A SWOT Team for Indie Bookstores (part 1)

The story of the end of bookstores is an old one, almost as old as bookstores themselves, I would bet. And while it has always been a miserable way to make a living, the fundamental business model of the bookstore is now in question like it never has before. The story has quickly shifted from a drama about whether bookstores can survive to a tragedy of their sure death.

I confess, though I was a bookseller for several years, and love bookstores, and what they do, I don’t feel the romance or nostalgia that many book lovers do. Fundamentally, bookstores are just businesses. If the business model—that of renting space to stock inventory and paying employees to sell printed books—doesn’t work—even with all the add-ons of cafes, side-line merchandise, paid author events, etc.—then it doesn’t work. I don’t mean this coldly, but if the value that physical bookstores provide isn’t sufficient to cover the costs of providing that value then I think we ought to move on. As booklovers, booksellers, and publishers—we ought to move on and create a new model for providing that unique value.

I hope it doesn’t sound too goofy or like some sort of arrogant business school experiment, but I think a SWOT analysis might at least be clarifying. (SWOT=Strengths, Weakness, Opportunities, Threats). Here’s a text book definition:

SWOT analysis is the most renowned tool for audit and analysis of the overall strategic position of the business and its environment. Its key purpose is to identify the strategies that will create a firm specific business model that will best align an organization’s resources and capabilities to the requirements of the environment in which the firm operates. In other words, it is the foundation for evaluating the internal potential and limitations and the probable/likely opportunities and threats from the external environment. It views all positive and negative factors inside and outside the firm that affect the success. A consistent study of the environment in which the firm operates helps in forecasting/predicting the changing trends and also helps in including them in the decision-making process of the organization.

Organizations of all sorts (businesses as well as not-f0r-profit organizations, or groups) do a SWOT analysis for a variety of reasons. It can help:

•  identify core competencies
• build on strength not weakness
• clarify a strategic plan
• maximize response to opportunities
• navigate away from threats
• align strengths with competitive environment

SWOT analysis is a great tool but it’s inherently subjective. And it requires considerable input from various stakeholders (you know who you are).

Today’s post is an invitation to contribute to a discussion about the fundamental strengths and weakness of the bookstore qua bookstore. (The next post will focus on Opportunities and Threats). I’m not saying all bookstores are the same, that they have the same strengths and weakness, so we have to speak more broadly. I’m going to throw out a few thoughts, but please do join in by adding your own comments below.

Oh, and let me put this bluntly: if you bother to read this post and don’t feel compelled to contribute at least one comment, than you deserve a world with very few if any bookstores, and I also hope you enjoy it when there’s no alternative to taking whatever Amazon spews at you. (Sorry, had to get that off my chest.)

Strengths

Strengths, in the context of SWOT, are either tangible or intangible, but they are internal to the business. Strengths can be many things: expertise, capabilities, strategic advantage, goodwill, brand loyalty, etc. Here are a few.

Physical Space

Duh. What I mean is bookstores are a place where people go to browse and (at least sometimes) buy books. If I love to shop for books in bookstores it’s likely habitual, the way some people shop for shoes. And, unlike online retail environments, physical stores demonstrate a huge opportunity for impulse sales.

Book Knowledge

The best bookstores have staff that know and love books and are able to make recommendations that are both personalized and well informed. Thus far, that’s a quality or service that isn’t provided well elsewhere.

Curated Selection

Curation is one of those words that will be outlawed soon due to overuse and misapplication but it’s profoundly important here. Something almost alchemical happens between the buyers who select what new titles to stock and the clientele that browse and decide what to buy. The result is an ecology specific to a place and to the people in it. So while it’s roughly mirroring back the interests of the community who frequent it, your local bookstore is also constantly stimulating you with new choices that you either ratify or not. Sorry to get all poesy, but there it is.

Customer Loyalty

This is an obvious one but worth reflection. Every single person who buys a book in a bookstore knows that they’ve almost certainly paid more than they had to if they were willing to buy online and wait a day or two (or even same day, soon) for delivery. But it’s even more remarkable than that. If a customer is willing to get off his sofa, drive to a local bookstore, look for a book and buy it, he not only knows that he’s paying more than he needs to but he’s applying considerable effort to do so—strange and wonderful, when you stop to think about it.

Customer Identity

This is related to customer loyalty but a bit different. Avid bookstore browsers have this trait as part of their persona. They are book enthusiasts but if they were to describe themselves they wouldn’t just say they love books but that they love bookstores.

Weaknesses

Weaknesses are not abstract;they’re specific and controllable because they’re internal to an organization. Examples might be outdated technology, limited range of products, overhead and its effect on pricing.

Limited Selection

Here’s a case of an attribute that can be both a strength and a weakness. It’s a weakness, obviously, because if a customer wants a particular book and the bookstore doesn’t have it, it’s pretty hard to convince them to wait a day or more to pay full price when they can get it online, cheaper, in the same time frame. The worst thing about this is it creates a negative customer experience that weakens the habituation of devoted bookstore browsers. When the bookstore doesn’t have something specific that the customer really wants, the bookstore not only walks the sale but likely also walks the customer.

Cash Flow

This is an obvious one for anyone in the business, but I’m not sure most consumers understand the incredible burden it is to stock inventory until it is sold or (laboriously) returned for credit. Unlike online retailers, physical bookstores are in a constant battle of balancing a rich diversity of selection with available cash. This is why you can usually tell if a once great bookstore is in trouble: the selection is thin and predictable.

Limited Formats

To me, this is a big one. Indie bookstores can only provide their customers with books in print format. While the ABA is looking to provide a solution and start-ups like Zola Books are working on their own eBook platform for retailers—it’s doubtful that these will seduce away many of the customers who read on Nook or Kindle. And the inability to sell eBooks to those readers hits bookstores hardest in a category that has been their bread and butter: fiction. Though it’s not a major potential source of revenue, notice also that the shift away from CDs means that audio books are almost all but lost to booksellers as a format they can retail.

Okay, I may have picked some of the most obvious strengths and weaknesses, so please pitch in your own comments, corrections, and disagreements, whatever.

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