Family-owned businesses, once the soul of Main Street America, are in decline. Countless are the numbers of mom-and-pop hardware stores, drugstores and family-owned bookstores that have given way to Big Business in the last few decades. But one of the main challenges to a family-run operation is simply competition, it's succession. According to Mark Green, the director of the Austin Family Business Program, 70% of family businesses fail in the second generation, and 50% fail in the third. Keeping up is hard to do, but some are doing just that. For booksellers, some of the challenges are unique while others are standard in today's business climate.
Changing Times
They survived the competition first served up by the spread of bookstore chains, followed by the growth of superstores and, finally, the advent of online bookselling. In many respects, they are the first class of professional booksellers who overcame unprecedented changes in bookselling and adapted their business models to deal with the realities of an evolving marketplace. For many independent booksellers, the question now is not can I survive, but can my business survive my retirement?
The question is not unique to the book business. According to a study by researchers at Kennesaw State University, Loyola University Chicago and Babson College, more than a third of all family-owned businesses will change leaders between 2003 and 2008. But booksellers face additional difficulties as they bump up against a retail market in transition, and one in which growth has been flat for the past few years. Several independents that have been most successful over the last decade are pinning their future on their children, and some stores are already benefiting from innovations introduced by the more tech-savvy younger generation.
"Next generations are more willing to look at technologies," says Ryan Coonerty, who joined his father, Neal Coonerty, at Bookshop Santa Cruz after earning a law degree. "In the climate we're in, we have to look at all the efficiencies, like simplifying ordering and targeted marketing." Ryan's sister, Casey Coonerty, who will begin working at the store full time next year, has already helped strengthen the store's customer loyalty program. By using data that she gleaned in a survey of store customers, Bookshop Santa Cruz has signed on 2,500 new loyalty members, bringing the total to just over 14,000.
Since Jon Nelson Jr. returned to Martha's Vineyard after serving as a commercial and military pilot to help his mother, Ann Nelson, run Bunch of Grapes Bookstore in Vineyard Haven, Mass., the former Black Hawk pilot has overhauled much of the store's operations. In 2002 he began upgrading the store's computer system from DOS to Windows. But his contributions haven't been limited to the technology sphere. The staff has been largely turned over, and Nelson has become personally involved in structural improvements. This fall he donned a hard hat to dig up the parking lot to replace the store's septic system and framed up a new handicap bathroom. "The only way a small family business can survive," says Jon Nelson, who is now store CEO, "is if you put on your tool belt and make it happen."
For third-generation bookseller Nancy Bass, who has taken over much of the day-to-day running of the Strand in New York City—her 76-year-old father, Fred Bass, still buys used books—changing with the marketplace is essential. It's what enabled the store, once one of 48 independents on New York's fabled "Book Row," to survive for nearly half a century. Although the change most customers notice first when they enter the Strand on a hot summer's day is air conditioning, she also oversaw a major store expansion and introduced an author events series. But the biggest transformation involved computerizing the inventory so that the store could sell books online. In just a few years, StrandBooks.com accounts for 22% of sales.
No independent bookseller depends more on the Internet for its success than Powell's City of Books in Portland, Ore. So it's no coincidence that as Michael Powell's 27-year-old daughter, Emily Powell, prepares to take over the family business, she's now heading up business development for Powells.com.
When, after a series on nonbook jobs outside of Portland, Emily Powell said yes to succeeding her father and returning home, the family hired the Austin Family Foundation at Oregon State University to help develop a five-year transition process. She meets regularly with a transition team and will shift among different jobs and departments to get a complete perspective on how the business runs. And although Powell is not currently involved in the day-to-day running of the store, she sits in on all strategic planning meetings. But even as her father schools her in the ways of the business, Michael Powell is not sure what independent bookselling will look like in just a few years. "Right now we're putting in a new system from CompuTech; we're working on adding both customers and merchandise to our Web site; and we're refurbishing a number of our stores," he says. "The industry's in so much flux now. It could mean more stores or fewer stores."
Like Michael Powell, 60-year-old Vivien Jennings, co-owner of Rainy Day Books in Fairway, Kans., would also like to retire in the next five to 10 years, but she's not sure the store can support her two children and their families. "We're looking at succession, but with a reality check," says Jennings. "We evaluate the book business all the time. There's no question that the pie is not getting any bigger; the slices are getting smaller and smaller. If you combine the problems the book industry is having with the problems retail is having, that's a bad combination."
Just in case business takes a bad turn, both of Jennings's children have an exit plan. Jennings's daughter, Alison Connelly, who has worked in the store for the past two decades, went back to school for a R.N. degree. Now she splits her time between nursing and managing the store. Her brother, Geoffrey, earned a master's in marketing and a law degree before he began working at Rainy Day three years ago, where, in addition to working on the floor, he serves as corporate counsel.
Chris Morrow returned to Manchester Center, Vt., to help his parents, Barbara and Edward Morrow, expand Northshire Bookstore two years ago. "My father and I worked as a team," says Chris Morrow about the process that led the family to expand the bookselling space of the store to 10,000 sq. ft. and add a 3,000-sq.-ft. cafe. However, given today's retail climate, Morrow questions whether the planned-on business will be there. "Independent booksellers," says Morrow, "are kind of in a catch-22. We're in a commodity business and a service business. Our strength has always been customer service and selection. At a certain point, that model comes apart because of price erosion." Morrow, who is now general manager, says his top priority for 2006 is to rethink Northshire's business entirely, from what it sells to how it sells it. In particular, Morrow is looking at how best to incorporate used books into the store's mix.
The new generation of booksellers know they face significant challenges in continuing the work of their parents. As with their parents, energy and enthusiasm are essential to bucking the odds.
