Autopsy of an Indie Bookseller

For decades, Cody's Books was a Berkeley (Calif.) institution with an international reputation as a modern-day agora. From the start, the independent bookstore was about more than selling books—it was also about the ideas they represented and the people who came to read and discuss them. Almost every night, the store was a hub of literary and political culture, where a Pulitzer Prize-winning author, a baseball Hall of Famer, or a former U.S. President could be found giving a reading or signing books, while igniting some form of lively discussion.

Over the years, Cody's grew to three stores, stocking 150,000 titles. Jacques Derrida and Michel Foucault were perennial best sellers, although Danielle Steele and Dan Brown could also be found. During the '60s, Cody's stood at the center of the Free Speech movement and became known for its unwavering stand against censorship. When in 1989, the store was firebombed for selling Salman Rushdie's novel The Satanic Verses, Cody's employees voted to continue selling the controversial novel that earned its author a fatwa (death sentence) from Iran's Ayatollah Khomeini.

Then it all came to an end. Last June, Cody's shut its doors after 52 years, the victim of crushing economic factors and a slew of business decisions that couldn't keep it competitive. The story of Cody's, says Michael Levy, a professor of retail and marketing at Babson College, "is sort of an epitaph [of the independent book industry] in a way."

Dwindling Numbers

Indeed, times have been especially tough for independent booksellers, who have seen their numbers dropping steadily. According to the American Booksellers Assn., a trade organization made up of independents, based in Tarrytown, N.Y., in 1993 there were 4,700 indies. Last year, that number had fallen to 1,600, though Meg Smith, chief marketing officer of the ABA, cautions that many small bookstores continue to do well and says that 73 new shops opened last year.

The culprits of the overall decrease are many: the blitzkrieg of mega-stores like Barnes & Noble (BKS), with $5.4 billion in sales, and Borders (BGP), with $3.8 billion; behemoth discounters like Costco (COST) and Wal-Mart (WMT); the Internet; competition for readers' time; and the changing habits of readers themselves. Indeed, despite the gloomy numbers, the National Endowment for the Arts released a study this month that found that fiction reading has increased for the first time since 1982—especially among adults. The most recent blow has been the recession, which has put a vise on retail sales. In recent weeks, Stacey's Bookstore, the 85-year-old San Francisco shop, announced that it would close in March. Citing weak sales, the venerable Portland (Ore.) indie icon Powell's asked its employees to consider taking unpaid sabbaticals.

The community reacted to the news of Cody's end as if an important part of the social fabric had been undone. "Cody's was such an institution," says Debbi Hersh, who moved to Berkeley in 1978 and is currently the marketing director for the Oakland East Bay Symphony. "It is just so inconceivable to think that they are completely gone."

In many respects, Cody's rise and fall is emblematic of many booksellers' struggles in recent years. At the same time, it is also a cautionary tale about the myriad business decisions that scores of small businesses face every day—the kind that collectively can mean the difference between survival, success, or closure.

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