Steal This DVD, Part II: Turning a Bookstore Into a Media Center

Over the past decade, as the bookstore market has become increasingly competitive, many independent bookstores began to delve into sidelines in an effort to broaden their stores' appeal and to enhance their bottom line. For many booksellers, that meant bringing in CDs and, more recently, DVDs.

Last week, BTW spoke to a number of booksellers about their reasons for carrying CDs, DVDs, or both, as well as how they handle security. This week, the focus is on the additional challenges facing those who are looking to broaden their store's horizons by bringing in music and film.

Purchasing & Distribution

Security aside, another challenge awaiting the booksellers who are making their first forays into media is understanding how pricing, returns, and distribution differ from the book business -- not to mention that booksellers note that margins are lower for CDs and DVDs than for books. Of course, pricing and returns will depend on the kind of CDs and DVDs the bookseller is purchasing (bestsellers versus smaller label or independent), the quantity being ordered, and the distributor or company the bookseller is buying from.

Kevin Ryan of Green Apple Books in San Francisco noted that the record business is not like the book business. For one, the variance in prices is greater. "Instead of a flat discount, a lot of the more traditional music distributors will sell at a net price based on the [record] label," he explained.

Joanne Young, director of marketing for Baker & Taylor, told BTW that CD prices can be "all over the board. There are budget, mid-line, new release [net prices] -- it can vary among one record company."

Added Oblong Books & Music's Dick Hermans, who has stores in Millerton and Rhinebeck, New York, "We watch prices all the time. It will change ... in November everything will go up [for example]."

Ryan also stressed that a retailer should always be wary of unexpected CD price reductions or changes in availability. "[A CD] will be cheaper than the last time or go out of print." For instance, he noted, "almost all of the Rolling Stones albums were out of print at one time and then reissued." DVDs are "pretty similar. Prices will change and things will go out of print -- it's this philosophy of scarcity."

Bill Fehsenfeld, co-owner of Michigan's Schuler Books & Music, told BTW that the "one thing peculiar to DVDs ... they will release it at a higher price and then, it won't be long, like maybe three months, and they will lower the price. They will then offer you credit. It's important to keep up with that."

Disney, for one, is well known for releasing a classic on DVD (and video) and then pulling it off the shelves after three or four months, Young pointed out.

Ryan also reported that booksellers should be aware that CD and DVD returns are handled differently than in the publishing industry. "In the book business, you can return [books] whenever, but with CDs and DVDs, returns are done on a quarterly basis [with Green Apple's distributor]. Sometimes you won't get [the entire price] back because there have been price reductions [for a particular item]."

Regarding CDs, Hermans said, "We are only allowed to return 10 percent of what we buy."

Baker & Taylor's Young stressed that her company helps booksellers walk through its CD and DVD return policy. She explained that the company's current return policy is 100 percent returns for the first six months for both CDs and DVDs, after which there will be a cap placed on return quantity.

Booksellers also noted that margins are not as good for CDs and DVDs as they are for books. Jill Johnson of Beagle Books in Park Rapids, Minnesota, said, "[Our retail] price for CDs is $18, and luckily, people who come in here will pay it," she said.

Certainly, the more diverse the bookstore's mix of music or film, the more complex the buying and pricing will become. For example, Johnson noted that, because of her store's eclectic mix of CDs, she could not simply buy all her CD stock at one distributor. "Finding a distributor that carries out-of-the-ordinary CDs at a reasonable price is a challenge," she explained. "It's not possible for us to have one distributor." She said that she works with Alliance Entertainment Corp., better known as AEC One Stop -- a large distributor of CDs and DVDs -- and a number of smaller distributors, such as Red House and Electric Fetus. "Our [selection] is a little more obscure but it pays off -- we do a lot of special ordering, too."

Aside from AEC One Stop, two other well-known distributors of CDs and DVDs are the aforementioned Baker & Taylor and Ingram Entertainment, Inc., in La Vergne, Tennessee.

Industry Knowledge a Key

Being familiar with how the CD and DVD industry works is certainly a plus for booksellers starting a media center in their stores, but odds are most booksellers won't be. Toward that end, a few booksellers noted that it is a good idea to hire staff with media retail experience to help manage their new CD/DVD sections. However, if that is not an option, be prepared to spend time and money training staff -- and yourself -- on selling CDs and DVDs.

