Just one week before Borders filed for Chapter 11 bankruptcy protection, Powell's Books in Portland, Ore., laid off 31 employees, or 7% of its workforce, a move that followed downsizing the staff through attrition in 2010. While the situation at Powell's is not dire, unlike that of the nation's #2 bookstore chain, many of the same economic factors are forcing all bricks-and-mortar booksellers to make tough decisions regarding staffing, inventory, marketing, benefits, and in some cases, closings. As Powell's noted at the time of the layoffs, "Consumer behavior—how, where, and what people read—has changed dramatically over the past few years."

The challenges have complicated 32-year-old Emily Powell's transition as she succeeds her father, Michael Powell, in running one of the country's largest indies—with four stores in Portland, including the 68,000-sq.-ft. flagship Powell's City of Books; one in nearby Beaverton; and three at Portland International Airport. Despite being named president only last summer, Powell fully understands that changes have to be made. "Having grown up in the company, I had a good appreciation of what the business was wrestling with when I started in 2004," she says. "Since 2008, when the recession hit in the West, the trends weren't getting happier that business was going to come back or people were going to buy hardcovers." Or that customers would start looking again for certain once-hot titles, like computer books. One of the first changes under her watch was giving the technical bookstore a smaller footprint, moving it closer to the flagship store, and renaming it the more anonymous Bldg. 2. The rechristened store stocks nearly the same number of titles as before, says Powell, but it features more science and technology books with fewer computer titles.

For Powell, though, the questions, and possible solutions, involve more than just renaming a branch store, even one where the Powells.com Web site got its start in 1994, before Amazon (online sales are 20%–25% of sales). "Do we need to look at our business differently?" asks Powell. "We're just trying to juggle everything. There's a lot of tinkering, a lot of big ideas [involving] marketing, promotions, and operational efficiencies." Already, for example, Powell's has changed the way it sells e-books, which it has been carrying at its online store in a variety of formats for the past decade. "It's been a steady piece of business for us," says Powell, "and the people who use it are loyal." To maintain that loyalty, in December Powell's moved to Google eBooks because of its simplicity. She's cautiously optimistic that digital books will spark more reading.

Powell's is also experimenting with digital integration in the store and store integration on its Web site. Although it doesn't use QR codes in its physical stores yet, they are on Powells.com in conjunction with a free Powell's Meridian iPhone app from developer Spotlight Mobile. Released last month, the app provides turn-by-turn directions to navigate the flagship store and locate a specific title, which customers can also buy online through a link to Powells.com. In addition, it displays the day's events along with featured titles, new favorites, and staff picks. "We're happy with the functionality," notes Powell.

At a time when chains are downsizing their superstores or filling them with toys, Powell has no plans to significantly reconfigure the flagship or dramatically change the product mix. "So many people are buying print books," she says. "As it shifts, we'll have to ask, how does that space need to shift. We're not at that bridge yet." What she is looking at is improving the physical store's browsability. In addition to the Meridian app, Powell's is considering an Apple-inspired Genius Bar to help customers find books. It's also trying to increase foot traffic by upping its events schedule, which is already at least one event a day. Powell would like to bring in more knitters, for example, by having an event around knitting books while also offering a glass of wine.

Powell is fortunate to have a strong financial base—the store's estimated sales were $64.8 million in 2008, according to Hoover's—and her father's continued support, particularly in used, while she charts a new course. According to Thom Chambliss, executive director of the Pacific Northwest Booksellers Association, many small area stores don't have enough of a cushion: "We've had three stores close since Christmas. A lot of stores reported good holiday sales. For some January, February, and continuing into March, it's hard. We're all wondering where this industry is going. Will stores be around in five years? We're all wondering if everything will go online. The question is, what does the public want?"

While Powell's sorts out the answers, it has decided to postpone its 40th anniversary celebration until after the holidays and the beginning of 2012. "We have a lot on our plate right now," says Powell. Not least of which is some pain for management with pay freezes set to go into effect on July 1.