The anti-Amazon: Joseph Beth Group grows by boosting local bonds

Book fairs, bistros, local merchants juice revenue

CINCINNATI - Mark Wilson knew his retail strategy was working when he overheard a customer invite one of his employees to lunch.

In the same conversation, the employee recommended a book she knew the customer would love.

“That’s the intimacy that our booksellers have with our customers,” said Wilson, President and CEO at Joseph Beth Group. “They understand what their reading personalities are and that’s why they come back to us. They know that when we put a book in their hand they’re going to get a good one.”

It sounds simple enough to ask your employees to have a personal bond with their customers. But we’re living in an Amazon world, where relationships are defined by clicks and bytes, algorithms interpret consumer desires and books aren’t meant for browsing so much as they’re stacked for quick shipping or whisked wirelessly to e-readers and tablets.

Joseph-Beth has worked hard to be the anti-Amazon of Cincinnati, investing in bistros for ambience, stocking Cincinnati-centric merchandise from dozens of local vendors and launching a book fair business to forge new relationships with the next generation of readers.

“That personal touch is not to be under-estimated, especially in a local market,” said Chuck Matthews, a distinguished professor of entrepreneurship and strategy at the University of Cincinnati.

Matthews said many retailers are emphasizing locally-sourced products as a way of differentiating themselves from big box and online retail outlets. But it’s not enough to just offer local products. Retailers need to make their service offerings compelling enough to entice customers to make repeat visits.

“You can develop all the competency you want but you’ve got to make it actionable,” said. “If you can do that, you can rule the roost.”

Mission Statement Drives Strategy

Wilson has been trying to do just that with a strategic plan that dates back to 2011. The strategy starts with a mission statement that vows to "give customers an engaging and memorable experience where ideas are shared, knowledge is gained and the community is enriched, one conversation at a time."

The new plan followed the company’s emergence from bankruptcy restructuring, during which it closed four of its seven stores and changed ownership. The company is now owned by its former Lexington landlord, Robert Langley, and Wilson, a Toronto native who came to Cincinnati to work for GE Capital in Newport, Ky.

In 2004, Wilson left GE after 14 years to become a turnaround specialist. He revived the technology company, PC OnCall, before joining Joseph-Beth in 2006. The company now operates two local stores at Rookwood Pavilion and Crestview Hills, two others in Lexington and Cleveland.

Revenue is up about 8 percent since the new strategic plan was implemented and it is more profitable today that at any time since the restructuring. Wilson wouldn’t give details, but said revenue now stands are more than $20 million. He is forecasting growth of four to six percent next year.

“Out of all my career, retail is the most challenging,” he said. “The consumer can turn on or off their wallet in a heartbeat and you have to manage through that risk and know that can happen. It’s not just build it, they will come.”

Bistros, Book Fairs and Buying Local

Key elements of the strategy at Joseph Beth include Bronte Bistro, a casual-dining concept where most menu items can be purchased for $8 to $15 and drink offerings include Ernest Hemmingway’s favorite Daquiri recipe – double the rum no sugar – and the William Faulkner Mint Julep. Wilson said the bistro adds not only ambience but sales growth. Restaurant revenue at Rookwood is up 26 percent since the bistro was remodeled earlier this year, he said.

Joseph-Beth’s book fair business started as a pilot project last fall and expanded this year to include fair at 26 local schools. Wilson hopes to double that total next year. He said book fairs are a $7 million business in Cincinnati, a business that is now dominated by New York –based Scholastic Inc. Joseph-Beth is offering local teachers access to book publishers and authors, so they can line up their curriculum to new titles and trends. The company donates 20 percent of book fair sales back to participating schools. That led to $30,000 in donations this year.

Local merchants are another key element of the Joseph-Beth strategy. Wilson said the company is trying to make it easy for Cincinnati-area entrepreneurs to sell books and gift shop merchandise in its stores. He said the company buys product from more than 100 local vendors, including apparel and accessories maker, HaloMinor , and Studio Vertu , which makes Italian marble coasters with Cincinnati-themed designs.

Wilson said locally sourced products make up 15 percent of its gift shop revenue, which in turn accounts for 30 percent of Joseph-Beth’s total revenue. The company makes 45 percent of its revenue from books, 15 percent from bistros and 10 percent from periodicals and miscellaneous items.

“We like our community,” Wilson said.

“We think we’ve found what works in our community.”

But that doesn’t mean it will end there.

Wilson has invested $500,000 in new software to improve its inventory tracking and allow its customers to buy online while accumulating loyalty rewards. He didn’t want to implement the system until he first established stronger bonds with local customers because he worried that a shift to online sales would cannibalize in-store revenue.

But he’s not as worried about that now. In fact, he thinks Joseph-Beth could add up to five stores in the next five years.

“I think we’ve got a valuable business model here,” he said. “It’s easily expandable. (But) we’re going to be very cautious in our approach to this. We’ll do the right deals.”

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