Fighting the Big Book Chains

By Dennis Loy Johnson, MobyLives. Posted April 3, 2002.

To most people, it must seem like a no-brainer: Which is better, an independent bookstore or a chain bookstore? Whichever one has the book you want at the lowest price, natch. And let's face facts -- lately, the winner of that contest has been the chains.

However a surprising recent survey says that regardless of price, people actually feel they're more apt to be satisfied shopping at an independent. Meanwhile, the rabble-rousing plaintiff in an incendiary court case claims the chains' low prices are illusionary, achieved by illegal strong-arm tactics, and may actually be insuring higher prices down the line.

First, the survey, which was conducted by Consumer Reports in January -- it found that most people felt the chains or the equally giant on-line booksellers did indeed offer a better deal price-wise. Nonetheless, independent bookstores generated a higher level of customer satisfaction than even the cheapest chain retailer. In fact, independents scored "on a par with the highest-rated stores from any survey we've done in recent years," said the magazine.

What's more, Consumer Reports also noted the illusionary quality of the chains vaunted discounting -- chains, it said, had "quietly hiked prices by reducing discounts."

Of course, if buying books were the same as buying widgets -- an experience where price was all that mattered -- then in the comparison of independents to chains there would be no need to consider anything beyond those disappearing discounts.

But buying books is not the same thing as buying widgets, and as the survey's findings about "customer satisfaction" seem to indicate, there is indeed more to consider.

Which is what the aforementioned legal case -- being heard right now before a Federal District Court in New York City -- stresses vehemently, and in such a way as to make it seem that what's going on now in book retailing is microcosmic of what's going on in the greater society.

You probably haven't heard about it, though (which is microcosmic of mainstream media coverage of conglomerate America, but that's another column -- although I must point out the irony that the plaintiff in the case is the brother of the late CBS newsman Charles Kuralt). But anyway, in brief: Walter Kuralt, owner of a bankrupt mini-chain called Intimate Bookshops, is suing Borders and Barnes & Noble for illegal activities -- such as demanding secret discounts from publishers -- that gave them an unfair advantage in the marketplace.

Sound familiar? Well, it didn't get much coverage either, but in another case last year, the American Booksellers Association and 26 independent bookstores sued the chains for the same thing. But that suit -- years in the making -- ground to a halt when the judge ruled the independents couldn't collect damages even if they proved their case, because it was impossible to determine the dollar value of any harm done. Already outspent and with a doubtless lengthy appeals process before them, the independents settled for enough to cover their legal fees and claimed moral victory.

But the decision, or lack thereof, begged not only the actual question -- do the chains engage in illegal practices? -- it rendered unanswerable still larger questions that get at the heart of life in contemporary democracy. To wit, is it wrong for the chains, victors in the marketplace after all, to throw their weight around like that? Isn't that -- as the judge observed at one point -- "what capitalism is all about"? Or is it about competition and choice driving commerce? In essence: Is bigger better?

Well, the Intimate case provides a second chance for answers. Walter Kuralt doesn't seem about to settle, and as a Publishers Weekly report observed, "when it comes to juicy allegations," his case "takes second place to no one."

In a memorandum filed to counter the chains' request for a dismissal, attorney Carl Person outlined Kuralt's charges that the chains strong-armed publishers into providing a 60 percent discount off the cover price -- as compared to the 40 percent to 46 percent discounts smaller booksellers like Intimate were limited to. (Remember those figures the next time you hear B&N head Leonard Riggio complaining -- as he did last fall, and did again this week -- that publishers are to blame for prices so high he calls them "abominations." Considering that publishers share what's left with printers, distributors, warehousers and, oh yes, authors, even if B&N is getting only a 50 percent discount, it's making considerably more than those who actually created the book. Who's driving the price?)

Meanwhile, Kuralt set up a website (www.lawmall.com/rpa/rpa_whk1.html) providing an exhaustive list of "discriminatory payments and benefits received by the chains -- and largely not disputed by the chains." The list includes "co-op funds exceeding costs of advertising," "free freight," "free books not offered to others," "special allowances for fixtures," "access to information regarding competitors," and more that he says "permit the chains simply to expand at will and overwhelm any smaller competition."

But Kuralt doesn't stop there. He says the case is part of a "national disaster" resulting from "the Wal-Marts and Mega-Malls." What would happen, he goes on to ask, "if all national chain store companies were required to observe the law"?

If the judge doesn't dismiss the case we may finally get a chance to find out. We might also learn which is truly better for the consumer: chain stores, or independents?

Dennis Loy Johnson writes for MobyLives.com, where this article first appeared.

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