Issue #5 | Eslite
Welcome to E-MERGE!
To those who recently put their life savings into Tesla stock, I’m hoping for a good comeback story for you. During such tumultuous times, the last thing we want is a bunch of tweets or scandals that could send the stock market into a downward spiral. Speaking of downward spirals, retail has taken an astronomical beating lately from Covid-19, with our beloved brands and stores like J.Crew and Neiman Marcus getting close to bankruptcy. In today’s issue, I dive into a sector of retail that’s getting no love, but is illuminating small rays of hope for brick-and-mortar businesses in the future: bookstores.
It wasn’t too long ago when I would find myself standing on the miles-long escalators of Hysan Place in Hong Kong. The escalators were paralleled to the mall’s glass windows where you can stare down the city streets from a couple stories high. Because of this breathtaking view, I’d always avoid taking the elevators to go up (that, and I never had the patience to wait 10 minutes only to get onto a crowded lift). Once I reached the 10th floor of Hysan Place, I’d begin to mentally prepare myself with the familiar layout of the land.
Between the 8th to 10th floor of Hysan Place lies a bookstore, a bookstore that sells everything from books to CDs to magazines and has a mini café where you can lounge. Many rational folks who understand retail’s predicament might think that there’s nothing exceptional about physical bookstore chains in general and see Barnes & Noble as a testament for physical retail’s demise.
They’re not wrong.
However, there was a certain appeal to this particular bookstore. It had a type of allure that would drag people like me out of their shoebox apartments and reel them in on a beautiful Saturday afternoon. And for what? To actually read books.
Eslite: An Elite Brand
Back in 1989, Robert Wu Ching-yu had this idea of starting a bookstore in Taiwan. He didn’t want to create your everyday store where you’d only find popular titles or bestsellers. Instead, he focused on selling selective works in literature, arts, and architecture, placing a heavy focus on the arts and humanities. He called it Eslite.
Like promoting a blockbuster hit in film, selling bestsellers and titles people raved about were essential towards generating revenue and traffic for a traditional bookstore. Wu went against the grain and premised his business model towards a niche audience and an entirely foreign vision. During a time when bookstores were booming in different parts of the world and Borders was still everyone’s favorite, Eslite took on a different strategy that would eventually put the company 15 years into the red. Yet, after surviving year after year, the company was still able to garner the respects and well-earned reputation from artists and writers alike. Soon after, those who weren’t initially keen on the arts started to share a similar appreciation for these bookstores.
So what was Wu’s vision that was deemed so foreign during its early days, yet made Eslite successful in its later years?
It was creating experiences.
Wu transformed the traditional bookshop into a lifestyle brand, an image it was able to chisel beyond the shelves of the fiction & literature section. Sure, it was a bookstore that sold high-end books, but Eslite had grown to serve other sectors that suited its reputable profile, including hospitality, F&B, and entertainment.
Serving as an experiential incubator for smaller retailers, Eslite eventually expanded into niche products and propped up businesses it was able to monetize in its bookstores like selling tea, ice cream, stationary products and fashion goods. In order to sustain its brand, Eslite used this business model of leasing large spaces from operators of shopping malls and complexes and re-letting them to these high-margin boutique businesses at higher rents. It’s crazy (and pretty ironic) that books are not the main driving force for its businesses; it’s the green tea and ice cream that’s being served to its customers.
Yet, it isn’t these small-priced items and local brands that make Eslite so exceptional. It’s the experience and happiness that comes with it. You could find similar, yet cheaper products like tea next door, but people come to Eslite for the experience of soaking into the ambiance and leisurely reading books. Many prefer to sip on their matcha latte while reading about architectural design on the conveniently-placed benches nearby. Others like me might just find it soothing to just browse through the shelves without making a purchase and pick up a magazine about global affairs. Its perfectly-curated stores make it easy to get lost in its sea of products. You could spend hours, even days, in between its shelves and pop-up shops without realizing it, raising the likelihood that you’ll end up leaving its doors with something in your hand.
It’s a haven to decompress from work; a place to discover hidden passions; a safe space to meet friends; and a cultural hub to relish the modern arts. As ridiculous as it sounds, these unique, miniscule experiences are imperative to its overall culture and brand, which makes it well-suited to sustain through tough times during the era of e-commerce.
The Fallacy of Brick-and-Mortar’s Fate
Eslite flaunts 54 stores in total: 48 in Taiwan, 3 in Hong Kong, and 3 in mainland China. I’ve been to 5 of them, at least one in each location, which goes to show that the allure is contagious. Although survival isn’t always easy for some of its locations, this bookstore continues to defy expectations and is a proof of concept that brick-and-mortar businesses done right can survive.
A traditional brick-and-mortar company can’t outlive the days of online commerce if the experience is purely functional. Barnes & Noble lost a major share of its core retail business to e-bookstores like Amazon, as it failed to quickly adapt to online retail. The same can be said for department store chains like Macy and JCPenney and other apparel brands like J.Crew. Having a huge online presence can be crucial for major retailers but is not necessarily imperative for their survival.
For example, the concept of merging online commerce with offline stores has already proved fruitful for retailers. In what is known as online-to-offline (O2O) commerce, online marketplaces and physical retailers alike are facilitating the use of digitization in IRL stores, allowing brands to access consumers through different channels. Do you crave a cold brew but don’t want to wait in line or face the embarrassment of getting your name called wrong? You can purchase Starbucks through their Mobile Order & Pay app. How about that sectional you’re eyeing to get, now that you’ve worked from your less-ideal couch for the last two months? With Ikea’s latest play in VR, you can soon reimagine your living room in a click of a button. In the midst of the pandemic, in-store and curbside pickups are also becoming hugely popular to the masses, who are willing to purchase goods online and pick up offline at the physical store.
As demonstrated by Eslite, experiential retail is also proven to be a trendsetter in the world of the brick-and-mortar. It isn’t enough to just sell good products; retailers need to offer new in-store experiences for consumers. These features could come in different shapes and sizes, from integrating smart mirrors in beauty and apparel shops to interacting with outdoor lifestyle brands through indoor, in-store innovation. These experiences would encourage online consumers to be active participants in physical retail and make purchases beyond the comfort of their homes.
By taking the architectural mantra “form follows function” to heart in retail, brick-and-mortar businesses that cultivate a cultural identity and cult following will surpass those that don’t. We desire brands that can touch and enhance different aspects of our lives. With newcomers (D2C, resale) and legacy retailers fighting for a share of our e-wallet, these companies must remember that, no matter how digitally enabled we are, we crave to build personal connections at the end of the aisle.
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Thanks for your interest, and have a great week!
Jeff