What’s killing Hong Kong bookstores?
Jason Ng discounts the usual suspects behind the closure of chains such as Page One and Dymocks, saying that faulty business sense, in the main, was their undoing
Reaction on social media to the loss of yet another bookstore chain was both immediate and damning. While some attributed Page One’s demise to competition from e-books and online retailers, many put the blame on the lack of a robust reading culture in Hong Kong. Still others pointed their finger at greedy landlords and the sky-high rent they extort from retailers.
But what really killed Page One? An autopsy is in order to examine the cause of death of the book industry’s latest casualty.
Hong Kong’s Page One bookstores closed as company faces more financial trouble
E-books: The technorati have long prophesised the end of paper. Portable and affordable, Amazon’s Kindle and other e-readers are the physical book’s worst nightmare. But are they really?
After years of rapid growth in the past decade, e-book sales appear to have reached a plateau. In the UK, digital content sales fell nearly 2 per cent last year, while physical book sales grew in the same period. A similar reversal of fortune is happening in the United States, where industry experts cite “digital fatigue” as the primary cause of e-books’ gradual decline in popularity.
E-books have been even slower to catch on in Hong Kong, largely because not as many Chinese titles are available electronically. Contrary to common belief, they are not responsible for Page One’s death.
Online retailers: Popular sites such as Book Depository and SHOPinHK boast free delivery and sizable discounts – between 10 and 25 per cent. They offer convenience, savings and a selection that traditional bookstores find hard to beat.
Still, the two platforms cater to somewhat different customer groups: readers who already know what they want (usually international bestsellers) versus those who need to browse and be inspired. The latter are less inclined to make a purchase unless they can leaf through the pages or check out what else is on the shelf.
Store experience matters the most to buyers of children’s books. On weekends, many Hong Kong parents take their kids to physical bookstores where they can pick out a few choice titles, curl up on the carpeted floor and read the text out loud before taking them home as a treat. And so, while online retailers do peel away sales from traditional stores, the former can’t match the shopping environment offered by their bricks-and-mortar counterparts. E-commerce did hurt Page One, but it didn’t mortally wound it.
Chinese bookstore owner’s business of selling old books flies in face of e-book boom
Reading culture: The joy of reading is lost on most Hongkongers. We tend to read for utility and not pleasure. That’s why investment manuals and travel guides outsell all other genres, whereas literature and fiction are the perennial underdogs. Chinese-language bookstores such as Joint Publishing, Commercial Press and Chung Hwa rely heavily on the sales of textbooks and exam aids.
Our reading culture has long been the bane of the publishing industry. Over the years, booksellers have evolved and adapted by expanding their product offerings to stay afloat.
Eslite and Bookazine, for instance, have carved out significant store space for stationery, snacks, toys and sundry paraphernalia.
So had Page One. Its Harbour City flagship resembled a small department store, complete with a restaurant and tea house. What’s more, the chain knew what it was in for when it opened shop in aliterate Hong Kong. It didn’t go out of business because its customers suddenly changed the way they read – because they didn’t.
Retail rent: We love to blame all social ills on the property market, and we do so for good reason. In Hong Kong, rent accounts for over 20 per cent of a retailer’s operating cost, nearly twice the industry norm overseas.
To understand the landlord-tenant dynamics, I spoke to Shonee Mirchandani, owner and managing director of Bookazine. To my surprise, she was quick to debunk the myth that commercial landlords are bloodsucking villains. “It’s simple supply and demand,” she said. “If a store space is overpriced, retailers will look somewhere else. At the same time, we don’t expect a free pass from our landlords just because we sell books. We are running a business and so are they.”
The relationship between shopping malls and retailers are symbiotic: mall operators bring in foot traffic and they charge market rates for it. “Yes, rents are high in Hong Kong, but our costliest stores [in terms of monthly rent] are also our most profitable,” Mirchandani confessed. “There are many reasons why businesses fail. It’s not always the landlord’s fault. In fact, it’s often not.”
The difference between success and failure boils down to the basic law of evolution: well-managed businesses survive and mismanaged ones don’t. Dymocks failed in Hong Kong in large part because the franchise was poorly run, according to an industry insider. The head office offered little support to the franchisees and set unrealistic turnover targets.
Page One, on the other hand, misread the book market. “They specialised in high-end art and architecture books and neglected non-fiction titles that Hongkongers love,” said Pete Spurrier, owner-founder of Blacksmith Books. “Expensive art books are a niche market and it can’t really sustain a business.” As if to prove the point, Basheer Design Books in Causeway Bay announced this past weekend that they have decided to call it quits.
Hong Kong bookshop Cosmos finds promotion is key to survival in digital age
Cash flow mismanagement is another common pitfall for booksellers – or any retailer for that matter.
There is still room for bookshops even in the electronic age
So let the coroner conclude his post mortem examination with a few wise words from a bookseller who has beaten the odds. “Running a business is a gamble,” Mirchandani said. “You need both skill and luck. I’m driven by fear – the fear factor is what makes us adaptable and viable.”
Jason Y. Ng is the author of several books about Hong Kong and the President of PEN Hong Kong, a bilingual literary organisation