A Letter to Booksellers from ABA CEO Avin Mark Domnitz on the Economy
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October 16, 2008 essential to try to remain proactive rather than reactive. Now is the TABLE OF CONTENTS: time to look at your business carefully, to first identify trends, and, • Meeting the Challenge: A Letter to Booksellers then, to find ways to enhance those that are positive and to soften those that are negative. From ABA CEO Avin Mark Domnitz on the Economy -- Plus Other Resources for Tough None of us has a crystal ball, and no one can predict exactly how the economic downturn will affect sales this fall. Now more than Times ................................................................ 1 ever, it's important to hearken back to business fundamentals. A • Bookselling in Tough Times: Staffing ............... 2 basic business tenet -- especially when credit is tight -- is that • Books to Spur Impulse Buys at the Cashwrap "Cash is King." The key to being in control of your business is .......................................................................... 3 to be in control of cash. Think in terms of cash even more than • Peace. Love. Books. Reusable Bags ............... 4 profitability. • BTW News Briefs ............................................. 4 With that in mind, immediately revisit your sales and inventory budgets. Look at how your actual sales over the last 60 days • Around Indie Bookstores .................................. 4 compare to last year's sales and to your budget for this year. Is there • ABFFE Urges Booksellers to Post Free a trend? Because most of you will do about 40 percent of your Speech Pledge ................................................. 5 business in the fourth quarter, it is essential to make sure that you • Harper Creates State by State Essay Contest are positioned to be able to make the business decisions necessary for Booksellers .................................................. 5 to maximize your holiday season, especially decisions regarding inventory purchases. • RiverRun Hosts Second Annual Read-a-Thon .......................................................................... 6 Remember the goal is to control cash. And to control cash means to control inventory and to control payroll. • Bookstore Sales Bounce Back in August ......... 6 • Main Street, Not Wall Street Initiative to The reason to focus on these two items is that they comprise the bulk of each dollar spent in the operation of your business. Launch in Lehigh Valley ................................... 6 Inventory constitutes approximately 60 percent of each dollar spent • The Indie October Baseball Bestseller List ...... 7 and payroll constitutes approximately 20 percent. To take control • Bookstore Gift Cards Near Top of Holiday Lists of both payroll and inventory means you can control 80 percent of .......................................................................... 8 every dollar spent, which means you have a much better chance of controlling your business. Again, the point is to be proactive rather • National Book Award Finalists Announced ...... 8 than reactive. • Free Classifieds Available to ABA Bookstore The first step is to go back 60 days and determine what sales were Members .......................................................... 9 during that period and, then, compare them with the same time-period last year. Again, are there any trends? Are sales higher MARKETPLACE or lower? How do sales compare to your original budget for this year? If sales are five to 10 percent lower than last year, but you • Classifieds ........................................................ 9 budgeted for that -- fine. But if you budgeted for a flat year or an • Other Advertising .............................................. 9 increase in sales, you need to make a midcourse correction to keep control. Inventory Meeting the Challenge: A Letter to Look at inventory. Was your inventory plan based on original sales Booksellers From ABA CEO Avin Mark projections that are now lower than expected? You might have more inventory than is justified by sales. There's nothing wrong Domnitz on the Economy -- Plus Other with doing returns now. Returns are your ultimate control device. Resources for Tough Times I'm not talking about a full-scale pillaging of your inventory. I am October 16, 2008 -- Dear Booksellers, talking about adjustments to keep control of inventory levels. Remember, inventory is nothing more than cash in another form -- With almost-daily reports forecasting a challenging holiday season and we'd rather have cash in our pockets than in someone else's. for the nation's retailers, I know that many of you are focused on how to achieve the continued good health of your businesses. In the We may think we know what the hot books are going to be this midst of these turbulent times, please know that ABA is here to season, but inevitably there are one or two (or 10!) titles that help you. explode that we didn't plan for. You will need to get those books on a moment's notice. You don't want to be in a situation where you're We understand the challenges facing