Old-style, standalone bookstores have been under attack from the large chains. Will the rise of online retail sound their death knell?
Bangalore’s Select Bookshop, off Brigade Road, belongs to the legendary Mr Murthy. A young regular recalls how during one visit — trips to Select typically last for hours and climax with one or two happy finds —a friend of the owner’s happened to saunter in. Mr Murthy turned to this customer and told him: “Just sit here for five minutes. I’ll go have a cup of coffee.” The customer was nonplussed: “But what if someone wants to buy something?” “Then sell it to him, no.” Five minutes turned to 45 and in the interim, two sales had been made.
Heartwarming, for sure. But for how much longer will such bookshops and booksellers be around? Who has the time to browse for hours? Even Mr Murthy’s young customer now guiltily goes instead to Blossom Book House, a three-storey colossus of used books — big, ruthlessly organised, sternly priced, and without Select’s character, though conveniently located in the same area.
The future for the old-style owner-managed, single outlet bookshop is not looking bright. Because they are usually old businesses with old customers, paying rent at old rates, these bookshops are still making do. There is one significant recent loss: the New & Secondhand Bookshop of Dhobi Talao, Mumbai, where generations of young professionals began their book-buying careers. Opened in 1905 and run by three generations of the Vishram family, it closed in February this year, reportedly because it wasn’t selling enough. Earlier, the chaotic but well-stocked Bookworm in New Delhi’s Connaught Place shut down because staying in business was no longer viable.
Logically, there should be several things going for the independent bookseller. He knows his clientele. He doesn’t have to pay for his stock. If a book sells, there is a profit to make. If it doesn’t, it goes back to the publisher, at no cost to the retailer.
The modern books trade undercuts these advantages. Since the 1980s in the West and for the past decade in India, publishers have tended to focus on bestselling books and authors. The idea was to support less profitable but worthy titles with the flood of cash and publicity that the bestsellers bring. Because marketing and media coverage focus on the (potential) hits, bookshops have to stock all this “frontlist” from a growing number of publishers. The “backlist”, that is, older titles still in print, gets less and less retail space and visibility. This creates two problems for the old-style booksellers. One, the backlist is their strength. Their loyal repeat customers are not always looking for the latest title. Two, if everyone is selling the same bestseller, the customer will buy it wherever it is cheapest and most convenient. This may be at a big-box chain store like Landmark or Odyssey in a mall or Crossword in a prosperous neighbourhood market, or with a click of the mouse online, where the buyer is likely to get a tempting discount. With his small volumes and limited shelf space, the independent bookseller cannot compete easily.
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Publishers normally give a margin of 45 per cent on MRP to their distributors. While standalone bookstores get the stock at a discount of 32 or 33 per cent, the chain stores, because of the large volumes they handle, manage to get 40 to 42 per cent from distributors. This gives them the elbowroom to offer higher discounts to the buyers. Also, since these are large-format stores, they often keep other stocks to engage the customers.
Landmark, the largest books retailer in India by volume and sales — a subsidiary of Trent of the Tata group — has 17 large outlets nationwide, up to 35,000 sq ft each. Although books are still its most visible “product category”, as COO Ashutosh Pandey explains, Landmark gets just 30 to 40 per cent of its revenue from books and music. The rest comes from other “core categories” like films, stationery, “tech accessories” and computer games and consoles. Pandey points out that Landmark has the traditional bookshop advantage of “backlist”, and those titles don’t need discounting. Overall, however, Landmark is turning itself into a “leisure and lifestyle” business.
At the moment, most chains are in pain, thanks to high rentals. It has been reported that Shoppers Stop’s Crossword is on the block. With a gross profit of Rs 5 crore on a turnover of Rs 150 crore in 2010-11, Crossword is one of the few profitable chain stores in the country. But the chains can’t stop the discounts now to plug their losses, or they will run out of business.
Online stores get the same discounts as chain stores from distributors. Of course, their overheads are lower, though they need to spend on packaging and courier. As a result, they offer great discounts. “Online stores have many advantages such as the number of titles they can deliver and they have very low storage costs,” says Prakash Gangaram, owner of Gangaram Book Bureau in Bangalore. “They don’t need to worry about dead stock or pilferage.” P M Sukumar, the CEO of HarperCollins India, says his online sales are 10 per cent of the total, up from 2 to 3 per cent four years ago and 8 per cent a year ago. “It could go up further,” he adds. Flipkart.com, he says, has become one of HarperCollins’ top five or six retailers in India.
