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Thursday, Aug 11, 2022
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A Novel Approach

Never mind that Borders Group shut the doors on all of its 400 stores three years ago, or that Barnes & Noble Inc. is closing scores itself, including its Westfield Promenade location. One local businesswoman has found a successful way to operate in the increasingly tough brick-and-mortar bookstore business – being extremely flexible and cost conscious. Michelle Schwabe is owner of a small local chain that sells both new and used books acquired at a discount; operates mainly in cheap, temporary spaces; and even goes by different names to fit its location. Its original location in Simi Valley was the $5 or Less Bookstore. Then there is the $10 or Less Bookstore in Northridge. And opening next month in Thousand Oaks is an upscale version called The Open Book. Schwabe, a bookworm since childhood who comes from a publishing background, said it’s all about making sure book lovers still have physical books they can browse. “There is still a need for bookstores, even though there is a huge number of bookstores that have closed,” insists Schwabe, 41. “The difference in people who prefer books to e-books is about 50/50. And it’s just not the same, buying a book on Amazon.” The chain recently took a hit when it closed at the Westfield Topanga after being open only six months. Soon after, though, the retailer was invited to move in to The Oaks, a Caruso Affiliated shopping mall in Thousand Oaks, where it will open its fourth store Sept. 1. Schwabe’s first brick and mortar shop opened eight years ago in Simi Valley, the same city where its parent company, children’s books-distributor Schwabe Books is located. The distributor was established by her husband Greg Schwabe in 1993 and supplies books to schools and educators. The couple decided to branch out eight years ago by opening the bookstore chain. Schwabe’s stores are generally about 5,000 square-feet, far smaller than a typical Barnes & Noble, which might span 25,000 square feet. And they carry about 7,000 to 10,000 books, while Barnes & Noble carries up to 200,000 titles. But they still offer a variety of titles in many genres, including classics, science fiction and business, among various others. Like many bookstores today, they host local musicians and talent for open mic nights, as well as weekly story times that attract children and parents. And as a small business, Schwabe can be extremely nimble. After Robin Williams’ unexpected death this month, she quickly put together a tribute at her $10 or Less Bookstore with quotes from his films and a selection of merchandise like a children’s book of Disney’s “Aladdin,” which Williams had starred in the film version as the voice of Genie. Natalie Gavidia is a 20-year-old Los Angeles Valley College fine arts student who frequents the Northridge store. She likes the environment and has bought comic books, horror stories and self-guided French tutorials. “I was surprised to come in here and find they have such a wide array of books, so I come here a lot,” she said. “I usually shop at libraries and thrift stores for books. I hardly go into Barnes & Noble.” Assuming risk But what really keeps Schwabe in business is her low prices. Customers can find a used copy of the Yann Martel novel, “Life of Pi,” for $2 at the store. Barnes & Noble retails the same paperback new at $15.95 and Amazon visitors can buy the used book for as low as a penny, plus a $3.99 standard shipping fee. Some of her glossy coffee table books go for just $12. Used products obviously are far cheaper for her to procure but she also keeps the acquisition costs of new products low by purchasing directly from publishers – a somewhat risky strategy. That gets her a price reduction, as does buying overstocked books from the publishers rather than purchasing from distributors. But she also assumes risk because if the inventory doesn’t move, the store cannot return the books to the publisher for a refund. Oren Teicher, chief executive of the American Booksellers Association based in White Plains, N.Y., said that most new books are still sold to retailers on a returnable basis. “Many publishers are trying all sorts of new business models,” he said. “We welcome all these efforts by our publishing colleagues to reinvent how we do business together.” Then there is Schwabe’s willingness to sign cheap short-term leases with landlords just wanting to fill an empty storefront. She said she’s only paying about 40 percent of market value for the retail space her stores occupy, which normally cost about $18,000 to $20,000 per month. Schwabe did not disclose precise lease or revenue figures but at those rents she said she has been able to make each store profitable after about one year. Neil Stern, retail analyst with McMillan Doolittle in Chicago, said offering cheap temporary leases can be beneficial for landlords who would rather have some income. Plus, he said it is better to have a mall that appears to be full and active. “It is standard to pay considerably less for temporary space, assuming the landlord does not pay anything for tenant improvements,” he said. “It’s an interesting strategy and it can be a profitable way to run a business. Concepts like Spirit Halloween, Calendar Club and others have done very well with this type of approach.” Of course, temporary leases carry their own risks. Schwabe opened her second Open Book in January and then was asked to leave Westfield Topanga in July to make room for another retailer, YellowBox, a footwear brand based in Chino with a national presence. And the Northridge store, which opened on Plummer Street two years ago, had to move to Tampa Avenue last year. “I’m a professional at moving now,” said Schwabe, who figures that each time the bookstore has to pick up and relocate, it costs her about $20,000 to $30,000. Then there are the name changes. She opened in Valencia at Westfield’s Valencia Town Center one year ago and was asked to change the store name from the $10 Dollar or Less Bookstore to The Open Book six months later. Schwabe said mall owner Westfield Group LLC asked her to change the name and she had no problem with it. “It’s allowed us to attract a different type of customer. And plus we can charge more than $10,” she said. Westfield spokeswoman Katy Dickey said that the mall owner regularly works with its tenants to improve their sales. “It is not at all uncommon for Westfield to work with tenants to identify opportunities, refine and hone their concepts with the goal of strengthening appeal for consumers,” said Dickey, who would not comment on lease rates. High-end opportunity The Open Book’s two locations in higher-end shopping malls have a more upscale design and aesthetics with brick and warm wood colors, so customers often are surprised that prices are so low. The name change also may have had the benefit of creating another opportunity for Schwabe. She said that she was approached by Caruso Affiliated, the mall developer and operator owned by L.A. billionaire Rick Caruso, to open in the Oaks mall. “We’re lucky enough that all four of locations have supportive (landlords) and appreciate the demographic that a bookstore brings to their centers,” she said. The fact that Schwabe has expanded its chain comes as no surprise to the American Booksellers Association’s Teicher. He said that his association represents about 1,700 member companies with 2,000 locations across the country. “It’s true it’s a tough business and the competition is fierce,” he said. “Don’t get me wrong, no one’s getting rich doing it, but they’re making a living and playing an important role in their community.” He added that while Seattle-based online retailer Amazon.com Inc. has cut deeply into bookstore sales, stores can also benefit from email and social media. Also, many are accessing the Internet’s customer base by listing books on marketplaces run by Abebooks of Victoria, British Columbia and Alibris of Emeryville, which allow independent booksellers to showcase used books, many of which are rare or out of print.

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