"You're bookselling staff isn't necessarily comfortable with [CD and DVD] inventory," Schuler's Fehsenfeld said. "There are big training issues with integrating the two. At our Grand Rapids store, we have staff dedicated to the media section. In the other three stores, it's a shared responsibility." Similarly, Green Apple Books hired employees who had previous work experience in a record store.

Kathy Simoneaux of Chester County Book Company in West Chester, Pennsylvania, noted that the store hired two people specifically for the store's media center -- Jason Shafer-Valerius, the store's CD buyer, was brought in because of his music knowledge. Simoneaux said it's crucial to have staff who have a good sense of the film and music industry, and who understand what the store's customers will want to buy.

Shafer-Valerius, in fact, has a bachelor's degree in music and studied composition. When he moved to West Chester, he took a job at Rainbow Records. When Chester County bought Rainbow in 1996, "I went with the purchase," he joked.

Software Integration Issues

Another key consideration for booksellers is how well their POS system will be manage CD and DVD inventory and sales. Green Apple Books uses two different POS systems -- one for books and the other for CDs and DVDs -- because "new title updates from the record company don't work with [our bookstore POS]," said Ryan. "We could enter the titles in manually," but considering the size of the bookstore's CD selection, it would take too much time. "If you're only carrying say a hundred CDs ... [manual entry] is not an issue."

A Few Tips for Success

For booksellers thinking about starting a media center in the bookstore, Baker & Taylor's Young stressed "thinking through who your customer is," she said. "What titles are you going to carry, where are you going to put it, and how are you going to promote it? You have to do some soul searching."

"The thing that seems to have made a difference for us is critical mass in terms of inventory," said Ryan of Green Apple's DVD section. "This last Christmas DVD sales doubled ... and they stayed doubled. You need a good selection.... The margins are not as good as books, but we stock them to make the store interesting. It's one more reason to come to the store."

For booksellers who don't have the space for a huge CD/DVD section, Beagle Books' Johnson suggests "finding your niche for your area. Forget the Top 10 and go with what you love and what your clientele likes to listen to. Whatever we play [in the store] sells." Beagle carries about 500 CDs, she said.

Schuler's Fehsenfeld echoed Johnson's sentiments. He said that when it comes to choosing stock, booksellers could use the same principles as they do in buying books. "It's even more relevant with DVDs," he said. "Mass merchandisers you'll find ... [are] selling [bestselling DVDs] as loss leaders -- selling it at or below cost." As such, booksellers might want to concentrate on carrying backlist titles. "We carry a broad inventory -- eight or nine thousand, and we do well with backlist. You can't be so aggressive in ordering big new releases because you're not going to sell quite so many." As for CDs, "I have one piece of advice, to tread cautiously when it comes to music and be more bullish about DVDs."

Young said that, oftentimes, an independent bookseller's concern is how they could possibly compete with the Wal-Marts of the world in terms of inventory and pricing. But this doesn't necessarily have to be an issue, she explained, noting that there are plenty of CD and DVD titles to choose from to enable a bookstore to carry a selection of titles that is different from the typical big box selection and is targeted to the bookstore's particular customers. For instance, Baker & Taylor offers a selection of about 300,000 DVD and music titles.

"There are lots of categories in DVDs, such as history, biography, and wellness -- all that fits an independent bookstore," Young said. "There are DVDs from A&E, National Geographic, BBC, and PBS -- you would not go to a Wal-Mart to find those [types of titles] and if a customer discovers that an independent [has DVD titles they can't find at chains] ... they will come back."

And the Benefits?

The challenges to creating a successful selection of CDs and DVDs are many, but the booksellers to whom BTW spoke believe the efforts are worth it (though it's worth pointing out that there is a bit of breath-holding when it comes to current CD sales trends). "It brings more customers in," summed up Chester Book's Simoneaux.

"I think the benefit, for us, [is that] it's just adding something that [other stores] don't have," said Johnson. "As an independent bookstore, we offer a different type of CD, focusing on a narrower group of people. People come in here specifically for our music [selection]. They're excited about it. It's another facet to the store that adds to the ambience of Beagle Books."

(To read Part I of this series, click here.) --David Grogan