The sky isn't falling after all

>> Two years after the Chapters menace, Paragraphe opens its own superstore

by PHILIP PREVILLE

Richard King vividly remembers the days when bookselling giant Chapters was just being formed. Back in 1995 Canada's two major bookstore chains, Coles and WH Smith, announced their intent to merge into one dominant book retailing conglomerate and panic spread throughout Canada's community of independent booksellers. King, co-owner of then-small independent bookstore Paragraphe, was also president of the Canadian Booksellers Association at the time. He and the other members of the CBA were up in arms, petitioning the federal government to block the merger. Independent bookstores would never be able to compete, they said. They felt they were defending their livelihood.

Two years later, the panic is gone. Just before Christmas, Paragraphe Books moved out of its basement cubbyhole on Mansfield and into a much more comfortable, street-level, sunlit space on McGill College just outside the Roddick Gates entrance to McGill University. The new space boasts twice the retail space of the old store and, while still dwarfed by the four floors' worth of books over at Chapters, can still be considered a superstore in its own right.

"I know why we said the things we said back when Chapters was coming on to the scene," King says, hinting at the CBA's political agenda. "And I think it was the thing to do at the time. We expected more independent stores to go under. But independent bookstores represent half of all book sales in the country. People get all misty eyed when they talk about the book business, but in real life the chains and the independents have to coexist."

The real fallout from Chapters, unexpected as it was, materialized quickly. King stocked more titles in the old store so as not to lose face in the shadow of Chapters, and business boomed. While most independent bookstores turn over their inventory two, maybe three times a year, Paragraphe was turning it over at least four times per year. And it's easier to go through your full inventory when you have a diverse selection of titles, but don't stock four floors' worth of them. "We want to push those numbers, and turn over inventory five or six times a year," King says.

He is not alone in his sentiment. Back when he led the CBA and petitioned the government to disallow the Chapters merger, the government decided instead to place a two-year "watch period" over the merger to monitor the industry. That two-year watch is now nearing its end, but the CBA is no longer calling on the government to break up the Chapters monster. "We have no plans to that effect at this point," says Sheryl McKean, the executive director of the CBA, noting that membership is split on the issue. "Some members still feel threatened, but many no longer do."

Ultimately, the Chapters issue is no longer a priority for the CBA. Meanwhile, Canada's larger independent booksellers, such as Duffy's in Vancouver and McNally Robinson in Winnipeg as well as Paragraphe, have opened superstores of their own.

But the question remains: why didn't the Chapters threat materialize the way King and others thought it would? Part of the answer lies in Chapters' marketing strategy: they were trying to copy the independent bookstore experience, letting people take their own sweet time to browse and leaf through books comfortably--but in a bigger store. King notes that when Paragraphe first opened its doors 16 years ago, it was one of the first bookstores in North America to include a café. It was an idea before its time. "At first we just served coffee, but it didn't really generate traffic. So we decided to serve sandwiches and quiches, but we couldn't do it cheaply. I wish we had had the courage to stick with the original idea."

Once coffee culture settled firmly in place, Chapters opened its doors with a Starbucks outlet inside. Paragraphe no longer runs its own café; it is now attached to a Second Cup outlet.

Now, with Chapters mimicking the independent experience, the real victims of the Chapters invasion have been its own smaller mall stores. According to Jack Stoddart of the Association of Canadian Publishers, Chapters has "gone into direct competition with itself" and closed more than 60 of its Coles and WH Smith outlets as a result. Coles' McDonald's-style strategy best illustrates the problem: the bright yellow and black colours were designed to draw people's attention to the store and bring them in, but also to get rid of them quickly. Coles' in-store experience is not a pleasant one: you go in, you pick your book, you get out. "Coles was designed to be uncomfortable," says Stoddart. "Now the stores are designed for comfort. They are going back to books as a way of life."

King agrees. "Orange and yellow display racks are a mistake," he says. "You need an atmosphere that will show off the books--the books themselves will provide the colour." King spared no expense for the interior design of the new and improved Paragraphe. He even did away with the wire racks displaying free weeklies such as the Mirror, which are important to his business but which he considered a messy eyesore. Instead, he spent the extra money to build neat wooden boxes for them.

According to Stoddart, the real transformation of the bookselling industry came not from Chapters, but from the arrival of mega-retailers such as Club Price and Costco, who stock only bestsellers and sell them at unbeatable discounts. "Club Price changed where people buy bestsellers," Stoddart says, leaving both chains and independent bookstores to compete based on their inventory of what are known as mid-list titles: books first published years ago that continue to have a following. That's where, according to King, Paragraphe ends up with a distinct advantage. "There are so many books in print out there," he says, "that even a store the size of Chapters can't stock all of them."