Chapters Literary Bookstore, facing what it says is "almost insurmountable competition" from large discount bookstores and, has solicited money from 100 favored customers to help keep the District-based store in business.

Chapters, one of the region's few remaining independent book retailers, has sent letters to customers asking them to advance the store $500 to $1,000. Chapters would use the money to buy books from wholesalers.

The store has had trouble buying books from publishers and wholesalers who reduced its credit line. Some creditors have required cash payments with orders.

"For quite some time we have suffered from the draconian credit terms of nearly all our publishers and wholesalers," Chapters owner Terri Merz said in the letter. ". . . One would think that having been tough enough to survive in this low-margin business for thirteen years would be sufficient credit history! . . . It's even harder to pay our suppliers even more quickly without inventory coming in, but that is the circular strangulation in which we are continually caught."

Merz declined to comment further yesterday about the letter campaign or the store's finances.

Chapters' financial struggle reflects the fierce competition that independent booksellers are facing in an industry where large stores offer steep discounts and Internet sites have grown increasingly popular with time-starved consumers.

Jason Klein, an analyst with Blackford Securities, insisted "there is not an effort to put the small stores out of business." Klein said bigger stores can offer bigger discounts, and therefore are winning the sales war.

Another local retailer that has felt pressure from the outlets opened by major chains is Olsson's Books & Records. Owner John Olsson said his seven stores have been forced to sell more items such as Beanie Babies to remain competitive.

"We have felt the ripple of the major chains," Olsson said. "We're just sort of getting by. And we're just happy to get by."

Olsson said Internet rivals such as and have made purchasing books cheaper and more convenient for consumers because they offer more than a million titles.

In fact, Chapters is a plaintiff in an antitrust suit against Borders Books & Music and Barnes & Noble Booksellers that is slated to go to trial next May.

The suit alleges that "publishers and wholesalers are too intimidated by the superstores to put them on credit hold," Merz said in the letter. "You can see why a level playing field needs to be restored to our industry, and why we can't wait to have our day, and our say, in court."

Merz said in the letter she believes the way to break out of Chapters' credit problems is to "raise enough capital to be open with all of our major suppliers simultaneously, and thus be able to pay them as they need to be paid."

In the letter, Merz said that independently owned bookstores are still vital as alternatives to mega-stores.

"Chapters is unique in the country for daring to call itself, and to be, a Literary Bookstore," she wrote. ". . . We wouldn't be here today without your passion for books; now your direct and immediate involvement is crucial to our future."

CAPTION: In January, Chapters used a "You've Got Mail" poster to publicize its lawsuit against chain bookstores.

CAPTION: The letter from Chapters owner Terri Merz described book suppliers' "draconian credit terms."