you. Hopefully, many of you over-inventoried and don't have cash on hand to buy those books. will meet or exceed your goals, but, even if business falters, it's Also, it's important to keep in mind that in hard economic times © 2008 American Booksellers Association. http://news.bookweb.org/ 1 BOOKSELLING THIS WEEK October 16, 2008 publishers, like other businesses and banks, are more likely to October 16, 2008 -- During tough times, it's imperative that tighten credit, even for good customers. Without ready cash, you booksellers control costs. Payroll represents approximately 20 may not be able to get the very books that could maximize your percent of a store's costs (while inventory constitutes 60 percent), season. so taking control of staffing is crucial for stores looking to weather Here's more great information on inventory management 2 and economic turmoil. Today, in a letter to booksellers, ABA CEO marketing 3 in tough times from Bookselling This Week . Avin Mark Domnitz recommended taking "a look back at last year's payroll for the holiday season and comparing it with sales. If Payroll [this year's] sales are down 10 percent, then payroll should be Over the course of the whole year, profitable bookshops operate trimmed. There is no one-size-fits all solution here, but, again, the with a total compensation percentage of about 18 to 20 percent of object is to staff the store at the level that maximizes sales. If sales sales. At a time when sales are lower, the percentage will be higher. are below budget, you must adjust controllable expenses." During the holiday season, the percentage of compensation This week, Bill Reilly of The River's End Bookstore 13 in Oswego, expenses should then be lower. Take a look back at last year's New York; Dan Chartrand of Water Street Bookstore 14 in Exeter, payroll for the holiday season and compare it with sales. If sales are New Hampshire; Carla Jimenez of Inkwood Books 15 in Tampa, down 10 percent, then payroll should be trimmed. There is no Florida; and Chuck Robinson of Village Books 16 in Bellingham, one-size-fits-all solution here, but, again, the object is to staff the Washington, share their insights on staffing during economic store at the level that maximizes sales. If sales are below budget, uncertainty. you must adjust controllable expenses. And here's more good 4 information on staffing in tough times from Bookselling This Be More Deliberate in Scheduling Week. In uncertain economic times, fundamentals of good business One way to minimize compensation costs is through better management apply more than ever. And to help provide the tools scheduling. "We're going to try to spread staff out more evenly," for determining trends and building a strategy on those trends, said Village Books' Robinson. "Due to staff requests, we might please look at the Budgeting and Monitoring Worksheets 5 on have been overstaffed at times simply because we wanted to BookWeb.org. accommodate the request of staff members, rather than the needs of the store." Again, I want to stress that we at ABA are here to help you. It can feel as if each day brings a new economic rumble or dip, but with Chartrand noted that he will look at overlapping shifts at Water proactive planning and analysis, you can put yourself in the best Street Bookstore in an attempt to minimize costs and maximize possible position to maximize the potential for this holiday season. staffing efficiency. Also, "the owner is going to take some shifts, Feel free to contact me, and let's work together to help achieve the too. There's nothing like leadership from the front. When you start best holiday season we can. To help with logistics, please contact adding up $10 here and $10 there, it makes a difference." ABA's Member Services Director, Jill Perlstein, at [email protected] 6 , so that we can set up a time to talk. Don't Understaff -- Properly Staff Sincerely, Cutting payroll without understanding how it will impact the Avin Mark Domnitz customer experience can lead to a downward spiral -- especially at Chief Executive Officer an indie bookstore, where consumers are very much accustomed to American Booksellers Association receiving excellent customer service. Fewer staff to shelve, merchandise, and sell can lead to unhappy customers, and that can lead to a further decrease in sales... "You need to be careful not to cut staff dramatically," Chartrand Other Resources for Tough Times said, explaining that staff is the store's "heart and soul" and "drives" an independent bookstore. "[A good staff] brings people into the Links to all of these resources have been gathered on a single page 7 on store. I'm not resistant to making strategic cuts in staffing, but there BookWeb.org. In the coming days, ABA will be posting even more is a delicate balance." He suggested studying the patterns of information to help booksellers meet today's economic challenges. customers flowing into the store, and the ability of currently • scheduled employees to meet their needs, and then making Budgeting & Monitoring Worksheets to Help Create Budgets With an Eye 8 decisions about staffing levels based on that knowledge.