Don't act so surprised.

For those of you who read me on a regular basis, the column by John Sterns in today's Bulletin may come as a bit of a puzzler.

But hey, I've always been a contrarian, and when he came in looking for me to be all doom and gloomy, I gave him the positives....

I DID say LONG run.

But, yeah, for my store, I'm still in better shape foot traffic wise that I was in the past, and I AM situated right where the new development will help.

Not to underestimate the downturn, but I feel like Pegasus is in a good place.

About the only thing I would've added to the article was what I said straight off: that I thought the next six months were going to be especially tough.

But I don't think it's much of a reach to believe that both Deep and Merenda spaces will be filled.

I should probably say: having occupied storefronts is good, but says nothing about the inherent healthiness of those stores. Just that they are presenting a face to the world, and if they fail, someone else will present another face, and so on. I'm saying that occupied storefronts are good for me and downtown, not necessarily good for those stores. Get the difference?

Because, really, downtown Bend really is about the only place left in Central Oregon, besides Sisters and Sunriver in the summer, that generates significant foot-traffic. (Old Mill? I don't know, never go there except to the movies....)

So, yeah. I'm feeling pretty good about things right now. If my new lease isn't outrageous, we should get through this O.K.

It helps that my wife's store, the Bookmark, is doing well and I feel protected on the flanks. And for the first time, I have a bit of cash flow reserves, and lots and lots of experience with slowdowns.

In a way, my store was designed for just this situation, because I was so damn gunshy from past crashes. I may not make as much money during boom times, but I feel more insulated in downtimes.

You have to understand that my perspective is going to be different from anyone else's, because I went through a time when 40% of my 'gross' profits went toward debt. (I don't know, maybe 60% of 'income?' Whatever it was, any financial expert would have proclaimed me toast, but I just hunkered down.)

It won't ever get that bad again -- or I, and everyone else -- will be in the same boat, and I'll be trading comics for food.



The guys over at BB2 will be after my head.

So I'm going to duck and run away.



Downtown Bend: Trying to keep it all in perspective

By John Stearns, business editor, / The Bulletin

Walk around downtown Bend these days and it’s easy to feel alarmed about the health of Bend’s heart, not to mention the overall patient.

It’s the locked doors and darkened interiors of spaces that once held businesses like Merenda, Deep, Volo, BluTeal, The Paper Place and others. In the case of Merenda, the sidewalk dining on warm evenings and the bustling, albeit often noisy, interior emanated energy and a sense of Bend coolness.

But with the significant deflation of Bend’s housing market, mounting job losses, a national recession and badly shaken consumer confidence, the trickledown effect is claiming visible victims not just downtown, but all over.

It’s downtown, however, that often gets the most attention. It’s where people like to eat, imbibe, shop, watch a parade, attend a festival or just stroll. Perhaps it’s that focus from locals and visitors that makes the closures feel more symbolic, more worrisome — especially with the recession expected to hold and possibly tighten its grip through at least mid-2009.

But surprising as it may seem, a few businesses I spoke with aren’t panicking. They’re trying to operate leaner and smarter, be positive and ride out the quake.

Duncan McGeary, who bought Pegasus Books 25 years ago, has seen the ups, downs and in-betweens and has a long-term perspective that’s important when others might be inclined to cry that the sky is falling.

“I still get way more foot traffic than I used to get,” McGeary said of renovations and additions around his Minnesota Avenue store over the years that have landed him in the middle of a more vibrant city center. “So I actually am pretty positive about the long-term future of this area.”

Why not? The nearby Oxford Hotel, expected to be completed later this year, will deposit more people onto the streets, as will the new Putnam Pointe apartment/condominium complex behind the hotel. A new Bend-based bank, Crown Point, is forming and is remodeling the old Washington Mutual building on the corner of Bond and Oregon. A Subway sandwiches shop and Sisters Coffee Co. are opening a shared site. And you’ve got to believe the Merenda, Deep and Volo sites will generate ample interest. Their locations are too good. Even in very trying 2008, new businesses like Ciao Mambo and Bend Burger Co. quickly replaced Hans and Bluefish Bistro, for example.

For McGeary, the winter and spring months are always the toughest, but with careful business management, he expects to be OK. And he doubts key store and restaurant sites will go unfilled.

“Wall Street is a great location,” he said. “If you were going to start a business and you wanted foot traffic, where would you go?”

That’s exactly what Manoah Boutard, owner of The Goldsmith, was thinking when he opened his jewelry store on Wall Street on Dec. 5. It’s his second location, after Redmond.

