Bookstores Are Said to Be Recovering. Can an "Old-School" Chain Like Dazhong Bookstore Seize the Moment?

Dazhong Bookstore, once China's largest private bookstore chain, is still seen as a traditional bookshop, and it is struggling both to find a personality and to slim down its book stock.

Business at physical bookstores is finally picking up.

According to U.S. Census Bureau survey data, sales at American physical bookstores reached US$11.17 billion in 2015, up 2.5% from 2014 and the first increase in eight years. E-book sales, by contrast, fell, and online growth slowed.

Dong Chenxu, who works in China's bookstore industry, has noticed the same thing. In Shanghai, where he has long lived, physical bookstores first closed one after another and are now coming back. In 2015, Sisyphe, Yanjiyou and Fangsuo's Hengshan·Heji each opened their first Shanghai stores, and many bookstores have ambitious expansion plans.

He sums up the bookstores' earlier retreat this way: "We offended our customers. Readers stopped coming, so business was poor. It had nothing to do with the internet." The most accurate description of the situation now is: "Bookstores survive by adding coffee bars, food and cultural-creative events." That is close to an industry consensus.

Dazhong Bookstore, where Dong works, survived. It began as an old-fashioned bookshop headquartered in Nanjing; its parent company, Hongguo Group, once ran the women's shoe brand C.banner. In 2003 the group opened Nanjing Book City in Xinjiekou, 15,000 square meters spread over five floors and at the time the largest private bookstore in China. New stores were later all branded "Dazhong Bookstore," and the chain expanded to Shanghai and to other cities in Jiangsu.

Old bookstores like these were built on being big. For a long time that made for a virtuous circle that worked: what a traditional bookstore needs most is resources and a brand. Good resources get you more books from more publishers; a good brand lets you negotiate lower rent with shopping malls, grow bigger, and stock more books.

But in the past few years Dazhong Bookstore, which had "pursued bigness above all," put its energy elsewhere and acted like the industry's avant-garde. It renovated several stores, opened a 24-hour bookstore, and launched an Honesty Bookstore, where old books sell at 30% of list price on unattended shelves and buyers drop the money into a box beside them. When it opened a new store, it held a "Thousand-Person Book Date," clipping a small lamp to each open book so that anyone there could pick up whichever book they liked.

Unfortunately, none of this seems to have got people talking about it.

"We've done so much in response. Why do they still ignore us?" Dong sometimes wonders.

Metro City is a shopping mall in Shanghai's Xujiahui business district that draws about 100,000 visitors a day. Almost the whole fourth floor, nearly 3,000 square meters, used to be Dazhong Bookstore. Each month it carried 80,000 regular titles and more than 10 million yuan in "mayang" (the number of copies printed multiplied by their list price), making it the largest single bookstore in Shanghai.

In 2013 the store moved up to the fifth floor and shrank to a little over 600 square meters, one-fifth of its former size. The fourth floor is now taken up by restaurants of every kind. Less than 10 meters from the central elevators stands a physical Kindle store. Opened in August 2015, it is the only Kindle store in Shanghai. Its sales staff pitch this new way of reading to every visitor: it is light, easy on the eyes, and holds tens of thousands of books.

A few years earlier, people would readily have called this a showdown: physical bookstores were dying, and e-books were to blame.

Before May 2013, Dazhong Bookstore had no more stores in Shanghai than it had in 2005. Jifeng Bookstore, which comes close to being a Shanghai "cultural landmark," also planned to close its flagship on South Shaanxi Road in 2008 because of rising rent; under public pressure, the subway company that owned the space kept the old rent. Even so, in 2013 Jifeng moved from South Shaanxi Road station to Shanghai Library station. Of the eight stores it had at its peak, just one was left.

Dong does not see the smaller size of the new stores as a setback. He says it is something they began pursuing deliberately several years ago. Dong left Dazhong Bookstore in 2008 for e-commerce, because "traditional industries needed to change, but nobody changed, and we couldn't get through to each other." Yet in 2012, with e-commerce booming, he came back to Dazhong Bookstore as assistant to the general manager. One reason was that he saw the old bookstore had taken on the idea of change and come round to the "small bookstore" approach.

