Borders opens bookshelves to digital services

Working against Jones and other booksellers: When the economy slows, people may look for less expensive food and buy fewer or cheaper clothes, but they still have to buy such necessities. By contrast, bookstores must compete with other forms of entertainment for fewer disposable dollars. And they struggle to serve a younger generation that doesn't read nearly as much as their parents did.

Still, no one foresees the imminent demise of the major bricks-and-mortar chain bookstores. Helping offset the threat of declining readership: More than half the books sold in the USA, Jones notes, are bought by people over 50. With many of the vast baby boom generation entering their 60s, "the demographic trends are positive," agrees retail analyst David Schick of Stifel Nicolaus.

"The other side is, (bookstore chains) compete with everyone from mass discounters to, of course, Amazon amzn, and right now, the economy's slowing," Schick notes. "One of the things people do is go to dinner and stop at the bookstore. If they stop eating at the restaurant, does that mean the bookstore trip goes away?"

One of the saving graces for bookstores, say analysts, consumers and industry officials, is they offer people with shared interests a site to gather and socialize. The addition of coffee shops — which you'll find in nearly every Borders and Barnes & Nobles store — has accelerated the trend. Now, Jones hopes digital downloads can take the stores to the next level.

"Bookstores are typically the place that people like to go and congregate, so if (the stores) can monetize that, it's powerful," says Schick, who calls Borders' move "an attempt at evolution."

That's something that Amazon, for all its considerable market muscle, can't quite duplicate.

Pressure from online stores

"A bookstore is like an oasis, in a sense," says Sharonrose Francisco of Chicago, who favors Borders, but also shops at Barnes & Noble and occasionally at Amazon. "I love being surrounded by books."

Yet, Deutsche Bank analyst Dave Weiner notes that online bookselling still commands an edge over big-box bookstores and will continue to exert financial pressure on Borders and others.

"You're definitely seeing the market shift from the bricks-and-mortar guys to the online players," Weiner says. "The simple reason is that books are commodities, and superstores charge more. What is happening and will continue to happen is you're going to see prices at superstores come down."

Borders' Rob Gruen, executive vice president of marketing and merchandising, concedes that while stores are becoming more competitive on price, the physical stores can seldom match Amazon's pricing. "Customers," he says, "come to us not because of price."

Besides, Jones says of Amazon, "If you look at what they do, it isn't like they discount everything."

Some independent booksellers say they're managing well, too.

"The kinds of people who go to bookstores like to interact with other people who go to bookstores," says Hut Landon, executive director of the Northern California Independent Booksellers Association, which represents about 250 bookstores. "You can't reproduce that online, and many people feel you can't reproduce it in a chain store. It's big and impersonal."

Annie Philbrick, co-owner of independent Bank Square Books in Mystic, Conn., says her store struggles against Amazon discounts of 45% or more. She'd lose money on a book, she calculates, if she offered a discount of more than 42%.

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