“Downtown Bend is where foot traffic is and always will be,” Boutard said. Many of his customers drove to his Redmond store, so he decided the time was right to grab an opening downtown and move closer to them. He confidently signed his name to a long-term lease.

“You fight or you don’t fight,” he said. “If you want to throw in the towel, that’s fine.”

Dianne Bernert, owner of Kitchen Complements, also has a 25-year résumé downtown and says this recession feels especially bad, but she’s quick to point out that it’s ravaging the country, not just Central Oregon. That doesn’t dull the pain, though, of seeing neighbors close, she said, pointing across Minnesota Avenue to the recently silenced Merenda.

“It bothers me to see this happening, especially to our good restaurants — we need those restaurants,” she said. They, and stores like BluTeal, were draws and what tourists come back for, she added.

It’s possible more will close, said Darren Powderly, broker with Compass Commercial Real Estate Services.

As painful as they are, though, closures also create opportunities, he said. The next person coming in who is risk-tolerant and has a good plan often can buy at a discount and take advantage of improvements already made to the space, he said. That buyer hopefully has a better chance of survival long term.

Those on the ground now, though, like Bernert, are focusing on their strengths, being positive, serving customers the way larger stores can’t and encouraging locals to shop downtown.

McGeary tried to keep the economic landscape in perspective.

“Most people still have jobs,” he said.

True. While things could get worse before they get better, new businesses and opportunities will emerge … eventually.

What? You've never heard a shaggy dog story?

After one week, I can already feel myself slipping into the old routine of working every day. (The first 3 days don't count, they were more part of the Holidays.)

It being January and somewhat slow, it's a good time to ease back into it. It's not like I haven't done it before, though I'm about 8 years older than the last time. But there is something -- confirming -- about it.

I get to see every customer, in all their ways, and figure out more the overall picture. I get to see everything that sells, and why it sells, and when it sells.

I don't have to communicate changes; I just do them.

I'm going to be able to make a few more discount sales than Pat could've. He was authorized to offer a small discount, if he thought it appropriate. I can offer what I think is best for the store, because I know what I paid, and how long it's been around, and if I have multiple copies, and so on.

Plus I ordered them in the first place, so maybe have a bit more knowledge of every item.

I'm getting progressively tired, based on how I feel in the morning. I'll have to keep tabs on that, because I don't want it to go too far. If it does, I'll have to relent and hire a part-timer. But I'm still a ways away from that.

The trick is go at a nice steady pace, try not to get rushed, keep cash in the bank, and think about what I'm ordering just a little bit more.

There I was, surrounded by lions.

There I was, surrounded by lions.

"What did you do?"

I backed away slowly, with my hands out, non-threatening like.

"How many of them were there?"

There was a big old male, the old lioness, her two younger sisters, and several yearlings. And boy, were they hungry.

"Then what happened?"

Well, I kept backing up until I came to a wall. I realized there was a cave to my right, and I slipped in, hoping they wouldn't follow.

"Did they go in after you?"

They hesitated, but then...the lioness stepped into the cave and the others followed.

"Oh, my gosh. Were you trapped?"

I couldn't see a way out. I could seem them coming toward me in the dim light. Their eyes glowed. I kept retreating. And then....I hit the back of the cave. The Pride surrounded me, and snarled.

"What happened? What happened?"

And....then......and.....then.....THEY ATE ME!

So far, so good?

One good thing about setting such low goals -- they aren't that hard to achieve.

So far, our sales are more toward the middle case scenario than the worst case scenario.

Or course, the middle case scenario once would have been our worse case.....

It's been an interesting couple of weeks. I haven't made any reorders for an entire month, except for off the 'liquidation' lists. (I made a decision to go ahead and order good product at discounts while they are still available.)

Meanwhile, I didn't reorder the week before Christmas, which was fairly easy cause stuff wouldn't have arrived until a day or two before. I didn't order the week of Christmas or the week of New Years, because it would've been difficult to shoe-horn it in the available days, and because I was otherwise occupied.

This last week was a bit harder, because we have a fair number of spot shortages, but I ignored them.

I have one big payment to the governments for Pat's quarterly wages.

My credit card turns over about mid-month, so that bills will come due in late February.

So I'm biding my time.

I'll have several thousand dollars to spend for the February period; probably pretty much enough to replace all the evergreen product, and maybe even increase a bit.

All I have to do not reorder on Monday or Tuesday, and I'm there.

(Then again, having a couple of really, really slow hours like this morning have me doubting I should start reordering. I just have to keep playing it as I see it...)

On another subject -- was interesting with the new job report to listen to all the talk about 'what it would take' to restore confidence and get employers to start employing.

Well, this hits home -- on a tiny little scale, having just let go of my one employee.