What worried Dong about the move from the fourth to the fifth floor was only that the store's position in the mall was worse than before. It is squeezed into the exit corridor of a Shanghai Film Group cinema in Metro City. The area used to be very dark. Without a row of ceiling lights and a complete makeover, people could easily miss the store, which sits far from the elevators: after coming up, you have to walk past the theater and the cinema entrance.

But the upside is just as plain: theater and film audiences may stumble on the store. With 15 minutes to go before a film, a couple carrying drinks suddenly realized they were in a bookstore and decided to spend ten minutes there.

The Metro City store was renovated along with the whole mall. Like every mall struggling to draw foot traffic, Metro City hopes a cinema, a theater and a bookstore will lure back shoppers who have taken to buying online. Dazhong Bookstore filled the store with props such as old film projectors, movie posters and original film-reel cases, and hung a ring-shaped chandelier from the ceiling to echo the cinema's starry-sky theme. It also added a coffee bar.

"We're like a small commercial complex, but one built on the cultural industry. Shops and malls also want to embrace a mixed concept. Many malls are happier to take this kind of store," Dong says.

The Dazhong Bookstore on Shanghai's Fuzhou Road was the first store Dong helped renovate after returning to the business. It borrowed elements of the shikumen, Shanghai's traditional stone-gated lane house, and was redone in an old-Shanghai, Republican-era style. Half the floor space became an activity area for readers; to sit down with a book, you have to buy a coffee for about 30 yuan. The space came out of the book inventory, which was cut from 6 million copies to 2 million.

What people remember about the Fuzhou Road store, though, is that it stays open all night (since 2015, Dazhong Bookstore has been open mainly to members after 10 p.m.). At the time, the government wanted a 24-hour bookstore on Fuzhou Road and offered a subsidy, and Dazhong Bookstore, which owns its building, took it up. It is still the only bookstore in Shanghai open through the night. Dong says the 24-hour store turns a profit, but Wu Jian, its manager when it opened, once told the press that "the bookstore mainly covers the cost of opening overnight by raising daytime revenue," and that he himself was the store's only "book selector."

The renovations often seem half-hearted. In November 2015 the Honesty Bookstore, first opened in Xinjiekou, Nanjing, appeared on the ground floor of the Fuzhou Road store in Shanghai and drew a good deal of media attention. It has no cashier and no cameras; people who want a book put the money in a collection box themselves. But one reader wrote on Weibo: "The so-called Honesty Bookstore is nothing more than a few old books nobody wants."

After the Metro City renovation, the company began giving each new store a theme: the Zhengda Le Cheng store has a women's theme, the Xinlixiang store in a university town is a "dating bookstore," and the newly opened Hopson store went back to the Republican-era look.

"Maybe history is telling us this is a thankless task," Dong says. Fitting out a new Dazhong Bookstore costs 2 million to 3 million yuan, part of it spent on the design and materials each new theme requires. Few in the industry do this. Sisyphe, another chain, uses one European-garden style everywhere; leaving aside what it costs to open a store, readers can at least recognize its shops at a glance.

Beijing's Wansheng Bookgarden (Wanshengshuyuan), founded in 1993, is known for the expertise of its book selection. It covers more than 1,000 square meters and still runs as a traditional bookstore. It has a coffee area, but founder Liu Suli says books still bring in 90% of its revenue.

Liu, a graduate of Peking University's Department of International Politics, carries considerable weight in Beijing's cultural circles, and he has his own views on how a bookstore should be run. In a 2011 interview with the Oriental Morning Post, he said he was not optimistic about independent bookstores built on personality: "A good bookstore doesn't justify its existence by its personality. What decides things is still the books. A bookstore's fate turns on whether you can expertly serve the customers who demand expertise. Of course, that kind of specialization is hard to pull off."

Dazhong Bookstore has plainly taken a different line. It wants to offer general readers "entry-level books" and to "give store atmosphere, environment, experience and book signings equal weight." But to make room for the experience area and the coffee bar, it still plans to slim down its book stock.

Cutting school study guides was a hard decision. It took Dong years to make store managers understand why such books, though they sell well, are not the best choice for a bookstore and in fact count heavily against it. But what to stock once they are gone is another hard question. One simple answer is to tailor the range to local conditions, based on each store's customers and sales data. The Fuzhou Road store, right next to Shanghai Book City, sells no children's books, while the Zhengda store in Pudong's Lujiazui will carry more social science and finance titles.

