Books as showbiz: Mega-chains use DVDs & lattes to seduce buyers

The second floor of the Barnes & Noble at New York’s Union Square resembles a day-care center at noon. Tots roam the aisles of its vast kids-lit section, their juice boxes spurting. Mothers and nannies eat lunch on the Maurice Sendak-themed stage while one infant, marooned on the carpet, tries to crawl.

In the third-floor cafe, the full-grown partake of the freebie lifestyle, tapping on computers or leafing through magazines as if this was their own living room. In fact, for most New Yorkers, it’s far better.

Two book retailers — Barnes & Noble and Borders — have so completely remapped the sensory experience of shopping that it’s easy to forget what book-buying used to be like: no chairs, narrow aisles, no talking and certainly no eating.

Today, the bookstore is an entertainment destination as much as any multiplex.Borders claims an annual 30 million customers — defined as anyone who walks in and buys a book, a DVD or a cup of coffee. Barnes & Noble says 400 million people walk through their doors each year.

Both studiously divulge statistics that foil apples-to-apples comparisons, but both say the average customer spends an hour browsing.

Together, they control 2,000 stores, $10 billion in sales and account for well over one-third of all books sold in America.

“We believe retailing is like theater,” says Barnes & Noble topper Stephen Riggio. “We want it to be a place people spend leisure time; it’s become as much a part of the experience of going out as going to the movies or to dinner.”

On the down side, staff at these mega-bookstores tend to resemble workers at your local multiplex: They don’t exactly exude the passion and knowledge of literature that used to characterize smaller bookstores or art moviehouses.

And, as with megaplexes, the price has been independence: A lot of small, funky, independent bookstores have gone out of business due to the encroaching behemoths.

Still, with rivals like Costco and Wal-Mart, plus online outlets taking an increasing share of the book-buying pie, Barnes & Noble and Borders provide a comfy feeling as “counter-programming” to impersonal shopping experiences.What’s more, the bookstore megachains have diversified: They’re luring in buyers with music, DVDs and coffee, and they are creating their own book imprints. They’re changing the publishing world as well as retail worlds of entertainment selling.

As a result, they’re gaining the affection and hostility of publishers as they increasingly exert control over what America is buying.

Thanks to the expansion of these behemoths, at no time in history have so many books been so accessible to so many Americans. But never have so few people decided the reading choices of so many.

Buyers like Barnes & Noble’s Sessalee Hensley and Borders’ Tom Dwyer wield outsized influence on the nation’s literary consciousness, and publishers court them aggressively, giving them wide latitude in shaping the content and the marketing of books.

The consolidation of book retail makes publishers and their corporate parents nervous; they simultaneously court the chains while working to undermine their dominance.

Bertelsmann’s Random House devotes a separate sales staff to mass-merchandise booksellers like Costco, Sam’s Club and Wal-Mart, often with better terms than those offered to traditional booksellers.

Barnes & Noble is storming into the publishers’ territory, hoping to earn 10% of its revenue from publishing its own books. In response, Random House chief Peter Olson in December said the publishing behemoth would begin selling directly to consumers through its Website.

The paradox is that while book sales remain static for the last few years, there are more publishers putting out more books than ever before. In 2003 (the last year complete data was compiled), a record 54,000 publishers turned out 172,000 new books and editions in the U.S.

At the same time, the publishing business has taken on the characteristics of other hit-driven media with event-driven blockbusters like “Harry Potter” or Bill Clinton’s “My Life” enjoying record sales in their first days of release, while eating up shelf space, production and shipping capacity.

“It becomes self-perpetuating because the mass-market retailer can move huge units in a short period of time,” says Michael Cader, editor of the industry newsletter Publisher’s Lunch. “Meanwhile, the overall market is not growing.”

The prime book-buying demographic is older (30-65) than target buyers of most other media, which is reflected in the type of music the chains sell — big on Norah Jones and Alison Krause. One of the most obvious cultural impacts of chain-store book retailing is the proliferation of great bookstores in some of the least-likely locales.