And I can't figure out what the hell they're talking about.

Restore confidence to rehire an employee?

Well, increased sales and profits would do it.

Confidence, smofidence....

Book Churning. Why am I not surprised?

Christmas Sales at Bookstores.

Before I get to the "Book Churning" part, here are the bookstore results for Christmas.

From the ICV2 site:

Barnes & Noble's Holiday Sales Drop

"Barnes & Noble, the nation’s largest bookselling chain, announced today that its sales for November and December were down 5.2% over the same period in 2007. Comparable store sales were down 7.7%..."

"While Barnes & Noble’s holiday sales were nothing to write home up about, they were considerably better than those of its chief competitor, Borders, which saw its holiday sales drop 11.7% and same store sales for the Border Superstores decline 14.4%..."

"The most negative note in B& N’s holiday sales report was the news that holiday sales for the company’s online operations declined 11% versus 2007 during a season in which online competitor Amazon is expected to report robust holiday sales. Barnes & Noble reports that at year’s end, it had $275 million in cash on hand and no borrowings under its $850 million revolving credit facility."


We've hired a new management team!

It's hard to see how Borders is going to come out of this. They tried to sell last year when they weren't so far down, and when the economy wasn't in quite so dire shape. Like Gottshalks' hoping a Chinese finance company will come to their rescue, this all seems unlikely. Barnes and Noble has stayed a little further ahead of the bear.

Anyway, the crux of this is that the Publishing Industry is also suffering. There are a couple of funny articles about how editors and publishers can't go on Euro junkets or have to eat in less than 3 star restaurants, or have to --- horrors!-- take meetings at their desk.

But there are also stories of publishers actually not accepting new manuscripts, which as someone else pointed out is like a butcher not accepting meat.

Publishers on the ropes.

I don't feel sorry for them in the slightest. What the hell did they think was going to happen? They had 7500 independent bookstores they more or less heaved overboard in favor of the Big Two. If they think Amazon will treat them any better, they're totally delusional.

Comic publishers following them off the cliff.

One of the more irksome things lately has been the clamoring of independent comic publishers for the death of comic shops. "They don't carry out stuff! Our future is with the bookstores!"

Most of this was predicated on the fact that Manga was selling so well at the big stores.

At first.

Because it was new.

And it has started to fade.

Barnes and Noble is only going to carry best-sellers, guys. Maybe we small comic shops aren't what you hoped for, but I still think you might be better off to keep trying.

Book Churning.

See -- we've been through this before, back in the old days.

From the GalleyCat website. (Highlighting is mine.)

"On Tuesday, Jasmine-Jade Enterprises... filed a lawsuit against the bookstore chain seeking $1 million in damages stemming from what Jasmine-Jade alleges were deliberately "excessive" orders of their books..."

"CEO Patricia Marks described Borders's alleged ordering of more books than it planned to sell, which the publisher claims was intended to " reduce the amount owed [Jasmine-Jade] and produce a credit balance in the account," as "churning." She added, "It's crippling the industry. It is especially hard on small publishers, who can't absorb the staggering costs." You may recall that when Impetus Press was forced to close last fall, the independent publishing company cited the return fees charged by their distributor as the leading cause of their financial downfall, and specifically mentioned Borders as an outlet that was returning substantial numbers of books. You may also recall another book distributor's warning to indie publishers that Borders was anticipating "excessive returns" in the last months of 2008."

No Returns. It worked for comics.

My understanding of the comic biz is that the same thing happened in the mid to late '70's, on the part of newstands. They were getting comics in, tearing of the covers immediately, and sending them back for credit.

The comic industry was on the verge of collapse when an independent show dealer named Phil Seuling approached Marvel and DC and made a deal. He would buy comics from them without returns, but with a higher discount.

Thus Pegasus Books exists, and so does every other comic shop, because of a different model.

I wonder what would happen to B & N and Borders and Amazon if they actually had to BUY THE FRIGGING BOOKS! Might be a bit harder, they might be a bit more circumspect, and independent bookstores might have a chance to come back.

(Ironically, I'm sure the small stores would scream the loudest, but...well, it worked for comics....)

Emigrants not Immigrants.

The Inevitable.

I kind of thought Merenda was going to close for about a year, now. Not because I had any inside knowledge, or because I thought it was too big (which I did) but from Denton's own words.

I belong to a couple of business bulletin boards, with store owners only as members. And when you hear an owner start to talk a certain way....it seems like it's always the beginning of the end. I can't quite pin it down. It's not just that they're negative, there is a sort of disillusioned tone, a kind of 'put off' tone. But you know it when you hear it.