Beyond that, Dong has an ideal model in mind. He has visited Duyidong, a small neighborhood bookstore in Beijing. The first book inside the door is a tool encyclopedia from the British publisher DK (Dorling Kindersley), full of tools you will probably never use. He admits this unusual touch impressed him: "Being interesting is an important psychological cue." Sadly, though, the approach of such literary bookstores may not suit Dazhong Bookstore.

Next to Duyidong and Wansheng, Dazhong Bookstore is still a novice at choosing books. The Fuzhou Road store stocks almost every book Han Han has written, and they fill several rows of the main shelves just inside the door. Dong calls them books by a "public intellectual," but he says that if they wanted to stock writers with more influence than Han Han, they would not actually know whom to choose.

Publishers have changed in recent years too, and Dazhong Bookstore was slow to notice. It took a long while to realize that traditional science and technology publishers such as the Publishing House of Electronics Industry had long since extended their expertise into lifestyle books. Another reality is that small, niche publishers do not want their handsomely bound books sold in a big chain like Dazhong, sitting on several million copies of unsold stock. And Dazhong still works with the large publishers as it always has, on agreed sales volumes.

Even if trimming the book range cannot happen overnight, the coffee bars have kept all their space. A big reason is that they bring in a large share of Dazhong Bookstore's revenue, 20% of the total, and that share is growing faster than book sales. The current manager of the Fuzhou Road store told a QDaily reporter that selling books makes almost no profit and comes nowhere near covering rent, utilities and staff wages.

The coffee bar usually takes up a third of a store. The parent company set up Dazhong Housekeeper specifically to develop the food and drink business, and in some malls where conditions allow, Dazhong Bookstore also serves light meals such as sandwiches. But everyone knows, as Dong does, that its coffee cannot match the quality of real coffee shops. Dong says they are hiring better baristas, though even that may not match the drive of CITIC Press. The fast-growing publisher has also opened physical bookstores, and there are frequent reports of its general manager, Chen Fei, traveling abroad to inspect coffee beans and meet Michelin-starred chefs. All of this will make a powerful selling point as the newcomer makes its debut.

By comparison, Dazhong Bookstore's response looks mild and unfocused. "Dazhong Bookstore can only be called an upgraded traditional bookstore... its safe, middle-of-the-road sections don't bring out anything distinctive, or leave customers with any deep impression," Shanghai Huizhi Business Consulting wrote on Weibo on February 22 this year.

Dazhong Bookstore's official Shanghai Weibo account reposted this rather negative comment and replied: "While we have been working hard to improve our spaces and create a reading environment readers love, it turns out there are so many things we never even thought of... In this world, not every person, institution or company puts making money first. The story continues."

With Hongguo Group behind it, Dazhong Bookstore may indeed face less pressure to make money. But Dong is still uneasy. "Although we've made a lot of innovations and changes, at our core, in spirit and in thinking, we haven't fully broken away from the so-called traditional, outdated ways," he says. "That we've survived shows we have some resilience, but it doesn't mean everything that survived is good."

The new bookstores paint a completely different picture. In December 2015 the independent chain Sisyphe opened its 37th store, in Shanghai, and said it would grow to five Shanghai stores this year, dividing floor space among books, coffee and cultural-creative products in a ratio of 16:3:1. Hengshan·Heji, not far from Metro City, consists of four separate buildings close together, given over to books, exhibitions, menswear and womenswear respectively. Yanjiyou, which started in Chengdu, opened a store on Shanghai's Hubin Road in November 2015 and plans another 2,000-square-meter store this year that will combine books, a gallery, a clothing shop and other spaces. MUJI, a retailer to begin with, has brought MUJI BOOKS into its Huaihai Road flagship, where books fill the retail floors from the first to the third.

These new bookstores look more like the "small complexes" Dong talks about. "The industry is recovering," but for the old bookstores the news is mixed. Shanghai is a big city, and all Dong can do is tell himself that every neighborhood needs a bookstore.

Cover image credits: qclglomo, cnfaxie