The corner bookstores take on the book chains

In an age when publishing houses are bought and sold by conglomerates and best-sellers marketed like beachfront property, it's no surprise that big business is muscling America's corner bookstores into extinction.

What is most astonishing is the velocity of the takeover. A decade ago the four largest retail book companies in the United States controlled a meager 11 percent of the market. Only one of those retailers had over 100 stores. By last year, however, two bookstore chains alone, Waldenbooks and B. Dalton Company, accounted for some 30 percent of the retail bookstore business.

Each does about $250 million a year in business, twice that of Bantam, the nation's largest mass-market paperback publisher. Together, Walden and Dalton control more than 1,300 stores nationwide. Over the next five years, each chain plans to open 90 to 100 new outlets annually.

Sounds like the story of the mom-and-pop grocery store battling the supermarket chains, this time in book form? Not quite, says a group of corner bibliophiles now quixotically jousting with the book chains: This fight is not over the price of turnips and fish sticks, but over the availability of ideas.

The rapid expansion of the chains influences not only where Americans buy their books but what they buy. Many independent booksellers fear that when books are ordered by computers and not by crotchety old literary gents in cardigans, Flaubert and Hemingway won't stand a chance against paperbacks on preppies and Rubik's Cubes.

Andy Ross, president of the Northern California Booksellers Association and owner of Cody's Books in Berkeley, is one bookman who finds the supermarket approach to literature not only distasteful but unlawful. He and the NCBA recently filed an anti-trust suit against Avon Books - and threatened to take the rest of the publishing industry to court - for giving what they call ''secret'' and ''illegal'' discounts to chain bookstores. The windfall profits generated by the publishers' preferential pricing are, he says, responsible for bankrolling the chains' elephantine growth. This, in turn, puts the squeeze on small owner-run stores, who weren't making much money to begin with.

The NCBA suit, filed here in federal district court, has the support of the fledgling National Writers' Union, as well as independent booksellers from Detroit to Oklahoma City. If the booksellers get a favorable ruling, say antitrust experts like Earl Kintner, former chairman of the Federal Trade Commission, its legal precedent could send significant ripples, if not waves, of reform throughout the industry.

Cody's Books crouches on the corner of Telegraph Avenue and Haste Street in Berkeley, a stone's throw from People's Park and the University of California's Sproule Plaza. In Cody's front window is a tribute to the late beat poet, ''Kenneth Rexroth, 1906-1982.'' Across one wall of the glass-front bookstore, old graffiti still whisper in fading red spray paint: ''Free the SLA (Symbionese Liberation Army).''

Inside, a plaid blur moves through the stacks. It is Andy Ross, the proprietor, making his rounds. He wears tortoise-shell glasses, blue jeans, and a dark plaid shirt. He is amiable, intelligent, and restless to the point of being fidgety. He has owned Cody's since 1977, and is proud of his store. ''We hired a UC professor to give us an annotated list of books to develop our European History section,'' says Ross, striding into his favorite corner of the store. ''These don't sell real fast, but we think it's important to carry them. In a chain store all you'd find is John Reed's 'Ten Days that Shook the World' for six months, or until the movie (Warren Beatty's ''Reds'') fades from memory. . . .

''Here's our philosophy section with the complete works of Kierkegaard.'' He breezes into the next aisle. ''In the chains you may find (the writings of) Billy Graham, but you won't see Hegel, Hume, and Kant, the most important philosophers in the Western modern age.''

He turns and pirouettes into ''Poetry.'' ''The chains are weak here. You'll find Rod McKuen, Kahlil Gibran, and maybe T. S. Eliot, but you won't find Ferlinghetti, Philip Levine, or Czeslaw Milosz. . . . In fiction, name an author and we've got it. The chains have mostly mysteries and science fiction. You won't find many of the classics.''

He surveys the store with his outstretched arm. ''These books need personal salesmanship. How can you get that in the chains, which pay minimum wage and have inexperienced clerks, not booksellers? They central order their books by formula and computer from some place 3,000 miles away. The stores are homogeneous in character. You can walk into one in San Francisco and one in Dallas, Texas, and they look identical.''

Back in his small, windowless office on the second floor above the ''Environment'' section, Ross doodles while explaining why he and the NCBA filed the antitrust suit last April 13 and took on Avon (a division of the Hearst Corporation), which in 1979 had sales of $55 million.

''In the 1970s we didn't feel the pressure because chains opened up in the suburbs and regional malls. There weren't any independent bookstores there, because they couldn't afford the rent. But now no one is building malls, and the chains are moving in down the block from us.''

Just when independents were scraping by with a scant 1 percent profit, Ross says, they discovered most publishers were charging them up to 10 percent more for their books than they were charging the chain stores down the street. On mass-market paperbacks, Avon, like most other publishers, offers every bookseller a flat 40 percent discount off the list price on orders of at least 25 mass-market paperbacks and a 43 percent discount on orders of at least 15 trade and 20 mass-market paperbacks.

