Tuesday, July 09, 2013

What's really behind the decline in brick & mortar bookstores?

This morning, Bloomberg Television covered yesterday's resignation of Barnes & Noble CEO William Lynch and subsequent management reorganization. Bloomberg showed a bar graph of the decline in the number of bookstores in the U.S., and said that Amazon was responsible for the decline. Yes, Amazon played a part, but there are other reasons that are at least as important:
  • The decline in the number of bookstores began in the 1980s, when Barnes & Noble's and Borders's superstores decimated independent booksellers.
  • U.S. book sales started declining years before the 2007 introduction of Amazon's Kindle and the 2008 Great Recession. People are simply spending less time reading books.
  • eBooks from Amazon and other retailers have cannibalized sales of print books. In other words, eBook sales haven't increased total U.S. book sales revenues--they've only slowed the rate of decline.
So, you've got three factors responsible for the decline in the number of bookstores:
  1. Price competition, which was used by Barnes & Noble and Borders to kill off a large part of the U.S. bookstore industry even before Amazon was founded in 1995 (but which Amazon has certainly used to its advantage.)
  2. Declining book sales, which pressures all booksellers but puts the most pressure on retailers that don't have other product lines to fall back on for revenue.
  3. eBooks, which generally aren't sold in brick & mortar bookstores (although they could be.)
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