How Did We Get Here? How Will We Survive?

 


How Did We Get Here? How Will We Survive?

These are the two most frequent questions we have been asked. We want to make sure you understand our answers, so you can understand what we are attempting to do.

We started planning our first store at Columbia in 1995. That was the year that Amazon started, though it didn’t have much effect until after 2002. Around then, sales started to shrink then due mainly to online sales.

Book Culture was primarily an academic and course book business; course book sales were one of the first areas of the book business most strongly affected by Amazon. We have been dealing with the shift to online purchasing for two decades. From 2002 to 2014 sales at our original store have declined by 40%.

Because we were faced with that untenable decline in our top line sales we embarked on a strategy of growth into a different segment of the book business. We opened a new, family oriented model of store at Broadway and 114th Street with a children’s reading room. We brought in a wide range of non-book items for kids and adults alike; toys, games, water bottles, puzzles, backpacks, candles, gifts etc.

It was a big hit, but a small store -- not large enough to counter the declines we had suffered. Even so, we learned a lot from this model regarding what worked and why, and how to best distribute responsibilities for the buying, accounting, and management.

So, we did it again at 450 Columbus Ave. Again, it was a big hit, despite being two blocks from a large Barnes and Noble in 2014 (not a promising year for retail.)

In the run up to the election year 2016, the minimum wage in New York was set to rise, in increments, to $15.25 in 2019. We forecasted the effect that would have, from small losses in 2017 to indications that survival would be almost impossible in 2019 without massive structural changes; this was a 50% increase in our largest expense, which was the case for multiple small businesses across the city, none of which received any support from local government.

If we kept all our employees our costs were set to rise over $500k per year. We had about 30 months from the wage announcement to adjust and in doing so we took on debt, remortgaged our home, and asked our staff to accomplish more with fewer people.

Any bookstore has a very small margin of profit in the best of times; this was not an easy forecast to absorb.

We decided that we could survive if we could grow and distribute our administrative payroll across a larger top line. Seeking opportunities, we found one in Long Island City and a very supportive developer and community. Because our model of a community focused company was so attractive, our landlord made it financially possible to build the beautiful new store we have there.

That store opened in LIC at 26-09 Jackson Ave at the end of 2017.

Large losses were unavoidable and our vendors grew concerned by slow payments. Our credit lines decreased; in one from $450k to $50k. This makes acquiring books and merchandise impossible without working capital.

With financial statements showing losses for 2 years running, it is proving very difficult to get lending from banks or government lending programs.

So here we are.

We believe we can survive because we have made the changes to our payroll, we have renegotiated our leases, and we have got our 4th store in Long Island City up and running.

We are forecasting a profit for 2020, but we can’t do it without enough working capital to fill our stores and have them operating at their best.

We created the Community Lenders Program to help us borrow $750k over a term that will allow us to make that happen.