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Powell’s Books to lay off 31 employees

Borders aren’t the only bookseller who did badly this past year; Powell’s Books laid off  7% of their workforce today, and everyone remaining with the company took a benefit’s cut. Sales were down for 2010 and 2009 and they don’t expect next year to be better.

You have to have heard of Powell’s Books; they’re one of the largest  indie booksellers anywhere. I’ve never bought from them, but even I know who they are. They’ve been an ebook seller since before I can remember, and they were one of the first ebookstores to sign with Google.

As tragic as this might feel, it’s the future of book selling. People want to buy cheap stuff on line.  The only way indies will survive is to sell the experience.

via Portland Mercury

image by Paul Lowry

Powell’s Books, one of the largest independent bookstores in the world, announced today the decision to reduce its workforce, a move that is part of the Company’s response to the unprecedented, rapidly changing nature of the book industry.

Consumer behavior —- how, where, and what people read —- has changed dramatically over the past several years. It’s a story that’s hard to miss with daily articles about the book industry, the future of physical bookstores, and the rise of eBooks. As technology evolves, Powell’s expects consumer reading behavior to continue to change as new options and formats for reading develop and improve over time.

In addition to changing consumer behavior, Powell’s Books has been significantly impacted by market conditions, including an industry-wide decline in new book sales, rising healthcare costs, and the economy.

All of these circumstances have weighed on Powell’s business continually for the last three years. While the company has seen its share of changes over the past four decades, adverse market conditions generally never lasted more than two consecutive years. Unfortunately, at this critical point in time, corporate leadership expects similar trends as it has now experienced for several years.

Emily Powell, President of Powell’s Books stated, “I feel it is critical to make some very difficult adjustments at this time, to address our current reality and to prepare the company for success in the future, a future that looks very different than our business today.”

A major change shared today was a layoff impacting employees at various locations. This undesirable course of action was taken only after serious consideration of other possible options and a careful evaluation of the future. Ms. Powell shares, “I would like to thank all of the Powell’s employees who have shared their expertise and supported the business’s goals every day. Their contributions to Powell’s and the reading community have been substantial.”

Although Emily Powell assumed management of the company in July 2010 from her father, Michael Powell, Michael has been involved in the recent changes. “Emily’s transition to leadership of the business happened at a precarious time, at a crossroads in our business. I’m confident her fresh ideas and her understanding of technology will steer the company successfully forward. We plan to have Powell’s Books at the heart of the Portland community for years to come.”

And here’s the email they sent to staffers this morning.

We expect that you are concerned about the company’s sales trend in recent months, changes in the book industry, and actions the company may need to take to adjust to these events. This email is to let you know about immediate next steps the company is taking. Sales for this fiscal year are down and we expect this trend will continue. The largest decreases have been in new book sales. We see this as a clear indication that we are losing sales to electronic books and reading devices. Given the company’s declining sales, combined with industry data on the rapid growth of electronic book sales, we expect to see continuing erosion of new book sales over the next few years. While we believe we can compensate for some of the loss with solid used book sales and growth in gift sales, the erosion of new book sales will continue to take its toll.

Given that company sales are down this fiscal year, and that we are projecting annual sales decreases for the next few years, we need to take immediate steps to scale the company to our sales.

We have made the difficult decision to lay off 31 employees from the bargaining unit. The locations where lay offs will occur are: Burnside, CHX, Indy, Hoyt and Corporate.

Managers are notifying the employees who are being laid off today in one-on-one meetings. We are making every effort to notify all employees directly affected by the end of the day today. At Burnside, CHX, Indy, Hoyt and Corporate the location manager will let everyone know via email when the employees being laid off at that location have all been notified.

The second phase of the lay off process, bumping, will begin by the end of the week. Bumping is a complicated process to work through and will  take some time. Some staff members who were not laid off initially may be displaced in this process. Both Powell’s and the union recognize that until the bumping process is complete, there will be anxiety and uncertainty for many employees. The company and the union are committed to working through the bumping process as quickly as possible. We will notify everyone when the bumping process has finished.

The company has different options, and has taken different measures at this time with non bargaining unit employees. We have reduced benefits by suspending company 401k contributions effective February 21st for a minimum of a year. A pay freeze will go into effect July 1st, and be in effect for a minimum of a year. (No anniversary increases, no October increase.) These measures affect only the excluded group. Bargaining unit employees remain whole in terms of pay and benefits – per the contract.

We anticipate that the reduction of staff in the bargaining unit, combined with the benefit reduction and pay freeze for non bargaining unit employees, will be an adequate adjustment for the sales decrease this fiscal year. If sales continue to decrease in the future, we will need to make further reductions. As we have done before, we will try to avoid layoffs by reducing the size of the company over time through attrition.

Out of respect for the employees who are directly affected by this decision, we ask that this email, and the information it contains, be held in confidence within the company until the end of the day today.

We deeply regret having to take these steps. We are very sorry to be ending the employment of staff members who have been part of Powell’s and who have contributed in so many different ways.

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willem February 9, 2011 um 3:38 am

Following some of the discussions at that story suggests bad management decisions is more to blame. That is usually the case though the story of 'ebooks are killing us!' is easier to hide behind and a sexier story for journalists.

Looking at they seem to have problems attracting customers to their website, which suggests that the paperbook losses in their bricks and mortar locations are not being made up online.

Wally5 February 9, 2011 um 4:15 am

Correction: management did not take a pay cut. Nor were any managers laid off. The only people laid off today were bargaining unit workers making significantly less than most managers who continue to be employed by the company.

Nate the great February 9, 2011 um 7:15 am

Thanks. I misread it.

Perry February 9, 2011 um 12:36 pm

While these stories seem inevitable, it’s is still sad. Particularly when the store is a landmark for the town.

I hope they find a way to keep the doors open.

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