The independent bookstore lives! Why Amazon's conquest will never be complete

Borders might have gone the way of the buffalo, but indie booksellers are actually growing. Here's why

Published April 4, 2014 11:44AM (EDT)

  (AP/Reed Saxon/Reuters/Noah Berger/Salon)
(AP/Reed Saxon/Reuters/Noah Berger/Salon)

Stop carving that gravestone. Brick-and-mortar bookstores aren't dead, yet. On the contrary, independently owned bookstores are growing in number. According to the American Booksellers Association, since hitting a nadir in 2009, the number of indie bookstores in the U.S. has grown 19.3 percent, from 1,651 to 1,971. The current total is less than half the 1990s peak of around 4,000.  But it still serves as a rebuke to the conventional wisdom that equates Amazon's relentless rise with the inevitable death of the physical bookstore.

What explains this renaissance? The collapse of Borders in 2011 is one big piece of the puzzle. (Removing a dominant carnivore from the savannah gives all the other animals a little more breathing room.) The end of the recession also contributed to a more nurturing economic environment.

But there's more to the story. There is increasing evidence that the same digital transformation that has so dramatically reshaped the publishing industry, and driven millions of consumers online, also paradoxically rewards locally rooted authenticity. Our digital tools are steering us toward brick-and-mortar stores that promise a more satisfactory consumer experience than either chain stores or online emporiums can provide.

In a world increasingly influenced by our social media interactions, it's turning out there may well be enough room for the little guy to survive — and perhaps even thrive.

* * *

Oren Teicher, CEO of the American Booksellers Association, has a theory. Ever since the 1998 movie "You've Got Mail," the general public has been convinced that the kind of bookstore that perky Meg Ryan used to run is doomed.

"We know that the popular narrative about all this is that indie bookstores -- indie businesses in general -- are supposed to be up against the wall fighting the behemoths, and largely losing the fight,"  says Teicher.

"The data is quite contrary to that. It's absolutely not true. There are lots and lots of bookstore companies across the country that are increasingly profitable. Now, as with any small business, it's tough out there and the competition is fierce. But there is a recipe."

Teicher identified several reasons for the fact that new indie bookstores are popping up across the United States: Bookstore owners have become adept at taking advantage of new technology to connect to customers. Publishers are more willing to collaborate in innovative ways with bookstores to boost sales. But most important, said Teicher, is a growing consumer preference for shopping locally.

"The localism movement in America is real," says Teicher. "The data is now indisputable: There are millions of American consumers making decisions every day to shop at a locally owned independent business."

Teicher's citation of the "shop local" movement jibes with what academia is starting to learn about how consumers are using social media to inform their purchasing behavior. Over the past five years researchers have been generating a vast amount of data pertaining to the  impact of online reviews, ratings and social media buzz.

Unfortunately, almost none of that research focuses on bookstores, independent or otherwise. We know a lot about why consumers are choosing restaurants to eat at or  hotels to stay in, but very little about where people buy books. And there are obvious huge differences between restaurants and bookstores. You can't -- at least not yet -- digitize a meal, and online takeout ordering doesn't substitute for a dining experience the way Amazon delivery substitutes for trudging to the bookstore.

But there is still much to be learned from the research that's been done on restaurants. The values that emerge after the data is crunched help explain why the "shop local" movement is gaining traction. People crave authenticity, and they like supporting locally owned independents. What the data on restaurant choice tell is that now we have better tools than ever before to help us satisfy our cravings.

In 2011, Michael Luca, an assistant professor at Harvard Business School, published a study on the impact of Yelp restaurant reviews. He discovered three interesting things:

(1) a one-star increase in Yelp rating leads to a 5-9 percent increase in revenue, (2) this effect is driven by independent restaurants; ratings do not affect restaurants with chain affiliation, and (3) chain restaurants have declined in market share as Yelp penetration has increased.

His conclusion: Yelp was steering people to independently owned restaurants at the expense of chain restaurants.

Luca's finding made intuitive sense. This is how we live today. We don't just get off the freeway and choose where to eat based on the sorry collection of fast food outlets within sight. We check our phones and find the high-rated diner that might be another mile or two down the road. Five more minutes of travel time is a logistical price we're totally willing to pay if we are confident in the ultimate reward. Smartphone in hand, with the collective intelligence of our social media networks at beck-and-call, we are no longer at the mercy of our environment. We get to choose.

In 2012, the National Restaurant Association reported 28 percent of Americans made their restaurant selections based on information from social networking websites. That's a number that's only going to go up.

