Independent bookstore owners are wary of new chain opening at converted Varsity Theatre
by Don Kazak
Already bustling downtown Palo Alto will get some new life today when the large Borders Books and Music store opens in the old Varsity Theater. The 23,000-square-foot store is expected to create more of a draw to the east end of downtown and add more vitality to University Avenue's successful mix of restaurants and shops.
For one set of merchants--bookstore owners--June 5 has also been long-awaited, but for different reasons. The area's highly successful independent book sellers will face stiff competition from the national Borders chain with its marketing savvy and financial muscle.
Borders, which started out as an independent bookstore in Ann Arbor, Mich. 25 years ago, now has 125 stores nationally, and will open 15 more this year. Borders is different from other local bookstores because of its size and its selection of music and video titles.
Kepler's Books & Magazines in Menlo Park, which began in 1955, has about 154,000 titles on its computer base, not all of which are in the store at any one time.
Printers Inc in Palo Alto, which opened in 1978, carries about 100,000 titles. Books Inc. at Stanford Shopping Center opened in 1957 and carries about 70,000 titles. Stacey's in downtown Palo Alto, which opened in 1978, carries about 40,000 titles.
In contrast, Borders in Palo Alto will have 200,000 combined book and music titles, with some children's videos. About 120,000 to 130,000 of those titles will be books, said Kathleen West, the store's general manager.
The independents are counting on knowledgeable staffs and inventories customized to the Midpeninsula, along with customer loyalty, to carry them through the new competition from Borders.
"The staff knows what the customers are interested in," said Gerry Masteller, co-owner of Printers Inc. and its book buyer.
"Of course it's a concern," said Ivan Murillo, manager of Books Inc. at Stanford, of the new Borders store. "It's not something we take lightly."
"I'm optimistic about it," said Clark Kepler of Kepler's. "We've been serving the Peninsula community for 40 years. They know us and trust us."
Borders picked Palo Alto because it looked like a promising market, said Marie Whisenant, local marketing supervisor for the company. "Our objective is to offer the best selection of books and music in the market," Whisenant said. She said marketing research showed that "there is room for us in the market" of the Palo Alto area.
One estimate is that a new national chain bookstore can reduce sales at nearby independent bookstores by 10 to 20 percent. In some areas of the country, like Chicago, the chains have all but buried independent book sellers.
The Bay Area, on the other hand, has a long tradition of independent bookstores, some of which have held their own against the national chains so far. Stores like Kepler's in Menlo Park, City Lights in San Francisco, Cody's in Berkeley and Bookshop Santa Cruz are part of the history of book selling in the country. But that history is now being partly written by the successful corporate chains like Borders and Barnes & Noble.
"It's just part of the book world now," said Murillo.
But Stacey's, just a few blocks away from the new Borders on University Avenue, has already weathered the competition in San Francisco. Its Market Street store in the financial district actually did better business after a large new Borders opened up six blocks away in November 1994, said Rodman Froke, Stacey's general manager.
Part of the store's success, he said, is that it specializes in business and computer books, although it also carries general non-fiction and fiction.
The Palo Alto Stacey's also specializes in business and computer books, an emphasis that will be increased. "That will be an area we'll put more attention and space into," Froke said.
The independents pioneered the idea of browser-comfortable stores, with coffee bars and easy chairs, a formula picked up by the chains.
Borders "is not just a store," according to the company's press packet. "It's a community cultural and social center where people come to hear readings, attend workshops, meet authors, see demonstrations and attend children's events."
Borders started selling music compact discs in the early part of the 1990s and now music is a centerpiece of the stores, which specialize in classical music and jazz and feature live performances periodically.
In that sense, Borders could also affect some music stores, too.
Palo Alto will be the fifth Bay Area Borders store, joining ones in San Francisco, San Rafael, Emeryville and Milpitas.
Workers last week were putting in long hours putting the finishing touches on the Borders store to get it ready for opening today.
Kathleen West, the store's general manager, had her own independent bookstore in Phoenix for 12 years and has been impressed with Palo Alto. "It has a real sense of community," West said, "and the people have been very helpful. I think we'll help this end of University Avenue."
The weakness of some chain bookstores is that their inventories are not customized to their particular communities. But Borders has a computer system which adjusts each store's inventory to reflect the purchasing trends at that particular store, which is the greatest strength of stores like Kepler's and Printers Inc.
While national chains and independent book sellers battle for customers in a business now featuring closer profit margins and marked-down discounts, the sheer volume of the industry has been increasing substantially.
According to Borders, national bookstore sales increased from $7.8 billion in 1991 to $17.5 billion in 1994, an increase of 124 percent.
The Borders Books and Music store, at 456 University Ave., will be open 9 a.m. to 11 p.m. Sundays through Thursdays and 9 a.m. to midnight Fridays and Saturdays.
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