It’s been a year and a half since Joseph-Beth Booksellers, headquartered in Cincinnati, emerged from Chapter 11 bankruptcy protection with a new owner, after founder Neil Van Uum was outbid in an auction by Robert Langley, his landlord at the Mall at Lexington Green in Lexington, Ky. COO Mark Wilson became president and CEO of the new Joseph-Beth, which shrank from a one-time high of nine stores to two superstores—one in Lexington and a second in Cincinnati—as well as a small health-themed store in Cleveland, the Cleveland Clinic. In November 2011, Joseph-Beth added a 20,000-square-foot location at a former Borders in Crestview Hills, in northern Kentucky, just outside of Cincinnati. Now that Joseph-Beth has had a chance to incorporate the changes and to operate its newest store for a full year, PW spoke with Wilson about where he sees the minichain heading.
“We don’t know what the future of books is, but we don’t think they’re going away,” said Wilson, who, if not exactly bullish about the book, sees growth ahead for his store. In fact, after losing money for the five years leading into bankruptcy, Joseph-Beth’s December sales rose a total of 1.9% over last December. “We’re quite pleased from a comp basis,” said Wilson—particularly since the company used 2012 to rebuild the brand. “Last year was a reset of the foundation of the business. Previously, little money was invested in the store.”
Last June the company began by renovating its 40,000-square-foot flagship store in Lexington, and looking at its mix of books, sidelines, and food. In addition to redoing the store’s Brontë Bistro and testing a coffee kiosk near the entrance, the layout was revamped. The Avant Travel agency moved upstairs, where music had been, to make room for the coffee bar. An upscale children’s clothing store, Baby Bundles of Lexington, leased space on the lower level, and Wilson placed kids' books next to it to create a children’s area. Even with four months of renovation, Wilson said that children’s books did nicely, up 5.1% over 2011. And music is starting to be “cost-effective” since Joseph-Beth cut back from 500 square feet and $200,000 worth of inventory at cost, to a couple of cases managed by a vendor.
Similar changes are currently in the works at the 25,000-square-foot Cincinnati store, and they will be completed by mid-March. “We can’t be Amazon,” Wilson said. “What is your differentiating factor? How do I make it easy for the customer? How do I engage them?” Some of the answers come from responses to the 23,000 customer surveys that Joseph-Beth e-mails annually. “I personally go through each one of these. It takes me about eight hours per store,” said Wilson. “To us, there’s no better voice than the voice of the customer.” Change also comes from observing what works and what doesn’t. In reviewing the customer path at the Lexington store, Wilson realized that it had trained customers to stand in line and wait at a single information desk. To save customers time, the store now has five information stations, which will be replaced by self-service kiosks later this year.
The kiosks are part of a larger reset behind the scenes. Joseph-Beth is investing in a new enterprise resource planning (ERP) system that will enable it to build an active e-commerce site. At present JosephBeth.com sells physical books that can be drop-shipped through Ingram. But very few customers use the direct-to-home program, and Wilson has been reluctant to test e-books until there’s stickiness. With ERP, which will be live this fall, Joseph-Beth will be able to do more with digital books and to create more customer loyalty programs.
Staffing, too, is changing, and Wilson puts staff and training at the top of his to-do list for 2013. “In the old model, we had a general manager and booksellers under them. Half the time, they’re not being led by anybody because the general manager is off.” The store has increased its payroll to accommodate a general manager and two assistant managers. Plus the store is doing a better job of scheduling staff during the busiest days and times.
As for adding more stores, Wilson said, “at this point it’s prudent for us to work on our core stores. We will grow.” But the growth will likely come from pursuing more marketplace stores like the Cleveland Clinic, in the 1,000-to-5,000-square-foot size range. For now it’s a matter of keeping costs under control and getting the mix right. As Wilson noted, “This is a great business. [But] there are a lot of challenges around it.”