Writing about how many bookstores we have in Central Oregon got me thinking about whether it's a good thing or a bad thing to have too much capacity.
I've wavered about this for years. At first, it seemed very clear to me that one strong store was better than two or three weak stores. But did that necessarily follow? Was I just letting my competitive instinct get the better of me? Did I want it all to myself?
Given enough time and distance, I could half buy into the notion of 'the more the merrier'. That competition was good; and made all the stores better. That there might be a 'synergy' to more stores doing the same thing; a cross-fertilization if you will.
Almost every business article I've read on the subject comes down on the side of "more is better."
Sorry, I don't buy it.
Of course, much depends on the quality of the stores. But -- assuming all the stores are equal (either bad or good) -- I don't believe that splitting the market is healthy.
This proposition has been tested over and over. I've got enough history of watching stores come and go, and watching what my sales do each time, to realize that I almost always benefit from less competition.
It may not be gracious to say. It may not be politically correct. But I believe it's true.
Ironically, I've always been able to do a much, much better job when I had -- if you will -- a monopoly in a certain product. I would carry more, I would do more, I would be cheaper because of the pure volume. Competition, more often than not, makes me pare down my selection, to watch the bottom line on how much time and space I devote, and stick much more closely to full price. (Not the mention all the intangibles -- the motivation to learn everything I can about a subject, for instance. To create a place for the 'true believer's' to gather, and so on.)
This is, I believe, the opposite of the common wisdom. Monopolies bad, competition good.
At least on a micro level, and assuming altruistic impulses on the part of the store owner, a single store doing a full-service job, is better for the consumer than several cut-throat stores competing.
I compare it to Plato's thought that the best form of government is 'benign dictatorship."
But much like you can't count on the dictatorship staying 'benign" you can't count on a monopoly staying altruistic.
So I accept that everyone should have a chance at the brass ring. Everyone should have a chance to out-compete the other guy.
Whether I like it or not, that is the way of capitalism. This being so, it behooves me to 'pretend' if you will, the 'More the Merrier,' even if I don't secretly believe it. It is much better for me to be gracious and to let my customers know that there is choice in the local marketplace, and move on....
"That which I can't change..."
It has also helped that I decided not to be the PRIMARY supplier of most of my product; books, games, toys, cards etc. I can't be surprised if many customers prefer to go to my competitors who specialize in only one thing. It's O.K. because that's how I've designed my business.
Comics and graphic novels are the one category where I do try to be the primary supplier, and I don't honestly believe that a second store would be helpful. Not that I could stop it.
Ideally, an equilibrium would be reached by a 'free market'. The appropriate number of stores for the appropriate number of people.
The reality is much more messy; in fact, I don't think equilibrium is actually every reached....ever.
There are always too many or too little.
3 days ago