With its creature comforts, four mammoth floors, and 200,000 titles, Barnes & Noble in Union Square can reasonably lay claim to be the best bookstore in New York City, a real achievement in this literary town. But it’s not just major cities: Borders and Barnes & Noble each have stores ranging from Bangor, Maine, to San Diego, Calif., including Fort Wayne, Ind. (dubbed America’s “dumbest city” by Men’s Health magazine).

But for all the increased availability of great literature — and blockbuster books — sales have remained flat for the last few years, forcing retailers to play up the “entertainment experience” to win a bigger share of the pie.

For example, Barnes & Noble has become the second-largest retailer of coffee in the country, behind Starbucks.

“A well-run big-box chain store is a theater for books, and those chain guys know every inch of that stage,” says Patrick Nielsen Hayden, co-owner of Tor Publishing in New York.

The coveted tables in the front of any bookstore are even more critical to the success or failure of a book. Placement on those tables is often governed by covert deals in which the chain picks books it believes will do well and then hits up the publisher for “co-op advertising” to guarantee placement.

“It’s valuable space and it’s rarely provided without a payment or co-op allowance,” says Cader.

So when a consumer walks into a bookstore and assumes the best books get the best placement, they’re not entirely wrong — publishers tend to put the bucks behind those most likely to sell.

Borders’ head buyer, Dwyer, is working on ways to increase the number of premium slots in the average store from 1,000 to 1,200. More than ever, Dwyer says, the books on the table are less a reflection of the taste of the buyer than of complex statistical analysis of what will sell.

The by-the-numbers approach helps some genres that are hugely popular but get no literary respect. That’s why chains have big sci-fi, diet and how-to sections, and also why books like “French Women Don’t Get Fat” get huge placement.

The buyers are still experts in their subject areas, but Dwyer says, “What they don’t do is in a cavalier fashion apply their personal taste. Nowadays it’s too easy to see you’ve made a mistake by not buying a book.”

Chain bookstores are much quicker to exploit a hit book than nontraditional book retailers like Costco or Wal-Mart, which tend only to buy a book after its success is well-established. But the window between them is shrinking, as price clubs and other big retailers use books as a loss-leading marketing tool.

Even more than online outlets, the price clubs have loosened the book chains’ stranglehold on retailing, reducing their market share to 38% from 50% in 1992, according to research group Ipsos-NPD Group.

Random House has a sales staff devoted to courting the price clubs — a practice that doesn’t sit well with chain stores. “We’ve never understood why publishers pursue those markets,” says Barnes & Noble’s Riggio. “They cherry-pick the blockbusters, yet they get the same or greater discount than booksellers who represent the entire publisher’s new titles and back list.”

Part of Barnes & Noble’s response to consolidation in publishing is to get into the book publishing business itself. Barnes & Noble acquired Sterling Publishing in 2003 and has begun specializing in low-cost books such as its own version of the 9/11 Commission Report and specialty books like “Weird N.J.”

The move makes publishers and other retailers nervous, but it’s hardly unprecedented.

“Up until the middle of the 20th century, bookstores were branches of publisher chains,” says Steven Zeitchik, news editor at Publisher’s Weekly. “Doubleday bookstores in New York were a force and an outgrowth of a publisher.”

The standardization of literary culture is an ongoing process — Barnes & Noble sank Shakespeare & Company on New York’s Upper West Side, but it also expanded the literary culture of communities like Ridgeland, Miss.; Prescott, Ariz.; and Fort Dodge, Iowa, by building shopping and entertainment destinations around books.

“Those of us who go way back have always felt we were on a cultural mission,” says Dwyer, who started at Borders when it was a one-store operation in Ann Arbor, Mich. “It’s brought a certain level of cultural sophistication to places that didn’t have it.”

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