Schuler Books: Creating a Niche for Independent Bookstores

Introduction

Schuler Books is an independent bookstore chain founded and owned by husband and wife Bill and Cecile Fesenfeld in 1982 in Grand Rapids, Michigan. At the height of its operation, the chain had 5 stores operating across Michigan: three in Grand Rapids and two in Lansing, but currently only operates one in each area, in addition to the recently acquired Nicola’s Books in Ann Arbor. It has been previously expanded to Schuler Books& Music, featuring a large selection of CDs along with books, gift cards, and games; however the company dropped the ‘&Music’ to focus again on the latter areas.

Marketing Environment

The market environment for print books has been on a general decline in the last decade possibly due to several factors including the introduction of ebooks, the rise of online retailing giants such as Amazon. Many have suggested the rise of a digital reading era following the closing of Borders Group, the US’s second largest bookstore chain behind Barnes&Noble, in 2011.

There are several things of note specific to Schuler Books. While its main focus are its physical locations, the company has an online store which not only offers titles available in their bookstores, but also ebook purchases through Kobo Books. As one of the first independent bookstores to acquire an espresso machine (a high speed automatic book making machine) in 2009 (Schuler Website), the company also offers self publishing and print-on-demand services where customers can print books that have been out of print. Schuler Books also places great emphasis in engaging with the community, hosting author events and community book club events at their two operating locations.

PEST Analysis

Schuler Books is a part of the American Booksellers Association, a nonprofit trade association founded in 1900 for the benefit of independent booksellers. The ABA has made efforts in providing independent booksellers with business insurance policies, e-commerce services, education, and sponsors events such as the Independent Bookstore Day (ABA Website). Also sponsored by Ingram Books and Penguin Random House, the Independent Bookstore Day is a nationwide event with more than 507 participating bookstores hosting activities that celebrate print books and the bookstore. All 3 of Schuler Book’s locations participate in this event. The existence of the ABA and national events such as the Independent Bookstore Day increases the political significance of Schuler Books and other independent bookstores.

In terms of the economic environment, Schuler Books is influenced heavily by changes in real estate and retail space, unlike online-based retailers such as Amazon,. Co-owner Cecile Fesenfeld has cited this as a major factor that influenced the company’s decision to close its 15-year old store in Eastwood Town Mall in Lansing in early 2018, which has experienced a spike in real estate taxes since the mall ownership changed in 2005 (Kirch 2018). Moreover, since print books are more expensive than ebooks, the company would be more prone to being affected by trends inn disposable income and net worth. It has been found that the “average net worth of millenials aged 18–35 has dropped 34% since 1996” (Bhattaral 2019), as the price of healthcare, education, and housing increase. This is significant as research has found that this age group is the largest consumer group, books included.

Several social factors also affect the market environment of Schuler Books. Demographically, it has been consistently found that adults aged 18–29 are more likely to read books than those aged 65 and above, and so are people living in urban areas over those in rural areas. This is a relevant factor when considering the kinds of books Schuler stocks in each of their locations, or in the long term, planning. Another important social factor has been implicated in a study done by Scholastic on children’s reading patterns. Children readership has been on an incline, and while that has been in part due to the availability of ebooks, print books still account for a large portion of this. In addition, recent trends that emphasize then importance of local businesses and community such as the buy local movement has made people more conscious of supporting local businesses. It should be noted that both Schuler and recently acquired Nicola’s books are not only independently owned businesses but have gained reputation as being supportive of other local artists and businesses.

As a response to the introduction of ebooks and its rising popularity, Schuler has partnered with KoBo books to offer eReaders at their physical locations and ebooks on their website. This allows customers to read in a variety of ways while supporting the independent bookstore (“Why Kobo”, 2019). A similar way of adaptation did not happen with their music section, however. With increasing people downloading or streaming music and movies either online or through apps such as Spotify or iTunes, CDs and DVDs have become even more of a niche product, hence the company’s reducing of emphasis on the ‘&Music’, and decision not to list their CD and DVDs online.

From the analysis above, it should be noted that several key factors are influencing the market for Schuler Books, and that the impact created by the introduction of ebooks and online retailer is more complex than expected. Further analysis using the SWOT model will help identify the current situation facing the company.

