Powell's Books, Inc. History

Company Perspectives:

We are innovative Booksellers challenged by readers, the community, the industry, and ourselves. We value books, new, used, and rare. We support the personal and professional development of all members of the company. We recognize the value of each person's contribution to the company. We are committed to open and harmonious relations in our workplace. We are committed to ethical business practices with customers, vendors, and each other. We recognize the uniqueness of each store and will work to heighten cooperation among all stores. We accept the responsibility to do quality work. We value our customers and expect each of us to be knowledgeable, courteous, and helpful. We encourage the development and implementation of new ideas. We recognize that profitability is essential to our continued business and professional development. We serve as an important resource to our community through our books, ourselves, and by actively bringing people together for the exchange of ideas and information. We have a social responsibility to the community and our industry to fight censorship, promote literacy awareness, and encourage authors and their works. We are committed to reflecting the cultural, ethnic and experiential diversity of the larger community through our hiring practices and by making books and information available to people with special needs or interests. Key Dates:

Key Dates:

1970:

Michael Powell opens his first bookstore in Chicago.

1971:

Walter Powell opens Powell's Books in Portland, Oregon.

1979:

Michael Powell joins Walter Powell in running Powell's Books.

1982:

Walter Powell sells Powell's Books to Michael Powell.

1983:

Powell's Books expands from 24,000 to 30,000 square feet.

1984:

Powell's opens a second store in a shopping mall in the Portland suburb of Beaverton.

1985:

Walter Powell dies; the Anne Hughes Coffee Room opens at Powell's main store, followed by Powell's Travel Store in Portland's Pioneer Courthouse Square.

1990:

Powell's enlarges its main store to 43,000 square feet.

1992:

Powell's organizes the first major shipment of goods to Vietnam from the United States.

1993:

Powells.com begins selling books online.

1996:

Powells.com becomes the web site for all store inventories.

1999:

Powell's increases its retail space to 68,000 square feet.

2000:

Unionized Powell's employees and management sign their first three-year contract.

Company History:

Powell's Books, Inc. sells new, used, out-of-print, and rare books at its four full-service stores and three specialty stores in the Portland metro area (Powell's Technical Books, Powell's Travel Store, and Powell's Books for Cooks & Gardeners) and online at powells.com. Its world famous flagship store, Powell's City of Books, covers a city block and contains roughly 1.5 million volumes, new, used, and rare. The company's online outlet provides access to each of the seven stores and its Hoyt Warehouse.

A Start in Used Books: 1970

Powell's history begins in Chicago, where Michael Powell opened his first bookstore in 1970. Powell was a University of Chicago graduate student with an undergraduate degree in political science, who loved to read medieval histories. He hailed from Oregon, where he had worked summers as a commercial fisherman and his great-grandfather had homesteaded in the 1890s. Encouraged by friends and professors, including novelist Saul Bellow, Powell borrowed $3,000 from sociologist Morris Janowitz to assume a lease on a bookstore where he bought and sold used books. Within two months, he had paid off the loan and was on his way to building a profitable business. 'The book business was much more exciting [than graduate school], 'according to Powell in a 1987 article in the Business Journal. 'I'd go to flea markets on Sunday in Chicago and buy books, then sell them on campus for food money.'

In the summer of 1971, Powell's father, Walter, managed his son's store for a month, while the younger Powell went on vacation. He, too, caught the bookselling bug, and after returning to Portland, Oregon, opened his own used bookstore there with 100 boxes of books purchased at a local rummage sale. The older Powell, a retired painting and wallpapering contractor of 25 years, had also worked as a newspaper reporter and publicity director, sold advertising specialties, and taught industrial arts. Unencumbered by bookseller traditions, he followed an unorthodox formula: He shelved used and new, hardcover and paperback books side by side in his store at Southwest 12th Avenue and Burnside. Even Michael Powell was uncertain what to make of his father's practice. 'In the used book world,' he was later quoted in company literature as saying, 'mixing paperbacks and hardbacks was not so much of a stretch, but when my dad had the idea of bringing in new books too, I had no sympathy.' Yet Powell's Books, open 365 days a year and staffed by knowledgeable and dedicated book lovers, 'had synergy beyond what we expected.'

