In addition to events and the eclectic selection of the books themselves, what do you offer customers that online booksellers, chain stores, and big-box retailers cannot? Is customer service what matters most?
People have pretty neutral feelings about the service at Amazon. It’s okay. Last year, in the customer surveys of chain stores, both Barnes & Noble and Borders came out in the top ten. Even if some of my customers think the service isn’t so good and complain that the booksellers there don’t know the books, it’s not terrible. Is my service spectacular? It could be better. I never overestimate my service abilities. Do I think I’m good at that sort of stuff, and do I think my booksellers are? Absolutely. Do I think I am effective 100 percent of the time? Nooo. I’m not.
This then brings me to the most important question. In this economic climate—
Where a business with eighty-two years of history has already gone bankrupt—
Out of business. Schwartz didn’t go bankrupt. Don’t say we went bankrupt. [Laughter.]
And in the very same space that that iconic store has gone out of business, you thought it would be a good idea to open a bookstore. Care to explain?
I looked at the business and I said, “There is business here; it’s not like we’re not doing business. We just have a problematic cost structure.” And I thought a really nimble single-store business might work, because you don’t have that infrastructure level. Small chains are neither fish nor fowl. They’re not small enough to make decisions quickly, but not big enough to benefit from their size. When something’s not working here, I can just say, “Well, let’s not do that anymore.” But at Schwartz we had to go through committee meetings.
So it was hard to adapt quickly.
Right. And I thought, “If I don’t open right away, I’m going to lose that business because people are going to change their shopping habits. So I have to do this as quickly as possible.” And now we’ve gotten rid of the whole office infrastructure, which means that the costs to pay for another space, a dedicated marketing department, a lot of buyers, a working owner who got paid, and a percentage of rent—that all went away. I’m still me. I’m now doing the work that probably two or three people were doing before. Not as well! [Laughter.] And I took a pretty substantial pay cut to do it. But there are lots of little changes that I squeak through to try to cut costs, and I think we’re doing an okay job with that.
I also knew what my gross profit margin was at Schwartz, and I knew if I was really careful and watched everything and played with some of the things we were doing, that I could increase that a little. That was one of the problems with Schwartz—it wasn’t just the expenses, it was that our gross margin was on the low side.
Why was that?
I don’t really know. [Laughter.] But I know that I have friends with substantially higher gross profit margins. There’s all sorts of stuff I’m watching: damaged merchandise, throwing away things that can’t be used anymore, overly aggressive discounting—all that stuff. And so I worked on my business plan for three or four months, and I have to tell you, if I hadn’t gotten the numbers to work in a reasonable way…when I looked at my sales, I basically said, “I’m going to keep 75 percent of the Downer business, and then I will add to that 25 percent of the business in Shorewood [the neighborhood directly north].”
What has happened, in fact, is that more of the Downer business has gone away than I expected, because more of it was involved in the schools than I realized. They are in very bad shape, and they just changed the bidding process so we’re not getting quite as much Milwaukee public school business. On the other hand, we picked up more Shorewood business than I expected. So we’re close to where we want to be.
And you knew the numbers when you put together your business plan.
I knew the numbers and I also knew—
What you could do as an individual.
What I could do. Like I said, I feel like I have a very passionate personality; I can talk about books in a very nonthreatening way.
But it’s still a huge financial risk, especially considering the economy.
Yes. I had to bring my own money to the table. I had saved some money, but I am a bookseller—I didn’t save that much money! However, my family pulled together enough money so that with what I had saved, the bank would give me a loan. Actually, I still got rejected. I went to three banks: I was rejected by the first one, I got a provisional no from the second one, and then I got a yes from the third bank. The terms were very tough, but I got a yes. I took the yes and I went to the second bank and the second bank beat the other bank’s terms.
Did you ever say to yourself, “I had a good run, I enjoyed being a bookseller, but that phase of my life is over?”
What would I have done? What could I possibly do? [Laughter.]
So you haven’t second-guessed your decision.
I second-guess my decision every waking moment! I second-guess every decision.
Then perhaps I’ll close by asking this: What has made you happiest about this first year of owning your own bookstore?
Danny Meyer, who is a restaurateur, once said, “It’s not about service, it’s about hospitality. I don’t want to be the best restaurant, I want to be the favorite.” My favorite thing about Boswell is the emotional connection that people have with this store. Right before the holidays a pair of regular customers—loyal customers—came up to me and said, “When you first opened, the place was only so-so. At the time we said it was nice just to be polite, but now it really is great.” [Laughter.] I love that! I love that the place matters as much to them as it does to me. And I love that we’re headed in the right direction.