SINGAPORE: Ask bookstores what is their key challenge, and one answer keeps popping up: Rising rents.
And it has indeed felled one player in the market, at least for now.
Last Friday, MPH announced that it was closing the chapter on its two stores in Raffles City and Parkway Parade.
It cited high rental cost as the main reason.
But MPH’s shelf life is not over yet. It is exploring a few potential locations for a new store, and will take the opportunity to “re-structure and streamline resources to make way for new business initiatives,” according to Ms Ivy Tan, the retailer’s general manager for business development.
READ: MPH’s two remaining bookstores in Singapore to close by September
Books Kinokuniya and BooksActually agree that rising rents is one of their greatest challenges.
When asked if MPH’s consolidation was a normal move for a bookstore, senior store and merchandising director Kenny Chan of Books Kinokuniya (Pacific Asia) said yes.
“It’s good to move from poor locations that are have dropping footfall,” he said.
Kinokuniya would know. The Japanese bookstore chain closed its Liang Court outlet in April this year. The outlet, which opened in 1983, was the chain’s first branch in Asia outside of its home country.
Kinokuniya has three outlets remaining in Singapore, including its flagship store, which occupies 38,000 square feet of prime retail real estate in Ngee Ann City on Orchard Road. Business has been sustainable over the past few years, it added.
“But we still need more support, as well as understanding landlords, as rent is the biggest challenge,” said Mr Chan.
BooksActually’s founder Kenny Leck revealed that rent at his Tiong Bahru store is US$9,500 a month. It’s the highest rent he has paid in the 14-year business.
But he says that high rent comes with the territory, even if it’s a challenge when balancing the books.
“To be honest, if I want a lower rental, a more competitive rental, I would have rented maybe somewhere in the heartlands, an HDB shop, then I would never have to complain about rental, in that sense,” he said. “But would that generate that sort of sales, would it generate that sort of environment and vibe that the business is looking for?”
IMPACT OF E-COMMERCE ON BOOK SALES
Indeed, publisher Asiapac Books says the issues facing bookstores are similar to what any retail or F&B business would face – and the competition from e-commerce retailers is certainly one aspect.
“Something people may not realise is in Singapore, we’re one of the small minority of countries that charges standard GST on books. So when you see a book online, it’s slightly cheaper than in bookstores, and that’s because there’s no tax,” said Ms Chong Lingying, Manager of Asiapac Books, referring to foreign online retailers such as Book Depository and Amazon.
“If we continue to lose this share of the market to these overseas book retailers, we’re going to see more and more in Singapore having to scale down their book selection, or maybe even exit the book business entirely.”
While booksellers have surfed the wave of e-commerce themselves, their web sales do not comprise most of their revenue.
BooksActually said online sales comprise 5 to 7 per cent of their gross sales, while Asiapac Books said online and direct sales comprise 10 to 20 per cent of their sales.
To make matters worse, Ms Chong added that there is a lack of a proper tracking system for books sold in Singapore. This makes it hard to determine which books sell well. Booksellers have to rely on their own data as well as their instincts.
“What we can probably benefit from would be more consolidated data for the market. In terms of … sales data, trying to gauge the size of the market – right now we’re always operating on estimates,” said Ms Chong.
“Even though we can project numbers – and booksellers will trust their intuition and gut to sell the books – it will benefit us a lot more to adopt some international or local standards for our book data, so it’s easier for us to be more transparent about sales figures, and also so we can understand the impact of online retailers in a much more complete sense.”
Asiapac Books has been a Singapore publisher for the past 35 years. Last year, they edited a book on the history of publishing in Singapore, with chapters detailing MPH’s ups and downs over the years.
MPH has been in Singapore since 1890, starting out as a publisher. It used to own prominent magazine titles like Female and SilverKris, Singapore Airlines’ inflight magazine.
Even today, it has publishing and distribution arms – among other business verticals – that have not left the market. In fact, BooksActually sells books that are distributed by MPH Group.
The company has been headquartered in Malaysia since ti was acquired in 2002 by Jalinan Inspirasi. There are 31 MPH retail outlets in the country.