Michael Powell later offered the opinion in the August 28, 1983 edition of the Oregonian that his father's unorthodox formula worked because it benefited both bookseller and book buyer. Booksellers make more on used books than new ones. The profit margin on a new book ran about 40 percent in the late 1970s and early 1980s, while on used volumes, it ran to 50 or 60 percent. With new and used books shelved together, '[e]veryone profits.' The customer was likely to buy the used copy and 'bless you for the bargain,' according to the younger Powell. As business grew, Walter Powell moved his store to a larger site across the street and, finally, to its present location, in an old car dealership, which he expanded from its original 24,000 square feet to 30,000 square feet in 1983.

By 1979, the older Powell appealed to the younger Powell to return to Portland to take over management of Powell's Books, which by then employed eight people, each of whom was expert in a number of fields and responsible for buying books in his or her areas. Michael Powell joined his father in running Powell's Books, which was on its way to becoming one of the three largest bookstores in the country. The other two largest stores were Strand's Books in New York and the Tattered Cover in Denver. In 1982, Walter Powell sold Powell's Books to his son, although he remained involved in its everyday management until his death at 72 in 1985.

Years of Impressive Growth: The Early 1980s

The late 1970s and early 1980s were years of impressive growth for Powell's Books. While independent booksellers nationwide were closing their doors due to economic recession and the spread of bookstore chains and discounters, Powell's increased its sales by 38 percent annually from 1979 to 1983. Its sales total reached $2 million in fiscal 1983; by 1987, that number was $5 million. In 1983, Powell's purchased the entire stock of the Midwest's former largest bookstore, located in Cleveland, Ohio--700,000 books for $300,000--which it began shipping by truck to Portland. The store still did not advertise except for in the local yellow pages and occasionally in the Oregonian, although it gained in national renown when an article by a travel writer in a 1983 issue of Newsday listed it among Portland's tourist destinations. Powell's was known for the no-hassle policy of its management, who viewed a bookstore as a place to come read as well as buy. To help the uninitiated find their way through Powell's stacks and yet maintain a self-service set-up, maps of the premises were available in the front lobby, and the entire stock was labeled and cross-referenced.

In fact, Powell's was at the time gaining something of an international reputation as well. In 1985, a delegation of Chinese educators visited the store on its tour of American educational institutions. The educators wanted technical books, including English language aids, such as dictionaries, for which they wanted to barter fruit; however, Powell's insisted upon monetary payment. The store made its first sale of used books to the Pacific Rim in late 1986 with a large shipment of paperback novels and magazines to the Philippines. To assist in overseas sales, Powell's began a project that entailed cataloging about 10,000 titles, mostly used and out-of-print publications, ranging from neuroscience to nuclear physics; it offered these lists of titles to overseas university libraries and other potentially interested entities. By 1987, it was the moving force behind an exchange shipment with the provincial library in Fujian Province, China. In 1992, it organized the first major shipment of goods--books&mdashø Vietnam from the United States.

Powell's also was interested in expanding its local market in the 1980s. In late 1984, it opened a second 8,500-square-foot store (four times the size of the average chain bookstore) in a shopping mall in the Portland suburb of Beaverton. In late 1985, the Anne Hughes Coffee Room opened at Powell's main store, followed shortly by Powell's Travel Store, in the lower level of downtown Portland's Pioneer Courthouse Square. At 3,000 square feet and close to 10,000 volumes, Powell's first specialty store was small by Powell's own standards, but large for a bookstore with a specific focus. According to Michael Powell, who was quoted in an Oregonian article in November 1985, the distinguishing feature of Powell's Travel Store was its 'integration of guidebooks, maps and periodicals with literature and social studies about a region.' Alongside books for tourists were mood-setting works of fiction and books about the arts of places and regions. There were also newspapers and periodicals, and free information about Portland. A section of the store offered travel products, such as small binoculars, electric converters, hair dryers, shaving kits, passport holders, and money belts. In addition, a coffee shop with seating for 18 sold espresso coffee and cookies. By 1987, with 12,000 to 15,000 books in stock, Powell's Travel Store was meeting initial sales projections of $1,000 a day.

