. The growth of the extended TV series such as The Wire, Game of Thrones and Breaking Bad require viewers to devote huge chunks of time to them.

“In the past people might have read a series of books but these shows are like a digital novel with images, and so that’s the literary experience for some people.”

It’s clear many consumers are embracing the technological advancements in reading, but do the booksellers themselves use e-readers?

McInnes doesn’t have one yet, but the next time she goes holiday will be downloading.

“I think the economy of size of an e-book is just fantastic. I always used to go with a suitcase of clothes and a bag full of books. In the future, I’ll just have an iPad in my suitcase”.

Godwin downloaded a book just this morning to read on her iPhone for her holiday, but Lambert says the only reason she would use one is for work.

“Working for a publisher, I have to read lots of books and often the new releases are pdf files. If I did have an e-reader I’d be able to read them a lot earlier than when they came out. Otherwise, I’m really not interested in reading books on e-readers or kindles, I’d much much prefer to have a physical book”.

Rubbo is the same. He has an iPad, but much prefers to read a physical book, enjoying the tactile bit of it.

If people are looking at purchasing an e-reader, Becker’s message is to choose anything but a Kindle.

As a proprietary device, books for Kindles can only be bought from Amazon. Other devices work on a multi-platform system, meaning that books don’t have to be bought from that particular company.

“We get very worried about the use of the word ‘kindle’ meaning ‘e-readers’, because it’s a brand of e-readers. If people are going to buy an e-reading device, we encourage them to get anything but a Kindle”.

Choosing devices that work on multi-platform systems mean there’s room for physical bookstores to look at the possibility of selling both e-books and print books, something Readings has tried in the past.

Working with an Australian start-up, the bookshop sold e-books for a while but couldn’t sell enough. Publishers were initially suspicious and wouldn’t always provide popular content, and the work and promotion needed to sell large numbers of e-books did not translate into significant profit.

After selling e-books for two years, Rubbo made the decision to stop.

“The technology also wasn’t as easy as it could have been when it was first launched. It’s getting better, but whether we’d ever have got to a stage where it was actually profitable… who knows? Amazon just has a stranglehold on it”.

But embracing the “book” in whatever form it comes in – both print and digital – is something physical bookshops may have to get used to if they want to survive.

Becker believes it’s very likely that in five years time many bookshops, in addition to print books, will also have kiosks where customers can go in and buy their e-reader or e-book, something that some shops have already installed.

While he doesn’t suggest there hasn’t been an impact from the rise of e-readers and it hasn’t created challenges within the industry, he says we’ve seen it all before.

“There used to be this thing called radio and then television entered and radio was going to disappear. It was the same thing with theatre when films came into play. “

Becker believes each of these changes have shaken up the industry, but cant imagine people not picking up a bound object of paper and reading from cover to cover.

It may be however, that they put down the book and when they hop on the train or go on holiday they continue the book on a tablet – a likely change that is already occurring to some extent.

But he’s adamant that books will continue to play an important role, both as print books and e-books, and bookshops and libraries will continue to be a part of that.

Looking to the future, Rubbo expects print book sales to continue to decline – although he hopes he’s wrong.

He too, thinks people will use printed books for some purposed and e-books for others.

“The printophiles will hopefully support a smaller but viable bookselling industry, although the trouble is it could become unviable for publishers to produce print books to support the smaller market”.

While the market may be smaller, Lambert believes bookshops will become more specialised, leaving the mass-market books to discount department stores such as Big W, Target and Kmart and focus on their niche.

They won’t ever become obsolete either.

“There’s so many people who love reading, but from experience having a bookshop, you’d see little kids walking past the bookshop and every time they’ll ooh and aah, ‘mum can we go in’ sort of thing, so right from the youngest age they’re wanting to be in a bookshop. They think it’s a wonderful place and they love going in to look at the books, so I don’t think they’ll ever go.”

The desire to look and explore in a physical bookshop is something that remains for book-lovers way past childhood.

In his role as CEO of the ABA, Becker gives many talks. He makes a point of always asking who in the audience has ever gone into a bookshop and bought a book they didn’t know existed when they walked in. Each time, every single hand goes up

He says it’s the joy of the experience of having literally thousands of books pointing at you.

“It’s that wonderful experience of discovery that a bookshop provides and while there may be aspects of that buying online, it could never match that experience.”

People agree that books offer escape, they inform, they entertain and can connect people from all different walks of life. How you participate that experience at the moment comes down to personal choice.

Is your love of the tactile experience of a print book enough to make you pay a few extra dollars to keep your local bookshop in business? Or perhaps you enjoy the feel of a pristine new book or beautifully musty-smelling yellow-paged second-hand copy that once completed can be placed on your bookshelf like a badge of honour too much to let it go? Or is the convenience and portability of e-readers enough to convince you to put down the print book for good?

The current situation is just one chapter in an as yet unfinished novel. As technology continues to advance, there’ll be further changes to the way we view, buy and read books and perhaps we’ll even see a nostalgic return to the traditional as is currently happening with vinyl. Either way, this tale is far from over.