Aileen Chua, an undergraduate at New York University, studied restaurant choice in New York City for her honors thesis in 2013, and confirmed Luca's findings. Independent restaurants received an average rating of 85 percent, compared to 77 percent for chain restaurants. Chua concluded that in the future, "building an independent restaurant might be more feasible than franchising a chain, because the accelerating growth of social media and the information that it makes available proves to be more beneficial to independent restaurants than chain restaurants."

Another study published in 2013 analyzed more than a million online restaurant reviews published between 2004 and 2011 and discovered that "consumers assign higher ratings to restaurants regarded as authentic ... we find that consumers perceive independent, family-owned, and specialist (single-category) restaurants as more authentic than they do chain, non-family-owned, and generalist (multiple category) restaurants."

Perhaps even more critically, numerous studies show that we take recommendations -- and the super-charged word-of-mouth that comes to us from people we are connected to via social media -- more seriously than we do online advertising and marketing. A study published in March 2013 in the journal Information Systems Research that looked at data from a chain store affiliated with an "international apparel brand" reported that user-generated content beats advertising.

"User-generated content (e.g., those by real consumers) on social media brand communities have a stronger impact than marketer-generated content on actual purchase behaviors in stores," one of the researchers, Goh Khim Yong, told me via email.

Why, you might wonder, do we trust each other more than we trust advertisers? Easy! Because advertisers have a monetary incentive to lie. That's not exactly breaking news, but amusing confirmation of this eternal truth -- along with a demonstration of how social media can be employed to counteract marketing -- comes in a paper published by two Dartmouth researchers that studied how ski resorts routinely exaggerated the amount of fresh snow that had fallen at their locations, hoping to lure skiers.

The authors were able to prove the exaggerations by comparing ski resort marketing materials to government-reported snowfall figures. Then, in January 2009, " added a new feature to its popular iPhone application that makes it easier for skiers to post 'first-hand reports' alongside the resort-provided reports. This feature sparked a sharp increase in the amount and timeliness of skier feedback on the accuracy of resort reports, with many first-hand reports filed from the chairlift or the lodge."

And guess what happened, next? Ski resort snowfall exaggerations dropped sharply.

How is ski-resort marketing relevant to the rise of independent bookstores? The crucial piece here is that social media isn't just steering us to the local independent, it's also helping us to find information that we trust. Social media -- people trusting each other, rather than blandishments of marketing campaigns -- cuts through the info-clutter. According to Teicher, the independent bookstore operators who have recognized that they can insert themselves into these social media webs, to be trusted members of their local communities, is crucial to their success.

* * *

A review of the academic literature suggests strongly that we are trusting the recommendations of our social networks and the collective wisdom embodied by review and ratings sites to help us find locally owned, independent, authentic experiences. It also appears that we are more likely to trust such sources than the kinds of direct marketing and advertising that in the past pushed us toward whoever had the most capital to spend. We don't have the same kind of data on bookstores that we have on restaurants, but it isn't hard to make the cognitive leap. Technologies of connection encourage us to, well, connect. All things being equal, we like to support our local bookstores, and our social media tools make it much easier to build webs of community around local enterprises.

Indie-bookseller survival does not mean, however, that the larger trends unleashed by Amazon on the publishing industry are negated. We still don't know what Amazon's tremendous pricing pressure or the shift to ebooks will mean for the profitability of publishers and earning power of authors in the long run.

The ABA's Teicher acknowledged that it was a "fair question" to ask whether the health of the indie sector -- which only accounts for around 10 percent of the overall book sales -- would have any meaningful influence on the entire industry as it works through the changes wrought by e-commerce.

Even without the role played by Amazon's, says Teicher, "the book industry does face a pretty significant challenge. We are competing for people's leisure time in a way we never had to compete before. Everybody is walking around with a device that has access to every other form of entertainment there is. How do we make reading books compelling and fun?"

But that very challenge he says, helps explain why indie bookstores are growing in number. The people who run independent bookstores, he says, "are extraordinarily passionate about books and reading."

"The underlying key to an independent bookstore's success is their knowledge about books and their ability to put the right books in the customer's hands. It's at the heart of what we do every day, and that authenticity builds credibility."

"Social media gives you a way to communicate that knowledge far more widely than you ever could do in the past, " said Teicher. "And we absolutely see the spread of that passion resulting in traffic in stores, and resulting in sales."

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Amazon Books Bookstores Borders Independent Bookstores Internet Economy Retail