In late 1986, Powell's also opened a technical publications annex and, in the summer of 1987, a specialty cookbook and gardening store. Powell's 2,500-square-foot Books for Cooks & Gardeners was located on one of Portland's more popular shopping streets with a stock of about 10,000 volumes, tapes and videotapes, including new, used, and rare cookbooks, books on wine, and literary essays or narratives dealing with food and drink. By this time, sales for its main Portland store, Powell's City of Books, had reached between $4 million and $5 million a year, and sales at its Beaverton bookstore had risen more than 28 percent every year since its opening in 1984.

Michael Powell was by then a well-known Portland figure. He lived in southeast Portland with his wife, Alice, a social worker who, due to the success of Powell's Books, was able to do a portion of her work on a pro bono basis. The couple had a young daughter, Emily. Powell sat on six local boards devoted to causes ranging from chamber music to mental health and was an outspoken advocate of the rights of Portland's gay and homeless populations. In addition, he was in line to become the next president of the American Booksellers Association. He had a reputation for being decisive, somewhat taciturn, and witty, a man well-respected by his community with a commitment to giving something back. Books, Powell believed, were a vital tool in fighting ignorance and ensuring democracy. He often wandered the bookstore and worked the counter from time to time, and his office was off the store's front room, a cluttered room that he shared with a handful of other employees.

Expansion on Two Fronts: The Internet and at Home

By 1990, Powell's was growing at a rate of 25 percent annually and totaling $10 million in sales per year. The main store shelved about 750,000 volumes, covering almost 500,000 titles. A typical weekday brought in 3,000 to 5,000 shoppers. Portland's Design Review Commission approved a $1.1 million, 20,000-square-foot, two-story expansion to Powell's, which, when completed in late 1990, added capacity for another 250,000 books and a total of 43,000 square feet. This addition made the bookstore potentially the largest in the nation. However, despite the expansion, Powell's remained, according to the San Diego Union-Tribune, a 'low-tech' wonder, 'a warren of warehouse-type shelves, makeshift signs, and concrete floors' in color-coded rooms. Powell's still stuck to its manual system of inventory cards, maintained by the 75 people who ran the store's sections. Section heads met regularly with 30 used book buyers, who scoured the Northwest for books, and bought books locally from a steady stream of clients. The buyers put on something of a show for shoppers by sifting through books at a table just inside the store's entrance during business hours.

Powell's had come to exemplify what many publishing professionals believed was the resurgence of the independent bookstore, which in the early 1990s enjoyed 32 percent of book sales nationally after a decade of sales dominance by bookseller chains: catering to local interests and stocking a large number of titles. These independents showed signs of vigor while the chains, emphasizing bestsellers, suffered from a recession-related decline in shopping mall traffic. Powell's was unique and vital even among independents, a social hangout with more than 20 readings or literary events a month, doing business in excess of $10 million and selling about two million books a year.

However, by the mid-1990s, the success of the independents was on the wane; by the late 1990s, their market share had dropped to 17 percent as the chain stores and book discounters, once again, prevailed. Beginning in the mid-1990s, Powell's sales increases tapered off to the single digits, and in 1997 and 1998, sales were flat. In response to this turn of events, the store availed itself of online marketing. In 1993, Powell's had begun selling technical titles online; in early 1996, Powells.com became the web site for all of the business's inventories.

