Monday, July 4, 2016

Hastings Entertainment and the Chain Store Implosion

The Hastings storefront in Lawrence, Kansas—my home away from home
When news emerged last month that Amarillo, Texas-based chain bookstore Hastings Entertainment had sought Chapter 11 bankruptcy protection, I had mixed feelings. Hastings, having dominated the books and entertainment market in my town for decades, has successfully squeezed all competitors out. If Hastings fails, the only bookstore in my town will be a local start-up specializing in remainders. That and WalMart.

However, Hastings’ recent business choices have seemed counterproductive for years. Four or five years ago, they removed the comfy chairs and benches that made their stores welcoming places to meet friends. A handful of stores have tried selling coffee, but it was attempted only limply chain-wide. Most stores have reduced space dedicated to core products, like books and DVDs, redirecting the space to toys and tie-in merchandising.

The Hastings business model has always focused on middle-sized towns. They select communities ranging from roughly twenty-five-thousand to a quarter-million people, too small for superstores like Barnes & Noble, then import their mixed-product marketing structure. Like most big-box stores, Hastings has no interest in local culture. Communities accept its prodigiously bland content marketing and beige decor in exchange for access to diverse, nationally marketed media products and services.

When I first encountered Hastings in 1995, the same year first went online. While Amazon took years to break even, Hastings was already an established name. While visiting Kearney, Nebraska, a friend directed me to Hastings, telling me “they have everything.” Back then, e-readers didn’t exist, and music downloads were illegal and massively time-consuming. Hastings’ selection of books and CDs made this media junkie’s eyes sparkle.

Equally important, the store seemed inviting. Kearney back then had independent book and music stores, both located in the city’s mall, but space was at a premium, not uncommon for locally owned businesses. Aisles were relatively narrow, making people turn sideways to pass between shelves. Hastings, by contrast, not only had spacious aisles, it had wide arterial corridors, like a department store, and benches for sitting. It felt comfortably public.

All that remains of the once-proud Hastings store in my hometown,
in Kearney, Nebraska, is this ugly mall-based toystore
I returned to Kearney in 1999 for my education, and found a local economy transformed. The independent book and music stores had failed, leaving Hastings and WalMart to split the media market. With Amazon still somewhat marginal, this meant a starkly narrowed marketplace. And though Kearney entrepreneurs have since opened new book and vinyl record stores, those remain largely hobbies. Chain stores still dominate the media market.

Different communities will handle Hastings’ reorganization different ways. My second home of Lawrence, Kansas, has a large Hastings store, so it’ll feel the pinch, but it also has three independently owned bookstores, and a vinyl record store with a sideline in CDs. Lawrence can accommodate one store’s closure. Without serious competitors in Kearney, Hastings’ closure would blow a hole in our town’s economy.

But arguably, that’s the point. Throughout the latter Twentieth Century, massive chains increasingly dominated America’s market in almost everything. Subsidized by the Interstate Highway System, which made just-in-time resupply patterns possible and inexpensive, stores from Hastings and WalMart, to Sears, McDonalds, and Petco dominated regional markets. They made American culture uniform, but they also concentrated decision-making authority in a dwindling number of out-of-town hands.

The Internet retailing revolution was supposed to drive the final nail in independent American retailing’s coffin. Instead, national chains like Gottschalk’s, Osco, and Circuit City have all vanished since 2008, and one quarter of America’s largest malls have failed in the same time. I’d contend the Internet has proven less equipped to vend goods, than the static blandness chain stores once peddled. Hastings, diverse but bland, has joined that choir.

Hastings petitioned for Chapter 11 bankruptcy—short-term protection from creditors during internal reorganization. Thus the situation needn’t be terminal. In recent years, Chrysler, Texaco, and Pacific Gas & Electric have passed through Chapter 11 and emerged resilient. But Enron and Lehman Brothers didn’t. Hastings has announced its intent to sell itself out, but will close if no buyers arrive. Chapter 11, right now, is a legal limbo where corporate souls await judgement.

Chains like Hastings, Circuit City, and Tower Records achieved market dominance by squeezing smaller competition. Capitalist cheerleaders applauded, because victory is everything. These chains, some said, won on prices and selection, which small competitors couldn’t provide. But chains couldn’t respond to local demands; their supply chain was too long. When even bigger, blander rivals pinched the market, the chains folded.

Failing chains like Hastings temporarily narrow the market. But they’ve narrowed it for generations. I’ll miss my local Hastings, but it merely fell victim to forces it once manipulated to its own advantage. And it proves why the market matters more than the capitalists who have sucked it dry.

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