Big chain bookstores offer their own TV as small ones innovate or go bankrupt

  • 2011-08-10
  • By Linas Jegelevicius

OUT-DATED: The traditional book selling market is doing well, though e-books and on-line book orders are proving challenging.

KLAIPEDA - Unlike other market sectors, book publishing and book sales are dealing not only with the post-crisis economy, but what it makes it so special, is meeting the new reality stemming from the rapid book digitization process, which slowly but assuredly is crawling its way into the traditional book market. The century-defining alterations in publishing make major publishing houses and bookshop networks scramble for new ways of retaining their most faithful book readers and finding new ones. This is becoming a very hard task as, according to statistics, the number of readers is on a constant decline.
In a recent Delfi survey, only 40 percent of Lithuanians admitted to reading books, while as many respondents replied “to have no interest in books whatsoever.”

In light of the gloomy prospects, major publishing houses and big chain bookstores are seeking exuberantly new ways and forms to face the reality, often sinking their smaller rivals. Alma Littera is a part of the biggest publishing and book sale group in the Baltic States which includes Sviesa Publishers, bookshop network Pegasas, and The Book Club. Chairman of Alma Littera Group’s Board, Arvydas Andrijauskas, says that “the size of the company, as well as the scope of books and the number of employees, make it stand out in the market.”

“Also, unlike other similar companies, we have our own bookstore network, as well as retail and wholesale book trades,” Andrijauskas said to The Baltic Times.
He admits that the crisis has shaken up the company, making it overhaul its cost structure, downsize staff, cut spending and rethink marketing strategies. “All this has produced positive results,” the Alma Littera Group Board chairman claims. The company, he says, is coming back from a 30 percent plunge in sales in 2009 and 2010. “Due to the crisis, book circulation went down from several thousand copies to several hundred copies. In the wake of the economic turmoil, some wholesalers went bankrupt and, without exception, all publishing houses incurred big losses. However, having carried out the structural overhauls of the business operations, we were able to turn things around, seeing a six percent sales increase in Pegasus book stores in 2011’s half-year, year-on-year basis,” he maintained.

The publisher notices that more new books, particularly those by Lithuanian authors, are being published. “The increasing popularity of local authors is especially gladdening. It is a part of a European trend,” the Alma Littera CEO says.
Acknowledging the challenge of e-books and online book orders to the paper books, he maintains that the situation of the traditional book in Lithuania, compared to Latvia and Estonia, “is good.”

“Due to the rapid book digitization process and e-book business development, Estonians have only a few traditional book stores already. Besides, in Latvia and Estonia, book prices are considerably higher than in Lithuania, while book circulations there are smaller. However, we have larger competition in Lithuania, where, according to some unofficial estimations, the book market is twice as large as in Latvia and Estonia,” Andrijauskas observed.
The e-book market threatens to chip off a large chunk of the paper book market, however, he says, “it remains unclear to what scope it will happen.”

Previously asked about the rapidly shaping worldwide trend of book digitization, Aida Dobkeviciute-Dzioveniene, Lithuanian Publisher Association’s (LPA) executive director, told The Baltic Times that “obviously, [digitization] will change reading habits and long-lasting traditions.”

“However, the process’ encroachment so far is slowed by the high price of e-book readers, as well as by their complicated compatibility. Thus, if you have an e-book and Amazon e-reader, you may not be able to read it [book] using another e-reader,” the director maintained.

Though the e-book is no rival to the cozy paper book just yet in Lithuania, book digitization may loom large in the near future, gnawing away at the book you may keep on your shelf. However, despite the plight, she remains optimistic about the traditional book’s future. “The book has always been a very important part of our lives and it will remain that way,” the LPA executive director said.

Alma Littera is the only book company in the country that has not only its own retail and wholesale book trade, but also its own logistics, bookstore chain and Book Club, where it sells not only its own books but also other publishing house issues. It, Andrijauskas said, had 42.7 million litas (12.3 million euros) in turnover in 2011’s first half-year, preceded by 99 million litas in turnover last year, and 95 million litas in 2009. Despite the increase, it is still far from that of 2008 - 104 million litas.

JSC Vagos Prekyba, one of the largest book market players, runs a 34-bookstore network - VAGA - in 13 towns. “With over 30,000 book titles, both in Lithuanian and foreign languages and a large supply of office products, Vagos Prekyba is one of the very top leaders in the market,” Vytas Petrosius, Vagos Prekyba director general, maintained.
Like his Alma Littera counterpart, he says the company “has been through tumultuous times.”

“With book sales plummeting, we sought new ways and forms in attracting more book buyers into our bookstores, positioning the book as an inseparable part of leisure. Also, meeting ever-growing demands of modern book purchasers, we have renewed the concept of a traditional book store, offering not only books but also coffee in a modern-design environment,” Petrosius related to The Baltic Times.

In addition, the publishing house, in pursuit of a larger number of book lovers, started arranging various themed venues, meetings with different authors, notables and other extraordinary people. “Our striving is to have VAGA book stores as socially active venues, widening our visitors’ outlook and creating an additional value to the traditional activity – book sales,” the VAGA CEO asserted.

He says that the company started working more vigorously in marketing, particularly focusing on strengthening the flow of indirect advertising.

