Steal This DVD: 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. BTW recently spoke to a number of booksellers whose stores carry CDs, DVDs, or both, and many noted that they decided to carry these products because the categories seemed to be a natural extension of the store's inventory. As one bookseller put it -- people who love great books tend to love great music and film.

The rub, of course, is making the CD and/or DVD section profitable. A quick glance at CD and DVD sales shows significantly diverging sales figures, as DVD sales grow and CD sales decline -- though recent data suggests that CD sales are starting to make a recovery.

According to the 2004 Annual Report of the Video Software Dealer Association (VSDA), consumer spending on DVD sales and rentals totaled $16 billion in 2003, a 40 percent increase over 2002. Furthermore, music DVD sales rose more than 100 percent in 2003, surpassing more than 17 million units.

Conversely, according to the International Federation of the Phonographic Industry (IFPI), an organization that represents the recording industry worldwide, Internet piracy is playing a significant role in the decline of worldwide music sales. The U.S., which saw a 12 percent drop-off in sales in the first half of 2003, saw a sales increase in the second half of that year, particularly in the fourth quarter, resulting in a full-year sales decline of 6 percent, IFPI reported.

However, there are signs that things may be turning around for CD sales, especially in North America. According to Nielsen SoundScan, album sales rose 5.8 percent in the first nine months of 2004, which reflects an "overall turnaround in music sales that began a year ago on the strength of hit releases and a growing market for digital tracks," as reported by the Chicago Sun Times. The SoundScan report noted that about 463 million albums were sold in the U.S. between January and October 3, compared with roughly 437.4 million in 2003, the Sun Times article noted.

In general, booksellers thinking of broadening their store from bookstore to media outlet will not be surprised to hear that there is much for a bookseller to learn in order to create a successful DVD/CD section in a bookstore. BTW asked some booksellers about their reasons for stocking CDs and/or DVDs, the challenges involved in selling them, and, of course, the benefits.

Reasons for Creating an In-Store Media Center

Green Apple Books in San Francisco has been carrying CDs for six years and DVDs for almost five years, said the store's co-owner Kevin Ryan. "[Six years ago], we bought a record store just a couple of doors up and we expanded it [to turn it into] our Fiction and Music Annex -- those were the only sections we thought could stand alone," Ryan said. (He noted that customers have to go outside and walk up the street to the annex.) DVDs were added soon after.

When the bookstore bought the record store, it made a "huge commitment," purchasing around $80,000 in CD inventory, Ryan reported, and "two years ago we made the commitment to grow the [DVD] inventory. Since then, we now have between 2,500 to 3,000 titles. We also carry used DVDs."

Ryan said that Green Apple bought the music store "just to offer something new to our customers and give them one more reason to come to Green Apple."

Similarly, Chester County Book Company in West Chester, Pennsylvania, acquired the music store next door about eight years ago, said Kathy Simoneaux, the store's co-owner. "The thought is that it was a real complementary business," she said. "At that time, CDs were real big business." The bookstore began selling DVDs around four years ago and now stocks over 5,500 titles. "With DVDs, we found that not a lot of retailers at that time were selling DVDs -- only places like K-Mart -- but their selection was very narrow and we go deeper into backlist."

Dick Hermans, owner of Oblong Books & Music, with two stores in the small towns of Millerton and Rhinebeck, New York, also noted that CDs are a "really good complement" to books. "Book people are really often music people." He explained that, when he opened Oblong 29 years ago in Millerton, he decided to carry both books and music because there was a market for both in the rural town. A small selection of DVDs has recently been added to both stores, though the jury is out on whether DVDs will be successful for the stores.

Bill Fehsenfeld, co-owner of Schuler Books & Music, with four bookstores in Michigan, gave a different reason for bringing in CDs in 1995 and then DVDs in 2001: "It was getting to be a common and expected thing to find CDs in a bookstore," he said. "Our attitude is, the customer should not have to go somewhere else. They will find in our store what they find in chains. We were excited to have music; it seemed like a very good mix with our book inventory." He noted that CDs were first added to their Grand Rapids store, and then into the Okemos store. Schuler's newest two stores, in Lansing and Walker, opened with a complete CD and DVD inventory, he noted.

While Beagle Books in Park Rapids, Minnesota, does not sell DVDs, owner Jill Johnson said the store boasts a popular and eclectic collection of CDs. The bookstore, which has been in existence for three-and-a-half years, opened with a CD selection because there was no other music store in town, she said. Nonetheless, Beagle Books does not carry pop music, concentrating, instead, on a more diverse array of CD titles.

"I think it's because my husband is a musician," Johnson said of the store's offbeat music collection. "His selection [of CDs] is not found anywhere else [in the area], and includes bluegrass, folk, a good selection of classical and jazz," as well as Scandinavian music to meet the needs of the residents of Park Rapids and the surrounding area, which has a large population with Scandinavian and Finnish heritage. Music and arts sidelines are all part of the experience at the Park Rapids bookstore. Shoppers can choose not only from books and CDs, but even sheet music and Inuit art. "It's not uncommon for a customer to purchase three CDs, some books, and Inuit art," Johnson reported.

Be Prepared to Invest in Security

In real estate, it's all about location, location, location.

In setting up a media center with DVDs and/or CDs, it's all about security, security and then some more security.

Hut Landon, executive director of the Northern California Independent Booksellers Association found that out when he, along with representatives from Baker & Taylor, was attempting to put together a how-to session on selling DVDs in a bookstore for NCIBA's recent fall trade show, he couldn't find any booksellers to speak at the proposed panel discussion. "We couldn't get three booksellers to endorse DVDs because of the issue of theft," Landon told BTW. "It hasn't been solved to their satisfaction." In the end, the panel evolved into a brainstorming session on how best to handle security issues.

And even though BTW found booksellers endorsing DVDs, each would concur that security is a huge issue -- and not just for DVDs, but for CDs, as well. Make no mistake -- any bookseller planning to stock DVDs and CDs better budget for security -- and it's not cheap.

"Media products are much more prone to theft because their resale value is higher than books," said Schuler's Fehsenfeld. "We have plastic keepers [locking frames that the cashier removes at checkout] and [an alarm] system with a gate..... You can't just stick a tag on the back because [shoplifters] will just pull them off."

Jason Shafer-Valerius, the CD buyer at Chester County Book Co., said that theft is an issue with "anything that is small and valuable."

Booksellers handle the theft problem in a number of ways. The most popular are the aforementioned plastic keepers with the alarm system with a gate at the exit. Chester County has taken it a step further: The bookstore's CD and DVD section is cordoned off from the book section with a gate. "You need to buy [the CD or DVD] before going into the bookstore," Shafer-Valerius explained.

Other bookstores leave the packaging on the shelves, but place the CDs and DVDs behind the counter since thieves are less likely to make off with empty jackets (though, believe it or not, they will steal those, too!). Of course, to do that, it means the bookstore needs to set aside space behind the counter for the CDs and/or DVDs.

Whatever a store's strategy, security is necessary. Fehsenfeld emphasized it is an "investment to think about. The [keepers] range in price depending on the format -- our basic CD keeper is about $0.35 [per]. That's a significant investment." --David Grogan

Look for Part II of BTW's feature on integrating CDs and DVDs in bookstores next week, when we will explore purchasing and distribution options, software integration issues, and more.