Early last summer, Half Price Books, Records, Magazines Inc.’s revenue started flattening out noticeably. Many of the Dallas-based chain’s 115 stores were recording lower-than-usual sales increases. Others stores were staring at a flat line, and a few stores were even seeing sales dip a bit.
Sharon Anderson Wright, the company’s president and CEO, says the overall slackening of Half Price Books’ sales — caused by the lackluster economy and the ascendancy of electronic media and online sellers like Amazon — was not quite on a scale that she considered alarming. But it was noticeable and problematic, and Wright knew that she and her leadership team would have to deal with it immediately.
“It’s no secret that factors like the economy, electronic media, online sales — all of these things have been killing off a lot of the bookstores,” Wright says. “In the past our company has been pretty recession-proof, but this has been the worst economy we’ve seen in recent history. And when you couple that with the increases in online sales and electronic media, it’s been tough. So we’ve been having to work with that.”
For virtually all of its 40-year existence and through a number of tough economic periods, Half Price Books has experienced consistent, stable growth. The company derives the lion’s share of its revenue from used merchandise — books, magazines, music, video — which it buys and resells. Dealing in used merchandise has always been a recipe for steady success, irrespective of the economy’s up and downs.
“Normally, we sail above everyone in recessions,” Wright says. “We skate over the top of it, because everyone comes to us. We sell a good product at a good value, and we get incredible buys when people need to either make some extra cash or downsize or move. And we sell a lot of stuff when people are trying to reinvent themselves, or when they aren’t going to work every day so they have a little more time to read a book or watch a movie.
“Actually, we still are sailing above everyone, for the most part,” she says. “It’s just at a lower overall level. Our sales are flat, where we had been having 7 to 10 percent increases every year.”
The danger signs started cropping up in June 2011.
“We were doing fine until the beginning of this past fiscal year — a year ago in June,” Wright says. “That’s when we realized that sales were starting to go flat. The stores just weren’t doing as well as they’d always done. We’d always had increases in comparable stores, but now we were seeing that some of them were flat and some of them were down.
“The overall decrease was not drastic,” she says. “We were still making a profit, but it wasn’t as comfortable as it had been in the past. I wouldn’t say we were worried, but it was enough to get our attention. We had been fortunate to roll along and not have to worry about a thing for many years. But now we saw that it was time to look at some stuff and make some changes.”
The change-making started in earnest at Half Price Books’ semiannual management meeting last fall. Wright asked everyone attending — upper management, regional managers, district managers — to come to the meeting armed with ideas to counteract the company’s sales slowdown.
“At our meeting in October, we broke up into groups and put challenges before the groups,” Wright says. “We had asked everyone to come prepared with ideas for ways to improve their stores, their buying, everything. We spent three days hashing it over, and we came away with things that we are going to try, and with different groups that are going to try to fix different areas. We’re using the expertise of the people that are actually doing the job, to pay attention and see what’s broken or what can be improved on.”
Among Half Price Books’ new initiatives is a program to bar code all of the books on its stores’ shelves and computerize its inventory chainwide. This program, which is being rolled out over several years, has been implemented in about 30 HPB stores so far, and Wright says the company plans to install it in about 35 more stores by the end of this year. The bar-coding and computerization of inventory provides a dual benefit: It enables HPB to search for and find items for customers chainwide, and it allows the company to sell its merchandise online, both on its own website and on other booksellers’ sites.
“Once we’re bar-coded, then we can shelf-scan, and we’re listing the books on our own website, HPB Marketplace, as well as sites like Amazon, Half.com and Alibris,” Wright says. “This enables us to sell anywhere we don’t have a brick-and-mortar store. So we’re selling simultaneously off the shelf and online.
“And with 115 stores, we have probably the best variety and buying power of anybody, as far as what we’re able to get and sell,” she says. “So this is a pretty big deal.”
In addition, HPB is using the new online sales conduit to sell its own excess inventory. Previously the company had sold its excess books in bulk to smaller online-only resellers for a pittance. Now, by selling the books itself, HPB is making a better profit on them.
“We’ve always bought way more books than we could sell,” Wright says. “Some of the excess books we donate, but with most of our excess books, our practice has been to sell them in bulk to other book dealers. But we’ve come to realize that that’s ridiculous, because we’re cleaning the product, packaging it, getting it all neat and tidy, and then selling it to them basically for nothing. And then they turn around and list it online and compete against us.
“So we’ve started selling these books online ourselves,” she says. “My opinion is that if these other companies can sell them online, then we ought to be able to sell them online. And in doing this, we’re drying up those sites’ main source for good, cheap inventory. I think that’s going to work in our favor.”
Half Price Books is also starting to become more active in buying and selling educational textbooks.
“We’re focusing a lot more on the textbook market,” Wright says. “Before, we didn’t really think we could complete with [college bookstore operator] Nebraska Book Co. We brought in a gentleman who has a background in buying and selling textbooks, and he’s working with our stores on databases to help us determine what textbooks are being used at the different universities. We’re even going to experiment with a sort of reverse-bookmobile — a ‘buymobile’ that will go to university towns and buy books from students.”