Denton may not have fully known it himself, but it was evident to me from the tone and texture of what he was saying in newspaper interviews. There is a certain way a business speaker says things when they're losing their motivation. You can tell they are preparing themselves for the inevitable.

O.K. Smart ass.

It's all well and good to proclaim that you predicted something. "Yeah, yeah, Dunc. You're always right. Blah."

But if you have a two year running blog, you can actually point at what you said.

Two other predictions.

There were two particular predictions I made that everyone seemed to think dubious -- even more dubious than that housing prices were a bubble and would pop.

The rich don't hang around.

One was that rich people would be the last to come to a 'failing' town, and the first to leave.

If you look at the much reduced 'median' prices of houses in this town, I don't see how you can't come to the conclusion that the rich aren't buying the expensive houses. They might be waiting. Or they might not show up at all. In fact, I still predict they'll vacate this town like it's yesterday's news.

No longer growing?

The second prediction was that Bend would actually lose population. Again, it's hard to see how you can go from #1949 building permits in 2005 to #268 in 2008, and not see a outflow of labor. Not only the houses that aren't being built, but all those people who serviced and furnished those houses.

Losing 100 students since the start of the school year would be some proof of that.

I think the emigrants are just beginning.

Yep, emigrants, not immigrants.

Me and Jimmy Carter.

Cause we don't have the jobs. Malaise is a killer. Hard to be a popular town when malaise sets in. I admit, I'm not out and about town at night much, but the traffic last night was sparse.

This is starting to remind me of the good, bad old days.

Or is it, the bad, good old days?

Like I said, you know it when you see it.

Chainstores and me.

First incident.

Before Christmas, I decided to carry about the same number of Euro boardgames as last year. I figured it would be a slower Holiday, but I also saw signs that the Big Guys were noticing these games; last year Barnes and Noble had Settlers of Catan, though they did sell out and sent people our way.

Sold out of Carcassone early, but too late to reorder. Sold out of Tickets to Ride 10 days early, mostly because people who bought them bought two at time. Sold my last Settlers of Catan a day before Christmas.

Not great, but acceptable for me.

Then had at least 10 people call AFTER Christmas looking for Settlers of Catan. Because of the way the holiday shipping happened, the earliest convenient time to reorder would be this week.

Interesting, and makes me wonder if B & N had them through the holidays.


Second incident.

Couldn't get any of the Twilight books through the Christmas season, despite putting back orders with my wholesaler in late Oct., and then again in the middle of Nov.

But I had three copies of the third book, Eclipse. Everyone, but everyone turned their nose up at it. They wanted the first book, the second book, the fourth book, but not the third book.

"Buy it," I'd say. "You're going to need it later."

So I finally sold two copies, and had one left. Tuesday I got a call from a woman who wanted me to set it aside. "Sure," I said.

Then another call.

Then someone coming in the door looking for it.

Then another call.

Finally, when the woman who had set aside my copy came in, she said, "Barnes and Noble had stacks and stacks of them last weekend, and now they're out."

Third incident.

I have gotten three separate e-mails asking if I had Twilight cards. Since they were phrased very similarly, I suspect I might just be dealing with an over-zealous intern at InkWorks, but still.

There were the two possible outcomes of me carrying Twilight (my experience after 20 such movie hits and cards):

I get a couple of boxes in a month before the movie comes out. They sit there for a couple of more months, and then.....I finally get someone in. They look at my price, and wince, and say, "How come so much?" and I know they got their cards at a chain store, and then they want to know if I have any singles, and then....since I don't....they might -- or might not -- buy a couple of packs.

Or the second scenario; I get a couple of boxes in a month before the movie come out. The movie is a flop. No one ever buys them.

Here's the thing: I don't much enjoy being your second choice. I really hate being your third choice. And I refuse to be your last resort.

I certainly understand why Inkworks wants to sell their cards at Walmart, but they need to understand why I don't want to try to sell their cards at my store.

The Point?

RDC was laughing about today's earlier post about my ranting about the chain stores.

But what's funny to me is, that I don't really care that much about the chain stores, anymore.

I went from being afraid of them, to being indifferent, to being somewhat amused by them.

I think they're big old dinosaurs, doomed eventually to extinction.

They aren't too bright, they have no ability to think beyond the short term, and they certainly aren't efficient.

What they are is BIG: and if you get in their way, they are dangerous.

Lumbering Beasts.

Fortunately they are easy to avoid.

Just stay away from the swamp.

Don't try to carry Twilight cards, or the new best-selling fad book, or any boardgame they start to carry.

Don't carry G.I. Joe toys, or Transformer toys.

Don't carry most brands of sports cards.

And so on and so on.

Just stay out of the swamp.