Sachin Bansal, the CEO and co-founder of Flipkart.com, the e-business that has set off so much concern for the future in real-world books retail, says via email: “Books were an obvious choice to begin our foray into ecommerce. Books cost considerably less as compared to products like electronic items and, as a result, it is easier for a first-time customer to trust us with books and make that initial purchase from an unknown site.”
Bansal says his company sells six books a minute now, up from 2,000 a day early last year — these volumes he can now hit in less than six hours. Books contribute to half his revenue; the rest comes from newer categories like music, movies, games, computers, mobiles, and so on. “The collection of books on Flipkart is to the tune of 10 million titles,” Bansal says — impossible for any bricks-and-mortar bookseller to match, no matter how large.
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The uncertainty inside standalone bookstores is palpable. Nalini Chettur, owner of Giggles, a tiny and well-liked bookshop (“Biggest little bookshop”, the board reads) in a corner of Chennai’s Taj Connemara hotel, is fatalistic. “There is absolutely no future for bookshops,” she says. “It’s very hard to compete with the huge discounts offered by the online players.” Chettur knows every title on her shelves, will recommend books to her customers and even source and mail books. She gives a small discount to loyal customers or those buying many titles. “The indifference of large bookstores, particularly the staff who usually don’t know much beyond searching for a title on the computer,” she adds, “has helped me a lot.”
While Chettur offers personalised service, others choose a subject area or market niche. Half of Gangaram’s stock, for example, is academic reference books. Titles in philosophy, poetry, literary fiction and music are the strength of Fact & Fiction, the small corner bookshop in Delhi’s Vasant Vihar, run by Ajit Vikram Singh. But he, too, is not optimistic. “It will get progressively harder to compete,” he says, in cultured tones. “We don’t have the range. [...] I don’t think discounts are the only issue. The main issue here is online bookstores are selling books which cannot legally be imported through the books channel.”
He means that now that the biggest Western publishing groups have set up directly-owned subsidiaries in India (Penguin, HarperCollins, Random House, Hachette and so on), all books published abroad by any company owned by these parent groups can be brought to India only through their local subsidiaries. In the past, he would import directly ahead of others and gain custom. The change means, says Singh, that booksellers like him have access only to what the local subsidiaries of overseas publishers will sell here. He has little choice but to carry books from the same, limited pool of titles. If a customer asks for something else, Singh cannot provide it — unlike, as he points out, an online retailer that can source books directly from, say, USA.
Other small retailers are pairing businesses, especially in Delhi. Anuj Bahri, of the Delhi-based Bahrisons Book Shop chain, also runs a literary agency called Red Ink. Young entrepreneurs Kanika Kapoor and Aseem Vadehra this year opened the Spell & Bound Bookshop & Café in Delhi’s Safdarjung Development Area market, joining books and snacks; they have extra space for children’s books, a growth area. Midland Book Shop is not a chain but has four brothers in the same business in different locations around Delhi, which gives them local strength. They offer a standard 20 per cent discount. They also supply institutional libraries and handle distribution.
The pathbreaking Strand Book Stall, founded in the 1940s by the late, gentlemanly T N Shanbhag (the first to offer customers a flat discount of 20 per cent), has grown from one outlet in Fort, Mumbai, to a chain based in Bangalore under his daughter, Vidya Virkar. Strand without Shanbhag has less character, but is a more effective modern business. Virkar is building her chain on an IT foundation and has set up bookshops on the campuses of IT companies Infosys and Wipro. Strand has an annual book festival, which helps pull in customers. Some, like Starmark in Kolkata, want to strengthen their web presence. It tried to acquire an online bookstore; when the acquisition didn’t work out, it began working on its own portal.
Roli Books’ Pramod Kapoor is aiming to build two chains — one, CMYK, with art and architecture books as the USP (“Art books are difficult to buy online, you have to see them in physical form”) and an outlet each in Delhi and Pune, and the other, Half-Price Bookstore, discount books, with one outlet so far in a Delhi mall, which is a “success”. It is modelled on the successful American chain, Half-Price Books. “I’m ready to open 50 stores if I have the capital,” Kapoor says. “I’m quite bullish.”
It will be years before e-business swamps real-world books retail in India, everyone involved agrees. The old-fashioned nature of the book as an object, the slow act of consuming a book and the kind of person who makes a regular books buyer are reasonable safeguards for the near future of bricks-and-mortar bookselling. It’s only the old-style, purist, generalist booksellers — still the soul of the trade —that may not outlast the current generation.
(Praveen Bose in Bangalore, Arghya Ganguly in Mumbai, Swati Garg in Kolkata and Indulekha Aravind in New Delhi contributed to this article)