“With their management in Malaysia still going strong with the stores there, it makes sense for them to take some time to re-configure their Singapore retail business while the rest is still ongoing,” said Ms Chong.
Her view matches MPH’s positive outlook on the industry. Last week, Ms Tan said the business is confident that bookstores will continue to be relevant.
After all, bookstores such as BooksActually and Kinokuniya have somehow survived over the years – despite high rental costs.
BooksActually said it has seen yearly growth of 2 to 3 per cent for the past five years.
Kinokuniya says its main Ngee Ann City store is still the highest-grossing outlet outside of Japan. The global business is also “cautiously optimistic”, with a new store opening in Abu Dhabi next year, as well as two more in Houston and Portland in the United States.
The booksellers hope to close the book on the suggestion that readership is falling.
The 2018 National Reading Habits Survey conducted by the National Library Board (NLB) showed that 25 per cent of adults in Singapore read a book more than once a week – a six per cent increase from the previous, 2016 edition of the survey.
“The narrative is there are no readers, that’s why bookstores are closing,” said Mr Leck. “(But) if there are no readers, they wouldn’t even lament that bookstores are closing down. If there are no readers, (we) as this small independent bookstore with no big financial backer behind us – would have closed.”
Mr Leck quipped that he pays the rent through selling books – not, for example, by selling cats, or stationery.
“The readers are there, but how do you convince them to want to buy from you?”
Especially since readers have options beyond physical books these days.
In the NLB survey, of the people who had read at least one book in the past year, 89 per cent had been flipping through a physical pulp-and-pigment page. But that was lower than the 95 per cent reported in 2016.
The same survey also revealed that a growing number of people prefer e-books, with an increase from 41 to 55 per cent.
The proportion of people who bought books from a physical store fell from 53 to 48 per cent over the same period.
DIFFERENT FORMULA FOR BOOKS
The bookstores concur that the basics of retail are crucial. Kinokuniya lists its product range, ambience, customer service, and “most importantly”, the staff members who make it all work.
“Success has to do with the brand’s ability to understand and connect to the needs of book lovers, and people who need books for a multitude of reasons,” said Mr Chan.
Mr Leck adds that keeping stocks fresh and up-to-date is key, and to have a wider range than just bestsellers.
“As a book lover, I’ll stop going to a bookstore if it isn’t selling me anything new,” he said. “If I’ve been to your bookstore in 1990, and in 2019 I still see that same book, I think it’s horrendous. You can still have (bestsellers), but it shouldn’t be your main focus.”
The bookstores are also constantly thinking of ways to bring people through the doors. Both Kinokuniya and BooksActually have packed calendars of events with authors and the literary community in Singapore.
BooksActually cited the recent fourth edition of its 24-Hour Bookstore event as a successful one, which saw it hosting performances, panel discussions, readings and even food for extended hours.
It has also experimented with more novel ways to sell its books, such as vending machines for “mystery” books – wrapped-up tomes – outside its store, at the National Museum, and at arts venues like The Substation.
“For me, running the bookstore is always about reaching out, and to consistently reach out,” says Mr Leck. “The strategy is that you reach out to that person at 16 years old and tell them you exist … eight, nine years down the road, I still need to market to that same person, and now it’s even more important because this person is now working and has a bigger disposable income.”
Ms Chong says individual bookstores need to figure out what formula works for them. If a bookstore seems to be selling more stationery than books, that is still serving the needs of its customers.
Still, bookstores closing isn’t something to write home about. “Like any other business there’ll be some that come and go over the years,” she said.
But it seems few businesses are as lamented and missed as bookstores are. Of course, MPH looms large in collective memory thanks to its iconic red-and-white flagship store on Stamford Road, which closed in 2003 after nearly 100 years there.
“Obviously everyone is sad,” said Mr Leck. “A majority of Singaporeans grew up with the existence of MPH bookstores. When someone passes the old Stamford building, they will have fond memories of MPH there. Even I myself have one single memory of MPH at Stamford, when my mum brought me there and bought me an Enid Blyton book.
“It’s always that sense of nostalgia.”