Build a solid foundation
Wright attributes Half Price Books’ long track record of stable growth to the company’s founding principles, which haven’t changed since co-founders Pat Anderson — Wright’s mother — and Ken Gjemre opened HPB’s first store 40 years ago in a converted laundromat in Dallas.
“Our company has always been different all the way around,” Wright says. “We were founded by a war hero/peace activist/gray panther and a psychologist, and they started the store as a place where individuals and their values would be respected. It was based on the concepts of treating people fairly, providing a good value for the customer, not throwing things away and being good for the environment. Those are our founding principles, and they still hold true 40 years later. So any decision I make, and any decision the people around me make, is based on those basic founding principles.
“We have 3,000 people, and every day we give them a register full of money and say, basically, ‘Buy anything printed or recorded except yesterday’s newspaper, treat the customer right, pay the right amount, price it at the right amount, and put it out and sell it.’ And that has grown from — you know, originally we had eight-track tapes and 78’s, and now we have MP3 players and video games and consoles. We let our people experiment and try new things. If it somehow relates to something we think our customers would want or be interested in, then we’ll give it a try and see what happens.
“Each person that works here gets to think and be exposed to new information all day, every day. They’re basically entrepreneurs. They’re making it up as they go along, and if they come up with a good idea, then we’ll take it and spread it around.
“It’s built on trust, and we promote from within. So that’s why we’re a little different than a lot of businesses. On the other hand, I think it’s becoming more popular for companies to treat their people like that now. It’s kind of a Montessori approach to business.”
Pay attention to details
A couple other initiatives Half Price Books is undertaking could be said to fall under the category of running a tighter ship: sharpening the look of its stores, and making everyone more accountable for what they do, from managers to sellers.
“When you run a place like this, you have to look at the store closely,” Wright says. “The appearance of your store is hugely important. After our management meeting, I told the managers to go back and look at their stores with a fresh eye. How does it look to the people coming in? Because it can get a little doggy once in a while, a little dusty and dirty. And you can’t tolerate that. So we’re working hard to make our stores more inviting and friendly.
“You have to hold your store managers accountable for store appearance and store performance and all that kind of stuff,” she says. “At the same time, I’m definitely not a dictatorial leader. I’m more of a ‘Why not, let’s try it, let’s see how it goes’ type leader.
“The other thing you absolutely cannot tolerate in your stores is surly employees. In any business, there are always a few people around that might not be pulling their weight. We’ve become less tolerant of people who are unwilling to pitch in and do their part, because the other people really work hard. If they’re not going to enjoy what they do and do their job right, then let them go try to work for somebody else.”
In the end, despite the tough competition and the market-share inroads being made by online-only retailers, Wright says Half Price Books remains committed to the brick-and-mortar store concept.
“If we didn’t have the stores, then we wouldn’t have all of the great people that work for us, and we like providing something for our communities,” Wright says. “We feel that there are always going to be people that like not only a physical book, but they like a physical bookstore. The store is a place for people to come and hang out, and they bring in their books, and we get some incredible inventory from them. If we didn’t have brick and mortar, we’d be like those companies that are trying to buy bulk from us. Eventually you wouldn’t have anything to sell but a bunch of castoff excess inventory.”
Wright says Half Price Books’ new initiatives are working: Store sales are inching back up.
“For a while, we were looking at a situation where ‘flat’ was the new ‘up,’” she says. “Now we’re getting back to where ‘up’ is ‘up.’ It’s a good place to be.” <<
HOW TO REACH: Half Price Books, Records, Magazines Inc., (800) 883-2114, www.hpb.com
THE WRIGHT FILE
Name: Sharon Anderson Wright
Title: President and CEO
Company: Half Price Books, Records, Magazines Inc.
Education: Richland College, Dallas — studied art, anthropology, archaeology, photography, history
What were some of your earliest work experiences?
The first real job I had was at a grocery store called Foodland. I started working there when I was 15. Before that I had worked for my dad, filling orders for paint and stuff like that. He was a cuckoo clock salesman. But my first real job was as grocery store checker, and I loved it. My second job was as a trophy engraver and builder. I worked in a trophy shop. I engraved trophies and drill-pressed marble.
What’s a lesson you learned from those early jobs that you carry with you?
The importance of customer service. I always loved working the front counter. At a place like a grocery store, you relate to the person that’s in front of you, you take care of what’s going on right in front of you, and you just do that the best you can. I love talking to people, and in the grocery store we had constant lines, so you’re working directly with the people, and you’re constantly interacting with them and relating to them. I still try to use that approach every day.
Do you have an overriding business philosophy that you use to guide you?
The golden rule: Don’t expect or do anything to people that you wouldn’t want for yourself. Treat everybody equally. And listen to people. Respect them and respect what they bring to your company.
How do you define success in your business?
Being able to provide a good place for people to work and to provide something for the community that they need, and being able to be happy and feel good about what you do every day.
What’s the best advice anyone ever gave you?
Don’t go to bed mad. My mom taught me that.