CEO SHARON ANDERSON WRIGHT EXPLAINS HOW HALF PRICE BOOK’S COUNTER CULTURE ATTITUDE IS THE SECRET TO IT’S RETAIL SUCCESS
When you walk into a Half Price Books store, you know what to expect: wooden bookshelves crammed with hardcovers and paperbacks, racks of DVDs, CDs and vinyl records, remainders, and even first editions. But if you walk into a different Half Price Books store, you might encounter a different “feel,” – an atmosphere unique to that store among all the others in the Half Price chain. One store even has a recharging station for electric cars.
That’s because the bookstore’s operating philosophy lets employees at each of its stores figure out what they want to stock in their store. Local store employees buy 70 percent of their store’s inventory. Half Price CEO Sharon Anderson Wright says that’s the heart of the company’s philosophy:
“We didn’t want an individual buyer to be deciding what our inventory should be,” she said, “We didn’t want a single individual deciding what comes into the store.”
As a result, stores tend to reflect the tastes of their local neighborhoods. “A specific neighborhood might read a certain type of book,” continued Wright. “We see neighborhoods shape each store, and they are all different.”
Half Price Books is the largest family-owned independent bookstore chain in the United States. It’s been growing slowly but steadily since it was founded 40 years ago by Wright’s mother, a counterculture activist, and her business partner. Wright took over the business in 1997, after her mother’s death, but she’s continued to run Half Price Books by the same philosophy.
“We always promote from within, we don’t do anything we can’t afford, we operate on a cash basis and if we can’t afford to do it, we don’t do it,” she said.
They’re a lean operation, – “perhaps too lean,” Wright said. But she is adamant that the company be free of debt.
“I figure if you owe people money, they get to have control over what you do, and since we’ve never liked to have anyone telling us what to do and how to do it, we don’t borrow money,” she asserted.
But since Wright has been at the helm, Half Price Books has grown from a 55-store chain with revenues of $50 million, to 115 stores in 16 states and $235 million in revenue. At a time when bookstores face stiff competition from online retailers such as Amazon, the growing popularity of tablets like Kindle and the iPad, and with one major competitor – Borders – forced out of business, HPB is thriving.
Wright says the reason is simple. “Books are good, cheap entertainment,” she says. “Even with unemployment, we’re a safe and comfortable place to be. You can go back to the clearance wall and buy five books and it will keep you occupied for hours or days. It’s a good cheap place to find what you need in a calm environment.”
In fact, a company survey found that a lot of its customers have e-readers, but they still visit the store. “I do think there will always be a part of the population what likes real books,” Wright said.
The company’s figures reflect its low-priced offerings. The average transaction amount at HPB is $15.45. Sales per square foot: $18. When Borders went out of business, its sales per square foot was $170. Barnes & Noble is closer to $250.
In fact, HPB is negotiating to open a store inIllinoisin a former Border’s location. “With the demise of so many bookstores, we have to fill the gap,” Wright says. “With Barnes & Noble getting more and more into electronics and games, there are fewer true bookstores.”
Half Price Books is more than just books, itself. Depending upon the store, you might find video games, electronics, software, or vinyl records.
“InOhio, they’re buying MP3 players and iPods, and we’re looking at phones,” Wright said.
It might seem a problem to keep tabs on such a decentralized operation. Wright thinks it’s an advantage.
“We have 3,000 people in our 115 stores and we give them a bucket of money and they buy 70 percent of our inventory,” she said. “They look at it, they evaluate, they price it and put it out – so we have 3,000 entrepreneurs building it every day. It’s fun, it’s interesting and seems to be working so far.”
Half Price Books has always bought items from customers. Rather than insult customers by picking through their books and selecting only certain items, Half Price buys everything offered. Seventy percent of the inventory is used.
“We are really heavy on used books right now,” Wright said, “because of people moving and selling their collections and because people are looking for sources of cash due to the economy.”
That means new items are always coming in. “I miss being down inside the store because you get introduced to something new and interesting every day,” Wright said.
