Best Buy and Five Star in China
Last week I caught the tail-end of the CNBC show “Best Buy: The Big Box Strikes Back.”
According to the show, Best Buy “closed its nine American style stores in 2011.” In China, Best Buy had become the Brick portion of the “Brick and Click” method of buying. Consumers went into the stores to see the product, to research it, but then they “go back home to buy the product online or they go next store to the local competition because it was a lot cheaper.”
In 2006, Best Buy bought a “controlling stake in Five Star,” which used to be run by the government. According to the show, Five Star makes money leasing out space in the store to manufacturers . . .who pay rent to Five Star and provide their own sales force, reducing overhead. Five Star receives a cut of every sale. On a really good day, a single Five Star could bring in $2 million.”
One reason the Five Star version works better than the American version? It is better tailored to its customer.
Last Year’s Model
In February, Shawn Coyne wrote the post “Last Year’s Model.” Within it, he mentioned a conversation he had with a friend about ten years ago, when the friend was consulting the head of “one of the big six publishing companies.”
Shawn says to his friend:
“Where does it say that a publisher can’t be a retailer?”
“Okay, so you’re saying that the big six publishers should all kick in like 20 million dollars each and start up their own chain of bookstores? Dude, that’s nuts. Do you have any idea the amount of work that would take? And how many small independent bookstores would freak out about that? Not only would that be lawsuit city from the ABA, it would piss off B&N such that they’d slash orders to the bone. I see balance sheets drowning in rivers of red for at least five years.”
Now back to Shawn:
What if the big six came together and “saved” Borders? They don’t ‘take over’ Borders, they “bail it out” with a major capital investment that gives them preferred voting shares and allows them to bring in their own management? That’s a good story, right…”how the big publishers joined forced, saved jobs and kept books vital!”? And they could brand the stores with sections devoted to each of their offerings…can’t you hear your wife saying to you… I’m going over to the Simon and Schuster boutique, meet me at the Macmillan store after you’re done at Penguin.”
The Hallmark Lady at Wal-Mart
A week before Shawn wrote his “Last Year’s Model” post, I was standing in the seasonal Valentine’s Day aisle in Wal-Mart, looking for cellophane bags like the ones I bought the year before, clear with red hearts – perfect to insert Valentine’s Day gifts for my kids’ teachers.
I inspected every inch of the Valentine’s Day aisle. Not there.
Headed to the greeting card/wrapping paper aisle. Not there.
Went back to the Valentine’s Day aisle and asked the woman stocking one of the shelves about the bags.
“Do you know where the cellophane goodie bags are for Valentine’s Day?”
“I only do the Hallmark section.”
“Are you restocking any in the Hallmark section?”
Frustration pulled at the corners of my mouth and pushed my shoulders down into a slump. I didn’t have time to run to another store to find the bags.
And then one last line from the Hallmark lady:
“You know, sometimes I buy the clear ones over near the arts section. Just get yourself a red Sharpie and your kids can draw their own hearts on them – and you can use the extras for other holidays.”
I smiled and thanked her, and was on my way.
What’s My Point?
Five Star, Shawn’s post and my visit with the Wal-Mart Hallmark lady have specialized experience and specialized space in common.
Right now, publishers have a space in the stores, similar to Hallmark in Wal-Mart and electronic brands at Five Star. In book stores, the presence comes via co-op dollars. Those books on the tables at the front of the store? Bought space. The books facing out on the shelves? Bought space. The books behind the registers and on the end of the aisles? Bought space.
But, unlike Five Star, the space isn’t branded. There isn’t one corner or table rented, with obvious branding, for one publisher. And, the publisher isn’t responsible for the sales staff. The bookstores are responsible for selling the books, and for the staff it takes to stock and sell them.
This handing over, of using a bookstores space – whether around the corner or online – is the second step in the risk aversion Steve spoke about in “Betting on Yourself, Part II.” Authors write the books and then pass them to publishers. Publishers publish the books and then pass them to bookstores. Each step relies on the others doing its/his/her/their jobs. By the time the book hits the shelf, it is like one of 300 students in a college symposium, each student hoping he or she will stand out to the teacher. But by that point, the teacher – or in the stores’ cases, the bookstore associate – has too many other students and doesn’t have time to get to know each one. Once on the shelves or in the online stores’ warehouses, the books are on their own. They’ve got to go whole hog to grab attention, to let readers know they are there.
I don’t know the deal at Wal-Mart, but I know the Hallmark lady made me like Hallmark and Wal-Mart a little more. Once she stepped back, she recognized what was in front of her, and tailored her response accordingly. And I imagine that tailoring is what attracted Best Buy to Five Star. The Five Star model was better suited for China, and I wonder if it wouldn’t be better in the United States, too.
I rarely head into a bookstore these days, so how would the specialized experience work online? It would work in the form of publishers being more creative with how they are selling. Brick and mortar stores are one way, but not the only way. Ultimately, the publishers know their books more than the stores – outside the authors, the publishers know the books more than anyone else. So why aren’t they doing more to specialize the buying experience for readers? This goes beyond venues and more to the how, and not where, of selling. How can they make themselves the place readers want to go for books?
And, why aren’t authors doing this themselves, too?
It is easier to have someone else handle it.
And easier isn’t always better.
More to come…