Ross charges that since the early 1970s, Avon has maintained a discriminatory two-tiered pricing structure, granting larger discounts to Dalton, Walden, and other leading chains - regardless of the volume of books purchased - than to Cody's and other members of the NCBA. He has invoices showing Avon has given the chains 44 percent discounts on mass-market books and 48 percent off on trade paperbacks. This translates into Cody's and other independents' paying 7.1 percent more for mass-market paperbacks and 9.6 percent more for trade paperbacks than the chains. Every point of discount is a matter of survival for the independent bookseller. An economic profile commissioned by the American Booksellers Association (ABA), showed an average after-tax profit of less than 1 percent among independent booksellers. In contrast, Dalton reported in 1980 an after-tax profit of percent. The chains' larger profits, Ross contends, are a result of their competitive advantage from the discounts.

Ross believes the publishers' discrimination extends beyond discounts to return policies and cooperative advertising, which favor the chains. The NCBA chose to focus its suit on the ''most blatant violations,'' Avon's discount policies, he says. Avon openly admits to granting preferential discounts to chains. It claims, however, that the discounts are not only ''cost justified,'' but that they are ''meeting the competition.'' Thus what Ross sees as ''censorship of the marketplace,'' Avon and the chains view as nothing more nefarious than red-blooded capitalism.

According to Avon's attorney, Royce Schulz, ''any discount Hearst ever granted was only to meet discounts of competing publishers.'' The discounts are ''cost justified,'' he says, because Avon ''has to give far less services to the chains, and in some cases, no service at all.'' Furthermore, ''in court, their 'David and Goliath' argument will carry no weight. They must deal in real, legal issues.''

The NCBA's legal counsel is William Petrocelli, a San Francisco attorney who, with his wife Elaine, owns Lark Creek Books in Larkspur, Calif. He says he hopes to persuade the judge that the standard ''meeting the competition'' defense may work for interchangeable products like bread and gasoline, but that it doesn't apply to books - first, because they are ''unique products,'' and second, because bookstores ''carry all lines of all publishers.''

''Our case is very different,'' says Petrocelli, ''from that of two gasoline suppliers like Mobil and Texaco fighting to get their products into the same gas station.'' Adds Ross: ''If you're selling steel ingots, and your competition offers the product for less, you are allowed to meet that price. But books can't be treated like steel ingots. 'Gorky Park' is not interchangeable with 'A Hundred Years of Solitude.'

''Recently, Crown Books, one of the fastest-growing book chains in the country, opened an outlet on Telegraph Avenue, just a block away from Cody's.

The Berkeley store is unlike any other bookstore on the avenue. In contrast to Shakespeare & Company Books across the street, where well-thumbed volumes are crammed higgledy-piggledy into unreachable nooks and crannies, Crown's books are not so much shelved as showcased. Fluorescent panel lights and a lowered ceiling give it the feel of a cross between an airport lounge and a discount drugstore. Flashy placards beside the cash register announce the month's best-selling paperbacks: ''Tron,'' ''Blade Runner,'' and ''White Hotel.'' Near a display of remaindered art books dotted with day-glo orange discount price tags, hangs a plastic sign proclaiming: ''If you paid full price you didn't buy it at Crown.''

Behind the counter stands a mop-haired young man in blue jeans. He introduced himself as the store manager, and stated straight off: ''I'll talk to you, but you can't use my name. This is a chain.'' He said he had worked for a year in one of Crown's stores in Los Angeles, and had just come north to open the Berkeley outlet. ''Yup, Crown is moving up,'' he said. ''The company is run by a guy who's 29 years old and full of energy. We just went into Chicago and Houston , and have plans for 10 more stores in the Bay Area. We do mostly high-turnover books. When they're on the New York Times bestseller list, we give 35 percent off hardbacks, 25 percent off paperback.''

The issue of the NCBA suit comes up.

''I don't know what Andy Ross is complaining about,'' continued the store manager. ''Nobody goes to Cody's to buy bestsellers anyway. They come to a place like Crown. . . .

''We don't force people to buy our books. They come in here because they save money. The publishers and booksellers may be mad at us, but the customers love us.'' His sidekick adds, ''The remainder houses love us too, because we take all the garbage off their hands.''

''Ross says the people working in the chain stores are all just clerks,'' the manager continues. ''But we have degrees. We're not morons. Sure, they've got some pretty sharp guys in Cody's. But they're the kind of people that, if you ask them for 'Gone with the Wind,' they'll laugh at you.''

Vital to the chains' success formula is the no-frills service. ''I've been in the book business for nine years, and this is the easiest job I've had. The customers are happier because they're getting a deal; we have fewer returns, don't do any special ordering or gift wrappings. We are permitted to do some book ordering.''

Vital to Andy Ross is his vocation: ''When books are no longer treated as ideas to be read and valued,'' he said, ''but merely objects to be consumed; when bookselling ceases to be a vocation, but is only a business; when the range and quality of books is subordinated to abstract ratios of turnover and return on investment; then is when our culture will be threatened with censorship of the marketplace, then is when our pool of ideas will be reduced to the lowest common denominator of the public's taste, then is when we are in serious trouble. And I suspect we are already there.''