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Turning the Page on Bookstores

BY Jeff Green

The current upheaval we’re experiencing with booksellers reminds me of those nature documentaries where the host talks about what happens when a giant tree in the forest comes crashing down, leaving a gaping hole in the forest canopy. In those instances, dozens of smaller trees and plants spring up to take advantage of that gap and soak up the new light. With bookselling giants like Barnes & Noble losing money and closing stores by the hundreds and Borders liquidating, I think there’s plenty of new light available for small bookstores to open up and take advantage of the new and evolving market. Question is: Will those smaller independent bookstores capitalize on those book superstore closings? I think they will, and they should.

Let’s face it, from an historical perspective, the book superstores were overbuilt for the category. Combine that with the one-two punch of CDs giving way to digital music, followed by Kindles and other e-readers taking over the book segment, and these brick-and-mortar giants were bound to feel the pressure. Given the rise of digital bookselling, a falling tree might seem like the right metaphor — but I believe there is still a sizable market of folks out there who still like to read the “old-fashioned” way: book in hand, cover to cover, literally. These same people also still enjoy the bookstore “experience.” I’m not talking about the “25,000-sq.-ft. Starbucks-and-couches” superstore experience we’ve gotten so used to, but more the smaller neighborhood mom-and-pop bookstore experience that offers an intimate and quiet setting in which we can actually read the books we purchase.

I think the independents have a few advantages their superstore counterparts never did: They have the ability to take up smaller shop space, allowing them more flexibility. They can also have an edited selection of books. Many even carry used inventory. It’s this old-school/small-scale formula that can really work. Think about it: At roughly 1/10th the size of the superstores (I’m talking anywhere from 1,800 sq. ft. to 3,000 sq. ft.) these independent stores don’t need to do a massive volume of business to be profitable, and they have the freedom to be very convenience oriented.

I think the ideal locations for these independents today are going to be selected based largely on overall convenience and ease of access — strip malls, freestanding stores or a downtown/village center location where bookstores originated. Their growth will likely be dictated by the actions and the absence of the big names, those markets where Borders has closed and Barnes & Noble has pulled back the most. What’s really interesting about this full-circle, back-to-basics small and independent store phenomenon is that it’s something we just don’t see all that often (if ever) in the retail world. The shift away from big names and big stores back to small neighborhood specialty stores may have seemed about as likely as Google giving way to the rolodex and the Dewey Decimal system — but it is happening. The big challenge is a familiar one for small business owners everywhere: Financing can be difficult. Aspiring store owners may need to rely on incentives and programs through small business associations and other groups to get their businesses off the ground.

It will certainly be interesting to watch as we “turn the page” on the retail book sector. What do you think? Will the smaller independent bookstores of old be revived? Have you seen any open up in your market? Email me at [email protected].

Jeff Green is president and CEO of Phoenix-based Jeff Green Partners (jeffgreenpartners.com), a leading consulting firm specializing in retail real estate feasibility, retail expansion planning, medical retail planning, location analysis and commercial land use.

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Opponents seeking a second chance in South Africa

BY CSA STAFF

The ministers of economic development, trade and industry and agriculture, forestry and fisheries in South Africa are protesting the nation’s Competition Tribunal’s approval of a merger agreement between Walmart and Massmart. The three government entities are seeking to set aside a ruling that allowed Walmart to acquire a 51% ownership stake in Massmart last month on the grounds that the tribunal acted irregularly with regard to matters of documents presented during the discovery process and the scheduling of decisions.

“The tribunal erred in making the discovery order by failing to order the merging parties to discover all the documents sought by the applicants,” read a filing submitted to the competition appeals court by the ministers. “The tribunal erred in making the scheduling decision in that they precluded the parties who opposed the merger, or had otherwise intervened, including the applicant, from fully and properly ventilating their concerns and their submissions on the condition to which any approval should be subject.”

The merger was subject to some familiar opposition that Walmart has become quite adept at rebutting for the simple fact that no matter where the company goes it is confronted by lingering perceptions related to it negative impact on the economy, poor treatment of workers, impact on suppliers, etc. All those issues surfaced in South Africa and to get the Massmart deal done Walmart agreed to some concessions. For example, there are to be no staffing cuts for two years and union agreements are to be honored for three years. The company also agreed to allocate funds to a supplier development program to work with smaller local suppliers concerned about being shut out of the retail sector by Walmart’s global sourcing efforts.

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Calling out Supermarket News

BY CSA STAFF

It is logical that Wal-Mart Stores Inc. president and CEO Mike Duke would top Supermarket News’ Power 50 list of the food industry’s most influential executives. The company sells more food, by a large margin, than anyone else, therefore a case could be made that Duke, or whoever is CEO of Walmart, should top the publication’s list each year.

In reality, plenty of other executives with key leadership roles in the food area at Walmart should be on the list, but aren’t because it appears only one representative per company is allowed.(Click here to view the list.)Just go down the org chart beginning with Walmart U.S. president and CEO Bill Simon. He is the one leading the charge to undo such detrimental elements of Project Impact as SKU rationalization and the elimination of features displays. Next in line would be head merchant Duncan Mac Naughton because he oversees Walmart’s massive merchandising organization intent on re-establishing the company’s every day low price credibility with consumers. The guy who most directly impacts Walmart’s food merchandising efforts is EVP food Jack Sinclair.

Walmart’s other divisions sell a lot of food too. A case could be made for the inclusion of Walmart International president and CEO Doug McMillon as a large percentage of the $100+ billion division comes from the sale of food and same day he will be back in a leadership role in the United States., bringing with him all sorts of interesting ideas about format development and merchandising from time spent in China, India, Brazil, South Africa, etc. And what about Sam’s Club EVP merchandising Linda Heffner? Sam’s is Walmart’s best performing division currently, driving accelerating same-store sales growth through an emphasis on fresh and a commitment to quality that is resonating with Sam’s upper income members.

If the Supermarket News top 50 list were based purely on merit and executives’ impact on the market, as opposed to more arbitrary and possibly political considerations, a strong case could be made for inclusion of each of the executives named above and possibly others involved in packaging development, food safety and supply chain.

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