Visual Merchandising and Store Design | VMSD.com

(May 2009) posted on Mon Apr 27, 2009

Sector Spotlight: The major U.S. book retailers are facing a future in which consumers text, Twitter, blog, download and Kindle, but they don’t buy books.

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By Steve Kaufman

In the 1998 movie “You’ve Got Mail,” the Tom Hanks character managed a Barnes & Noble-type Manhattan superstore, the kind of behemoth that was gobbling up the book retailing industry. The Meg Ryan character operated the endangered species: a small, independent bookstore.

A decade later, the behemoth has become the endangered species. In the first quarter of 2009, both Barnes & Noble and its principal U.S. superstore rival, Borders Group, closed stores, reduced expansion plans, replaced key management and laid off thousands of workers. In March, Borders had to agree to a reverse stock split to keep from being delisted on the New York Stock Exchange.

“Bookstores are in danger of becoming dinosaurs if they don’t pay attention and respond to consumer changes,” says Ken Nisch, chairman of JGA Inc. (Southfield, Mich.), which has done consulting and design work for Borders. “There are fewer and fewer books in bookstores, just as there are fewer CDs in music stores and fewer DVDs in movie rental stores.”

The cause: a proliferation of new media that are replacing the printed page in people’s lives. More and more people today read their newspapers on the Internet and download their reading materials onto Blackberries and iPhones. So two months ago, to get into the game, Barnes & Noble paid $15.7 million to buy Fictionwise, an online retailer of electronic books.

It’s not the first time the superstore chains have had to peer into a future being reshaped by technology. In the 1990s, Amazon.com changed the face of book retailing when it began selling books online. Today, the technology that threatens bricks-and-mortar bookselling is the dissemination of digital books and other electronic reading devices. And once again it’s Amazon, which makes and sells the Kindle electronic book reader. Sony also sells a version, but the Kindle reader doesn’t need to be connected to a computer. Rather, users can purchase books right on the device, which downloads them over a wireless network. At press time, Amazon reported it had 230,000 titles for sale in the Kindle format, many of them exclusive to Amazon.