The Life and Times of Cody's Bookstore
Stacy Perman of Business Week wrote an excellent article about the downfall of Cody’s Books in San Francisco.
Cody’s was always one of Dalkey’s greatest accounts (and probably would’ve been for Open Letter had they been around when we started selling our books), in part because of a bookseller name Brian who worked at the 4th Street store. Brian was a huge fan, especially of Nicholas Mosley and Julian Rios’s Larva. At the start of a season, he would order 50+ copies of Hopeful Monsters and just through handselling, would sell out before the next catalog came out. I remember when the paperback of Larva came out, he outsold both Borders and Barnes & Noble single-handedly. He was also pretty adverse to returns, instead putting “to-be-returned” books on the front counter and pushing those until the stack was gone. (I have no idea what happened to Brian though . . .)
Anyway, enough reminiscing, this article is about how even the most popular, most well-known independents are two fuck ups away from bankruptcy. There’s really nothing else to add to Perman’s article. If you’re interested in the business of bookselling it’s a “must read.” Here are a few parts I found interesting starting after Andy Ross bought the store in 1977:
Throughout the 1980s the store prospered. It is a period that Ross, in retrospect, calls the Golden Age of independent bookstores — before chain mega-stores and discount warehouses, before the Internet and Amazon. Notable writers, from Alice Walker to Joseph Heller, made store appearances. “On a normal Saturday in 1989, we would do $25,000,” says Ross. Ninety percent of the books sold were part of the store’s extensive backlist. According to Ross, Cody’s sold 10% of the country’s copies of Walter Benjamin’s Illuminations.
Then along came the big box stores and Amazon . . .
Looking back, Ross says he was determined to turn a blind eye to some of the harsh realities unfolding all around him. “Amazon had a very good service,” he says. “But we didn’t want to admit it. We still had the experience of going to a bookstore, and we were a community center. We had author events every night, but the competition was stiff.”
The writing was on the wall. Customers came into the store to browse, but increasingly they went home and purchased their books online — at a discount. [Ed. Note: And without paying sales tax.]
By the early 2000s, Ross says he was losing $300,000 a year. By about 2005, losses had increased to $500,000, and profits were marginal. However, his payroll and overhead costs continued to go up.
Ignoring Amazon’s impact on the trade is mistake #1, and here’s the second:
In 2005, Ross opened a third store, in San Francisco, a decision that he hoped would pull Cody’s out of its hole. Looking back, it may have also been his fatal mistake, he says. Ross dug into his savings and plowed $1.5 million into a 22,000-sq.-ft. location in the heavily trafficked Union Square. “We thought we would expand ourselves to profitability,” he says. “All the factors were in place. It was a great location. We got a great deal per square foot: We had information about how much money per square foot you could make.” There was, however, another factor that Ross says he ignored at the time: “Nobody was buying books.”
Shortly thereafter, Ross sold the store to Hiroshi Kagawa of the Japanese firm IBC Publishing, who kept Ross on as a manager. Not that things were getting better:
Compounding problems, Ross says that Cody’s was being squeezed by creditors and stock was running low. There were even fewer books to sell to customers. Sales slipped further. On a good Saturday, Cody’s rang up only $9,000 in sales. Revenues were down two-thirds from their high point 17 years earlier. Ironically, Ross says, as things continued to get worse, Cody’s actually had gotten better at doing business. “We were reaching out to libraries and book fairs and other events, but it wasn’t enough.” Revenues were down to about $2.5 million (compared with the late 1980s, when there was only one store and Cody’s brought in $8 million), and profitability continued to slide. Ross says the costs became unsustainable.
And in June 2008, it all came to an end.