Is there a chance a reader out there just wants a book--and not a cup of exotic coffee or a stimulating lecture on James Buchanan's presidency?
Crown Books Corp. certainly hopes so. The former Haft family enterprise that put discount bookselling on the map is attempting a comeback after a long fall from grace. The 92-store chain plans to emerge from Chapter 11 bankruptcy protection late next month with solid financial backing, a stronger management team and a determination to reclaim its old niche as a bare-bones discount chain.
But it is reentering a world that seems to have been taken over by two enormous chains and online bookseller Amazon.com--competition that Crown never faced in its heyday.
Ironically, it was only a decade ago that Landover-based Crown Books was the Big Bad Wolf of book retailing, undercutting the prices of everyone in town. Since then, mom and pop bookstores have stopped complaining about Crown. Now they gripe about Barnes & Noble, Borders Books & Music and Amazon.com.
Crown executives feel their company is ready to make a comeback. The company will step up an advertising campaign designed to emphasize low prices and poke fun at the coffee bars and poetry readings that are central to the big-bookstore experience.
On the sides of Metrobuses, bright-red signs proclaim Crown to be "still the cheapest bookstore in town." In newspaper pages, the retailer crows, "With the money you save at Crown, you can buy your own espresso machine."
In a popular radio spot, a Sam Spade sound-alike spots a woman with "long hair cascading down her back" inside the cafe of a large bookstore. He dreams of taking her to Crown Books--because he knows what she's really thinking as she sips that double mocha.
I knew what she was doing, and to tell you the truth, I couldn't blame her. Unless you're in the game of giving your money away, a regular Joe like you or me just can't afford to buy the books at those big corporate book rackets.
So you sit in the cafe all day and read like a wild librarian until some nosy kid finally wonders why you don't just buy the book.
An informal survey of Washington area stores reveals that Crown really is underselling the big chains on bestsellers, along with some other books.
But do book buyers realize Crown is still around? And if so, do they care? Has a robust economy caused the old Crown customers to forget about pinching pennies--and dollars? Do they assume that a big store, by its very existence, has the lowest prices on everything?
"I tend not to shop for prices unless they're conspicuously different," explains Jack Coffey, an Alexandria lawyer who was recently shopping at the Super Crown store in Old Town.
As for loyalty, Coffey says he's simply attracted to whichever retailer is closest to him. Sometimes, that company is only a few mouse clicks away. Amazon.com, he said, and Barnes & Noble provide what Crown cannot: a humongous inventory of books.
Few people in the book industry believe that Crown, as it tries to kick Barnes & Nobles Inc. and Borders in the shins, will ever threaten its much larger competitors. Even with good management, they say, Crown's former owners and executives put the company in a tailspin that will be difficult to reverse.
"It will be extraordinary difficult for [Crown] or anyone else to emerge in the market today," said Richard Howorth, president of the American Booksellers Association. "We're at the beginning of a shakeout right now. I don't believe there will be room for more than two [large] booksellers."
Crown lost $66 million on $216.8 million in revenue in its fiscal year ended Jan. 31, 1999. In comparison, the nation's biggest bookseller, Barnes & Noble, earned $92.4 million on sales of $3 billion.
Furthermore, Howorth notes that Crown, unlike its rivals, has not gone online. Company officials say that Crown has no immediate plans to open an Internet store and that it will go online only if it can figure out how to make a profit there.
Crown's problems began when Robert Haft was fired six years ago by his father, Herbert, as chairman of Crown and president of its parent company, the Dart Group. Crown was Robert Haft's offspring; a decade ago, his personal pitch for his bottom-priced books was a staple of radio and television advertising here and in other key markets.
But the Haft family feud got so nasty and protracted that the entire company, including Crown, got lost in the shuffle.
This came at the same time that Borders and Barnes & Noble began expanding in Crown's markets, offering customers such perquisites as plush, cozy seats and caffe lattes.
Crown's management continued to stumble. In 1994, Dart's then-chief financial officer, Bob Marmon, wrote an internal memo that called Crown "a company completely out of control," with an outdated computer system and a dysfunctional buying process.
Over the next several years, experienced employees headed for the exits. Publishers began to cut back on deliveries. Many of Crown's stores began to lose money, and others no longer fit Crown's discount image.
This is what Anna Currence inherited when the former Barnes & Noble executive was hired as Crown's chief executive in 1998, after a stint as chief executive of the Kitchen Bazaar retailer.
"It really was a broken situation," she said of Crown's troubles. "The first couple of weeks, I just let [employees] talk and purge themselves."
Currence acknowledges the daunting task ahead. But she contends that the worst may be over.
The computer system is back up. Thinned-out store shelves are now filled with books. Unprofitable stores have been closed, and others are being redesigned. Employees add that morale has improved at the company's Landover headquarters and in stores.
"It has been a godsend" to have someone with long experience in the book business and who helped develop Barnes & Noble's superstores, said John Sutton, Crown's vice president of merchandising. Currence "knows how to relate to people, too. The stores just love that," he said.
Currence has even elbowed Barnes & Noble, swiping eight executives and store managers from the big bookseller. "I imagine I shouldn't push my luck," she said, smiling.
Still, there are more challenges.
As Crown attempts to return to profitability, it will need to boost revenue as well as whack costs. So far, Currence has reduced operating expenses by $25 million. And in an attempt to further cut costs, the retailer hopes to buy new titles directly from publishers instead of using only distributor Ingram Book Group. To do that, publishers must trust that Crown is indeed returning to health.
Plans call for Crown to emerge from Chapter 11 bankruptcy protection in late September as a publicly traded company with funding from the Primus Multi-Sector Credit Master Fund, part of the New York investment firm Shenkman Capital. Primus purchased claims from most of Crown's creditors and will be the retailer's single largest shareholder.
Shenkman officials believe that Crown's name is strong and that customers in the retailer's core markets--including Washington, Chicago, San Diego and Los Angeles--want to see the company succeed.
"Almost unanimously, almost everyone who had heard of Crown had a great affection for it," said Robert Miller, Shenkman's senior managing director. "It was like lamenting the fact that an old friend was sick and needed to get healthy."
Crown Books: A Page Turner
1977: Robert Haft establishes Crown Books, which was the subject of his Harvard Business School thesis.
1983: Crown goes public.
1993: Robert is ousted by his father, Crown Books chairman Herbert Haft; Robert is replaced by his brother, Ronald.
1994: Robert sues the Hafts' Dart Group and Crown Books for breach of contract, subsequently winning a jury award of $34 million.
1995: Ronald Haft steps down, leaving chief operating officer Steve Stevens to run the company.
1997: Stevens is left without his job after a "strategic restructuring" of the company.
January 1998: Anna Currence takes the helm at Crown.
May: Richfood Holdings buys Dart Group (including Crown Books, Shoppers Food Warehouse, Total Beverage, Trak Auto).
July: Seeks Chapter 11bankruptcy protection as Richfood struggles to find a buyer for it; Crown announces it will close 79 stores.
Late September 1999: Crown plans to emerge from Chapter 11.
1998 Retail Sales
Barnes & Noble $3.0 billion
Borders $2.6 billion
Amazon.com $610 milllion
Books-A-Million $348 milllion
Crown Books $216.8 milllion
SOURCE: Hoover's, Securities and Exchange Commission
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CAPTION: Crown Books chief Anna Currence thinks the worst may be over for her company.