Hence, Laisvoji Banga Radio Station started a daily several-minute program “Laikas Knygai” (Time for a Book). “In addition, we have launched a media network, VAGA TV, which airs in VAGA book stores in Vilnius, Kaunas, Klaipeda, Siauliai and Panevezys. It highlights readers’ meetings with book authors, famous people, as well as the trendy book news, discounts,” Petrosius said. “In responding to the book digitization processes, we have started our own Web site and started collaborating with the e-sale leader in the country,” the VAGA director added. He says that the company, having scrutinized VAGA bookstores’ economic indicators and compared them with the data of the bookstores that are being run as franchises, responded to the ineffectiveness of small bookstores by letting private companies run on the basis of the existing franchise agreements.

“Therefore, we are enjoying the results of the necessary reforms. Having set off the activities in 2010, we are looking forward to having positive outcomes at the end of the year,” Petrosius emphasized. He, however, did not elaborate on exact data proving the recovery.
Previously, a Vaga Prekyba first quarter report had claimed the company has seen an 8 percent turnover growth in the beginning of the year.
Unlike Alma Littera and Vaga, Panevezys-based Magile is a small, one-person publishing house. Its owner, Regina Magiliene, says that the Lithuanian book publishing and sale market has been “monopolized by a few giants who dictate the conditions for the rest.”

Though the Magile owner refused to pinpoint them, one in the business presumes she has in mind the aforementioned Alma Littera, which runs retail and wholesale book sales and also has its own logistics and owns the bookstore network. Magiliene complains that, in the uneven competition, it is hard for other publishers to sell their books in Pegasus book stores. “There are too many hurdles for others as Alma Littera books, certainly, do not meet them,” the publisher said to The Baltic Times.
In order to stay in the market, Magile is very selective about its authors, preferring publishing only already well-known, popular authors, such as Daiva Vaitkeviciute, Edmundas Malukas or Edvinas Kaleda. “I cannot risk publishing little known authors, as I have to be sure that I will not have any loss from publishing a book. Only big publishing houses can afford publishing less known or unknown authors. However, in general, it is getting harder to get published. In most cases, publishing houses require even aspiring authors to cover the expenses of publishing,” the one-person company’s owner maintained.

She says that the increased VAT and the hiked taxes for writers, who usually work according to author agreements and that have to be paid by publishers, “have extremely ill-affected” her business. “They have taken away 40 percent of my previous earnings,” the publisher acknowledged, not agreeing to elaborate on the numbers.
With the rapid market monopolization, which has been significantly instigated by the crisis, many smaller book publishers have gone bankrupt. As for book stores, those that do not belong to the market giants and are franchise-free, are attempting to bring up innovative business ideas which would allow them stay afloat.

A bookstore in Kaunas, Zmoniu Knygos, situated in the old city of Kaunas and run by Vilma Kubiliene, sells mostly second-hand books at affordable prices, ranging from several litas to 15 litas. Besides, it leases books, changes them and buys up.

“I am a big book lover, and I have dreamt all my life to run my own bookstore. Therefore, when the crisis hit, it occurred to me: “My time has come!” So I rented a 40-square-meter premise for my book store in the old city. Instead of only selling books, I also lease and change them, which is a new bookstore model,” Kubiliene related to The Baltic Times.
Asked whether the new approach to the business works, she replies, “It does. The activity is not loss-making, which is very good for the start.” The bookstore keeper admits that the premise rent, 1,200 litas a month, and salary for the bookstore seller, take up the bulk of the revenues.

Zmoniu Knygos bookstore also invites everyone to enjoy a sip of coffee, gulp down a cookie while flipping a book’s pages or browsing the Web. “In a large chain-bookstore, a book lover has not so much freedom, as he faces two options - to buy or not to buy a book. My business idea was to provide a handful of options, and it works,” Kubiliene maintained.
Most of her books are second-hand; however, the new ones are being offered for purchase at discounted prices. “Money-strapped people, who often are not able to afford a new book, find it here at a discounted price. Besides, leasing is an option,” the bookstore owner said.

She admitted that she had worked as a senior manager in a large company before leaving for  maternity leave. “My entrepreneurship has been much more rewarding to me,” the woman admitted.  She is looking for arranging what she says is an intellectual fitness-promoting school in the fall. “I am sure the bookstore will do well, but only if it offers a very wide range of activities. It is something I am striving for,” the owner revealed her business strategy.

A bookstore in Naujoji Akmene, a small city in the northeast, has been there since the Soviet times, and was the only bookstore in town in recent years. With book sales going down significantly, bookstore operators were not able to settle the premises lease bills, compelling the building owner to terminate the lease agreement. Instead, a second hand apparel and footwear store has been opened. “Obviously, it is a better business than book sales,”Alma Baranauskiene, the ex-director of the bookstore, noted sadly to Siauliu Krastas, a newspaper in Siauliai. “The book sales were on decline for many years. However, the crisis killed us,” she says.

Sviesva bookstore in Ramygala, a small town of 1,700 inhabitants in the north, faced a similar fate as the one in Naujoji Akmene. Pushed to the brink of bankruptcy, its administration decided to lease books. “My heart was bleeding at the prospects of the pending shut-down. As we had come to the conclusion that most people give up reading books not because they dislike reading, but because of their inability to buy a book due to economic hardships, we decided to change the way we run the bookstore – let our customers lease the books instead of buying them. The idea has worked out well -  we see constantly rising customer numbers. Instead of blaming the crisis, I keep repeating to everyone: “God likes to wrap up his gifts into crisis,” Zaneta Dangveckiene, Ramygala Sviesva bookstore co-owner, said, rejoicing.