Sales through the company's web site doubled each subsequent year, amounting to a little less than 10 percent of total revenue, or $3.3 million for the year ended June 1999. Yet despite the size of its Internet revenues, Powell's Books' focus remained on used and hard-to-find titles in 2001. Seventy percent of its stock was still used, out-of-print, and rare books. According to Michael Powell, while the Internet expanded the bookselling market, it did not simply substitute one venue of sales for another. On the Internet, 'interest and need are higher. ... You can sell a more obscure book, but you don't have to sell it cheaply.' Books that were too narrow in appeal to warrant display at a Powell's store would be stored in its Hoyt Warehouse, a space large enough to hold 40,000 volumes, until that day someone, or some other store, came looking for them. Powell's thus could continue to expand its already stupendous inventory, better serving customers directly while also supplying the growing network of competing virtual bookstores. Powell's made its inventories available through Half.com in 2001. It was also a regular supplier of books to Amazon.com beginning in the late 1990s and, in 2000, it began offering electronic books for sale online.

To house its ever increasing stock of books, Powell's completed construction in 1999 of a $3.5 million, four-story tower on its main store, Powell's City of Books, increasing its total retail space to 68,000 square feet. Anchoring the store's new entrance was its Pillar of Books, a carving in Tenino sandstone of eight of the world's great books stacked one on top of the other, on a base inscribed in Latin: Buy the book, read the book, enjoy the book, sell the book.

With expansion and renovation came reorganization. Powell's began computerizing operations in the mid-1990s and, in 1998, against many employees' wishes, it abandoned its former system of narrow employee specialization in particular subject areas in favor of team leaders responsible for broad categories, such as performing arts and genre fiction. Powell's also eliminated merit raises and cut back on annual cost-of-living increases in the fall of 1998. Responding to these changes, a majority of the store's 350 employees narrowly voted in April 1999 in favor of being represented by the International Longshore & Warehouse Union. During the ensuing ten months of contract negotiations, there was much friction between labor and management. Finally in August 2000, the two groups signed a three-year contract.

While the contract did not significantly affect Powell's bottom line, its attendant increases in employee wages and benefits translated into delays in some computer upgrades and store maintenance. Powell's was still going strong, however, with more than 1.5 million titles and sales of $41.8 million for the year ended June 2000. Some 3,000 to 5,000 people walked through Powell's Books' doors daily, and the store purchased about 3,500 used books each day. In addition, 44,000 book lovers browsed Powell's virtual shelves via the Internet on a daily basis.

Principal Competitors: Amazon.com, Inc.; Barnes & Noble, Inc.; Borders Group, Inc.

Further Reading:

• Balzar, John, 'A Novel Method to Sell Books,' Los Angeles Times, August 7, 1998, p. 1.
• Gauntt, Tom, 'Michael Powell: Retailer Turns a Page in Bookselling Trade, Makes a Mark As an Activist,' Business Journal, June 8, 1987, p. 12.
• Hamilton, Don, 'Michael Powell: Leaving His Imprint on Portland,' Oregonian, July 5, 1987, p. 1.
• Hill, Gail Kinsey, 'Bookseller Finds Niche in Used, Rare Books,' Oregonian, August 17, 1999.
• ------ 'Powell's Employees Say Changes in Pay, Operations Forced Union Push,' Oregonian, March 12, 1999, p. B1.
• Hill, Gail Kinsey, and Jeffrey Kossoff, 'Rules Change As Powell's Contract Signed,' Oregonian, August 15, 2000, p. E1.
• Miller, Matt, 'Be They Browsers or Bibliophiles ... Powell's Is One for the Books,' San Diego Union-Tribune, July 31, 1990, p. D1.
• Pintarich, Paul, 'Powell's Sets Aside Space for the Rare,' Oregonian, March 15, 1987, p. 18.
• Rothenberg, Randall, 'Outside Publishing Centers, A Giant Bookstore Prospers,' New York Times, August 12, 1991, p. D7.
• Tripp, Julie, 'Where Books Are Big Business,' Oregonian, August 28, 1983, p. A22.

Source: International Directory of Company Histories, Vol. 40. St. James Press, 2001.

Directory of Sample Business Plans Directory of Company Histories Contact Us Advertise