SWOT Analysis

One of Schuler’s main strengths is maintaining its unique identity as an independent bookstore. The company is considered an innovator in its field, operating a relatively large location without losing its reputation as an independently owned neighborhood bookseller with well curated collections of books. They have achieved this primarily through focusing on the defining aspects of a traditional bookstore: a well-maintained space and a knowledgable staff. They have a book quiz as a part of the hiring process (Shellenbarger, 2011), which ensures that they hire employees that are not only passionate and capable of establishing dynamic relationships with customers. Through customer interaction, Schuler Books is able to better curate their collections in different locations.

Schuler also stays in touch with the local community. Local authors can self publish at the location, and customers can purchase these books knowing that they are supporting local talent. Signing events and music nights also remind customers of the importance of the physical bookstore, while also being a marketing opportunity that attracts more potential customers to the space.

On the other hand, one of Schuler Books is its price rigidity. As it is a small chain, it cannot offer discounts and remain profitable, unlike competitors like Amazon (Shellenbarger 2011). This has clearly been an issue that is relevant in recent years, as owners reference instances where customers browse in the bookstore but end up ordering online due to the price difference. This links to the following point of limited sources of revenue. It is true that int he past years Schuler has slowly incorporated other products into their bookstores, but they have mostly remained true to the traditional bookstore ideal, with 60% of their revenue generated from the traditional sales of books. While this helps maintain their image as a local independent bookstore, this also limits their sources of revenue.

Schülers biggest opportunities lie in continuing to capitalize on their strong brand image. can capitalize on Nicola’s books, especially partnerships the newly acquired bookstore had with the Ann Arbor community. In a similar vein, Schuler Books can use their reputations as a way of furthering partnerships with local businesses. As they can ‘special order anything’ for seminars or staff trainings in small businesses, they can continue to build charge account relationships (Greater Lansing Business Monthly, 2005)

In addition, Schuler can boost profit and increase sources of revenue through taking advantage of current lifestyle trends such as the buy local movement. As previously mentioned, local artists are able to self publish their books at Schuler, which would appeal to indie readers. Schuler can take advantage of trends set by brands such as Urban Outfitters or Free People to sell Limited edition or aesthetically pleasing books that target younger customers.

The threats facing Schuler Books can be identified by referring back to some of the environmental factors affecting the company. Again, the popularity of music sharing technology has pushed CDs to a more niche market, and increasing prices of rent make it challenging for the company to maintain profitability in their physical locations, especially in the face of an increasing volume of purchase through their online store.

Conclusion

While e-commerce and the ebook industries prove to be challenges to Schuler Books, they have done a relatively good job in adapting to changes int he industry compared to other bookstores, establishing its own online store and partnering with Kobo rather than listing its inventory on other e-commerce websites, a decision that played a factor in the bankruptcy of Borders soup in 2011 (Czurak, 2011). However, as physical retail still is an integral part of the company, Schuler Books has to continue being mindful of real estate prices, changes in demographics, and employment rate which strongly impact the profitability of their stores.

Despite this, it has been repeatedly shown that the services provided by physical locations of Schuler are valuable and unique. As an independent bookstore, Schuler has cultivated an identity that emphasizes engaging with the customers and the community at large. Over its more than 30 year presence in Michigan, the stores has become an integral part of the local communities they are located in, something that sets them apart from chain bookstores. If Schuler Books continues with the elements that has led to its success while further taking advantage of the current opportunities to further its partnership with local artists created by the global buy local movement, there will always be a market for its bookstores.

Works Cited

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Denniss, Heather (27 Apr 2018.) Independent bookstores have their day. Regional News; Chicago. Retrieved From https://search-proquest.com.revproxy.brown.edu/

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Ellison, G. (2014, June 30). Schuler Books returns to growth mode with acquisition of Ann

Arbor book shop. Retrieved from https://www.mlive.com/business/west-michigan/2014/06/schuler_books_aquires_nicolas.html.

Kirch, C. L. (2018, April). Michigan Mini-Chain Schuler Books to Close Lansing Store. Retrieved from https://www.publishersweekly.com/pw/by-topic/industry-news/bookselling/article/75765-michigan-mini-chain-schuler-s-to-close-lansing-store.html.

Schuler Books & Music. (n.d.). Retrieved from https://www.schulerbooks.com/store-history.

By Yereem Chun on November 12, 2019.