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Business

Closing the Book on Small Bookstores

With evening events and espresso bars, sitting areas and CD lounges, Germany’s modern super-bookstores are driving out smaller independent shops in the ever more competitive book market.

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What's the final word on independent bookstores in Germany?

For some time now, independent bookstores in Germany have been going through a series of structural changes.

Competition from mega bookstore chains the size of department stores has been driving out smaller mom and pop shops from their traditional urban basis. The small local shops, with their customer-oriented service and individual approach to selling books, simply cannot compete with the larger mass-market chains, and a good number of them have been forced to close.

Many of these small shops have suffered significant financial losses, though these are mostly attributed to the general slump in book sales in Germany. Compared to the last 25 years when sales figures remained fairly stagnate, the first five months of 2002 recorded a 2.1 percent decline in sales.

Hard times for small booksellers

The drop in book sales has affected the entire branch.

The traditional Berlin-based Kiepert, a local bookstore with several shops throughout the city, was only able to pay 70 percent of employee wages in May, and in June close to a third of its 170 employees were laid off. In July, the industry journal "Buchmarkt" reported that the Kiepert family had requested distributors to temporarily forgive up to 60 percent of the bookstore’s debts. If the situation doesn’t improve soon, the company says it will have to close some of its branches.

In the last year alone, 30 of Berlin’s 330 bookstores were forced to close their doors after suffering heavy financial losses. This year, 11 have closed shop, including some of the city’s longest-operating booksellers.

But Berlin is not alone. Throughout Germany bookstores are struggling to survive in the face of a major downturn in consumer spending.

The Cologne-based Alibi, an independent bookstore specializing in detective novels, was hit so hard by the sales slump that it was forced to vacate its street-front property and move into the basement of another independent bookseller. But its sales have plummeted even further now that the store is no longer so visible, and it’s only a question of time before the small business closes altogether.

Big book businesses struggling too

Declining sales are not only a problem for independent booksellers. The large nation-wide chains have been struck equally as hard. Germany’s second largest bookstore, Hugendubel, which has 1,100 employees at 28 stores, has announced it will cut employee hours to make up for the loss of this year’s profits.

Dieter Schormann, chairman of the Association of German Publishers and Booksellers in Germany, has expressed concern about the current situation. "At this point, we have no idea when the situation will improve. That makes it very depressing," he told the "Frankfurter Allgemeine Zeitung" when the dwindling sales figures came out.

But Detlef Bluhm, manager of the Berlin Association of Publishers and Booksellers, says "the average sales figures don’t tell the whole story." The market has more ups and downs. "Some businesses are suffering two figure losses whereas others are growing," he says pointing to the country’s top bookseller Thalia which has increased sales by 0.8 percent.

Too much competition bad for some?

The inconsistency in market sales has led to an extremely competitive business landscape in Germany. From small to big and independent to franchise, bookstores are fighting for the consumer’s remaining euros.

"It used to be that there was an unspoken rule in the industry not to open a new book store a 100 meters away from an existing one," says Christine Böse, assistant store manager for Bouvier, a regional book chain based in Bonn. "Today, that’s no longer the case. Bookstores are expanding much more aggressively," she says.

And each time a new store opens, it detracts business from older ones. This is particularly true when the new store on the block is a big chain. In the last few years, the country’s biggest bookstores have continued to expand while the number of smaller ones has shrunk.

Krefeld, a mid-size western German city in North Rhine-Westphalia, is a good example of this trend. When two of Germany’s biggest chains moved in, seven of the city’s traditional independent stores shut down. They couldn’t compete with the bigger, more modern stores.

In Berlin, at the same time the 30 independent booksellers folded, big chains with over 30,000 square meters of sales space (322,900 square feet) expanded their presence in the city. And the mega-bookstores aren’t done taking over Germany’s capital. Thomas Nitz, manager of Hugendubel, says the city’s book demand is not quite "satiated". There’s still room for growth, he told "Buchreport".

A growing trend

The tendency to open chains at the expense of smaller bookstores is not unique to Germany. In England, the nation-wide Waterstones has driven out numerous independent sellers, and in the United States, Borders and Barnes & Noble share an ever-growing dominance on the American book market.

The giant stores with their broad selection and modern appearance are attracting more and more customers. They come for the experience of browsing in a trendy atmosphere, for special events, Internet terminals, and a cup of coffee.

And of course they come for the sales. The bigger the store, the bigger the price reductions. Smaller stores can’t afford to offer the price cuts and rebates the larger chains offer. As a result, customers empty the shelves of big stores first, and the books in the smaller ones gather dust.

In Germany, the actual number of book stores has not changed dramatically over the last several years. The Association of German Publishers and Booksellers listed 4,661 stores for 2002. That’s only nine fewer than in 1997.

But the numbers are deceptive. For every small store that closes, a bigger chain moves in. And the percentage of the market is increasing for the larger chains while it decreases for the independent stores. The 10 biggest bookstores in Germany accounted for 1.2 million euro ($1.2 million) of the 5.44 million euro ($5.43 million) in overall book sales for 2001.

The marketing division of the Booksellers association could not give exact statistics as to what percent of the market is in the hands of the nation-wide chains, but the spokesperson Gertraud Majer said she "suspects the chains are taking an ever larger share at the expense of the small stores."