by Elaine Walker (The Miami Herald)
Books & Books owner Mitchell Kaplan is determined to be one of the survivors.
You won’t find Kaplan wringing his hands over the impact of online book sales or the growth of digital books on the traditional bookselling industry. Instead, Kaplan has found ways to grow the Books & Books business amidst one of the industry’s most challenging times.
His energy has been focused on diversifying and branching out into related businesses including publishing and film production. At the same time, Kaplan has managed to fuel an expansion of Miami’s homegrown Books & Books brand through creative licensing deals and the creation of a new newsstand format.
“Instead of feeling victimized by what was happening in the marketplace, I decided to look at the value we’ve built up over the years and try to transfer it to other things,” Kaplan said. “You have to find ways to monetize the value. Otherwise, you can’t stay relevant.”
That’s not an easy task when the ranks of independent booksellers have spent more than a decade in dramatic decline fueled by changing industry dynamics.
Even the national chains are no longer immune. Though Borders filed for bankruptcy in February and closed more than 200 stores, it is still losing money and negotiating a deal with a private equity firm. Industry leader Barnes & Noble has been on the market since August. It wasn’t until Liberty Media Corp. last month offered to buy the bookstore chain at an 81 percent discount to sales that the stock started rising and ignited what is likely a bidding war.
This all comes at a time when traditional book sales are declining in the face of soaring sales of digital books delivered on Kindles, Nooks and tablets like the iPad. During the first quarter of 2011, e-book sales jumped nearly 160 percent to hit more than $233 million, according to the Association of American Publishers. That compares to a first-quarter sales decline of 23.4 percent at the nine mass market publishing houses. First quarter e-book sales were nearly double that of mass market paperback sales, which fell to $123.3 million.
These days independents like Books & Books must do a lot more than just stack books on a shelf to remain successful.
Kaplan has expanded his in-store cafes, doubled his special events and increased the number of ancillary items for sale like jewelry and decorative bowls. He’s also started selling e-books on his website, branched into convention book sales, added more kid’s book fairs and hired someone to build his corporate sales business.
“If I lose some sales, then I will make them up by selling other things,” Kaplan said. “We’re not where we were five years ago, when we didn’t have the kind of competition that we have now. It’s a real testament to Miami that we’re still around. There are lots of big cities that lost significant independent bookstores.”
The ranks of the independent bookstores have been steadily dropping by a couple hundred annually since the early 1990s. Membership in the American Booksellers Association fell by half during that period. In 2010, the association saw its first slight increase in nearly 15 years and membership now stands at 1,500. But even with that stabilization, independents only represent about 12 percent of the total retail market share, a far cry from the approximately 50 percent share they held back when Kaplan started in the early 80s.
And industry experts say the fallout is not over, as e-book sales continue to rise and could eventually represent half of all book sales. Most immediately, e-books are expected to make paperback book sales obsolete.
“This is biggest transformation in the book business since the summer of 1945 and the launch of Bantam Books, the first mass market paperback,” said Al Greco, professor of marketing at Fordham University and a consultant for Publisher’s Weekly. “The fact that unit sales of print books have declined – and will continue to decline – will lead to a reduction in the total number of bookstores in the United States over the next five years.’’
How many will survive is hard to say.
“It’s a game of musical chairs and it’s about who is going to get the last seat when the music stops,” Greco said. “The really well known independents with brand equity and a smart marketing strategy will survive, although it will be tough. The small mom-and-pops are another story.”
Kaplan estimates that his in-store book sales are down by close to 7 percent from the pre-recession peak, but overall sales have remained relatively flat. Creating multiple revenue streams helps balance out the bottom line. To make up for the decline in book sales, Kaplan has seen growth in newer categories like gift and corporate sales. About one-fourth of his sales now come from his in-store cafes run by chefs Bernie Matz and Allen Susser. The Books & Books Café by Matz at
the Lincoln Road location has become a destination restaurant in its own right.
This entrepreneurial spirit has earned Kaplan the respect of his peers. Books & Books is one of the industry’s most recognized names, along with Powell’s Books in Portland, City Lights Books in San Francisco and Politics & Prose in Washington D.C. The brand has come a long way since Kaplan, a law school dropout and former Southridge High School English teacher, opened the first Books & Books in 1982 in a 500-foot former jewelry store in Coral Gables with several family members, including his mother Helen Kaplan and uncle Julius Ser.
“He is certainly one of the most creative booksellers in the country,” said Oren Teicher, chief executive officer of the American Booksellers Association. “Books & Books has absolutely been a leader in terms of their willingness to reinvent themselves and find new ways of doing business in order to remain competitive in an ever-changing world. But there isn’t one formula that works. That’s part of the challenge. You can’t take what Mitchell has done in Miami and replicate it in Chicago.”
Kaplan has found a way to expand from his three Miami-Dade County stores — in Coral Gables, Miami Beach and Bal Harbour — to a total of seven locations under the Books & Books moniker. But the new locations in Grand Cayman; West Hampton Beach, N.Y.; the Museum of Art Fort Lauderdale and Miami International Airport are not owned by Kaplan.
In those cases, Kaplan created a licensing and marketing partnership with each local owner or institution. Kaplan lends the Books & Books name and store design, as well as the expertise on a wide-range of topics from inventory management to staff training. The Books & Books staff also bring in authors for book signing and speaking engagements.
The partnerships enabled Kaplan to leverage the infrastructure and brand recognition built up over nearly 30 years since he opened his first Coral Gables store in 1982. But what he doesn’t have is the financial responsibility or daily operational oversight for stores outside of South Florida.
“I really believe in locally owned bookstores,” Kaplan said. “This way we have local partners that own the stores and we could just bring our special sauce. I had no interest in owning stores outside of the local area. This model makes sense because at the heart of what we’re all about is a sense of community.”
Several partnerships started by chance, when people in the industry sought out Kaplan’s advice. Kaplan, co-founder and chairman of the Miami Book Fair International, remains a high-profile industry leader with connections to many of the country’s leading authors and publishers. Kaplan says he averages between two and three calls a week from communities — from Nashville, Tenn. to Bloomington, Ind., — that want bookstores.
But Kaplan isn’t planning to say yes to everyone. He chose his initial partners because they offered a market where the Books & Books name was already recognized – and an attractive partner.
Jack McKeown, owner of the West Hampton Beach store and a former book publisher, had known Kaplan for more than 30 years. When McKeown and his wife decided to open a bookstore, they decided a joint venture made the most sense. They have reduced overhead costs and simplified the inventory process by using the buying history at Books & Books in Coral Gables, which has similar market characteristics as the tony Long Island village.
“Being risk adverse types, we thought that the platform of a branded name would give us great credibility right out of the gate,” McKeown said. “It would create instant familiarity for a number of avid book buyers. We have been astonished at the number of times that people come in and say, ‘We love the Coral Gables store. We love Books & Books.’”