The company has four buyers visiting book publishers and distributors, to locate remainders and closeout titles. Others will go to book expos to prospect for the same kinds of items. Those are the new items sold at half price – the items that give Half Price Books its name.
Because it is so adept at rounding up remainders, Half Price Books started its own wholesale division – Texas Bookman. It sells publishers’ overstocks to other retailers in trade and scholarly books, visual and performing arts, history, literature, children’s books, crafts, science and other categories. The wholesale business accounts for about $2 million of the company’s total revenues.
Trusting her employees to make good decisions is another reason the company is doing well. Employees know they have the opportunity to move higher within the company, because of its “promote from within” policy.
“We don’t hire managers from off the street – you have to work here to move into a manager’s position,” Wright said. Her head of Human Resources has been with HPB for its 40-year history, but he has no HR background. He previously managed the magazine department. Later, he gained HR experience working in payroll and insurance. The regional manager forTexasandOklahomahas 35 years with the company. “You see people grow and take on the responsibility,” Wright said. “They sure make my life easier.”
In return, Wright treats her employees well. They get 12 vacation days, 12 sick days, and 12 holidays, for more than 30 days off each year. The company’s quarterly profits are distributed to all employees.
“Times are leaner than they have been in the past, but they get $400 or $500 per employee, per quarter,” Wright said. “Everyone gets the same bonus amount that I get. It’s very egalitarian.”
In addition, HPB offers medical, dental, and optical insurance, EAP, and domestic partner benefits. Many employees have stuck around since it began 40 years ago and are now retiring, so HPB finds itself in a time of transition. But Wright says the next generation is already in place.
Change comes slowly to Half Price Books, but it does come. Its growing inventory posed a problem in keeping track of all the items stocked in all the stores. Three years ago, an experimental bar-coding system was adopted at a single store. Now, all stores use it, and can tell whether an item is in stock, and what’s on each shelf in a store. Wright says that’s a “very weird” feeling. “I can’t carry stuff around the store and move it,” she says.
Bar-coding allowed HPB to get back into something else it tried about ten years ago but abandoned: e-commerce. “I think we’ve finally got a handle on it,” Wright said.
While you can’t look online for a book to pick up at your neighborhood HPB, books are available online from both HPB and other bookstores around the country. For example, a visit to www.hpb.com to search for the popular time management book, “Getting Things Done,” by David Allen, turns up copies in varying condition from several independent bookstores, as well as copies from different Half Price Books stores around the country. Prices range from $3.17 for a paperback in “fair” condition printed in 2002, to $39.96 for a first edition hardcover.
A company with its roots in the counterculture of the early ‘70s can be expected to be socially active, and Half Price Books has two corporate social responsibility initiatives in literacy and sustainability. Wright says one of her favorite things to do is “give books away.” HPB conducts book drives and donates books to any organization that needs them. This year, it has already given away a million books. When disaster strikes, like theJoplin,Missouri, tornado last year, HPB sent books to shelters soon after. Wright says some charities pick up books two or three times a month.
HPB’s support for the environment came after Wright had a “light bulb” moment. “It occurred to me nobody is going to be able to read if we’re all dead,” she said. The company recycles what it can’t sell, uses recycled paper and soy-based inks in its marketing materials, finishes out new stores with recycled carpeting, water based stains, and environmental lighting. “We do try to do no harm,” said Wright. “We try to do the right thing every day.”
Wright has simple advice for CEOs based on her 40 years experience in business: “Treat people like you want to be treated and respect them for what they know, and give credit where credit is due,” she said. “If you do that, what you do any day should have a positive outcome where you have people working with you instead of against you.”
And for retailers?
“Treat your customers well and provide them with an enjoyable, clean and safe place,” she continued. “Offer them a good and interesting product that changes constantly. Make it fun. Offer a good value. You would think people should know to do that.
“We want to continue to provide the best bookstore we can, and we might just be the last paper people standing.”