Half Price Books 1
Half Price Books, Records, Magazine Inc Case Study
Nitza Gomez
Domingo Gonzales
Ryan Holloway
Ivan Houellemont
Ram Maramba
Marketing 3300, Section 006
Professor Xie
December 5, 2013
Half Price Books 2
Half Price Books, Records, Magazine Inc Case Study
Half Price Books is a family owned discount bookstore that sells new and used books at
half of what the retail price is. In 1972 Ken Gjemre and Pat Anderson opened up the first Half
Price Books (HPB) in Dallas, TX. Located on Lovers Lane, their first store was actually a
converted laundromat. This store contained more than 2000 books from their own personal
libraries, and their idea was to sell a good product at a good price. The company continued to
grow and now Half Price Books has 115 stores in 16 states, with almost 3,000 employees and
over $210 million in revenues (Half Price Books [HPB], 2013c). It is the largest family-owned
independent bookstore chain in America (HPB, 2013d). Half Price Books mission statement is
“We buy and sell anything printed or recorded except yesterday’s newspaper. Preserving and
recycling resources and entertainment of any form is our business”. The company is mainly
known for buying and selling books, but they also buy and sell DVD’s, videotapes, CD’s, LP’s,
cassettes, and an assortment of gifts.
Some people wonder how Gjemre and Anderson came up with the name Half Price
Books, well the story is simple. They wanted a name that got to the point, and since most of the
books they were selling were going to be half off retail price, they decided on the name Half
Price Books (HPB, 2013d). Half Price Books was part of the first few companies that did not
follow mainstream corporate America. Their first advertising campaign was ‘“We Buy Books”’
which is how they started purchasing books from the public. They did so well that they were
forced to open a second store the following year because they simply did not have the room for
any more books (HPB, 2013d). However it is important to know that Half Price Books has a very
moderate expansion plan. They only build more stores if they have the money for it.
Half Price Books is very good to their employees too. They provide their employees with
different types of benefits like no dress codes, so employees can work in comfortable clothes.
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HPB also promotes from within the company, creating many advancement opportunities (“Every
Trick,” 2012). HPB also gives their employees profit-based bonuses, so in turn the employees
are motivated to work harder for the company. HPB is even a match maker. Many employees
including the CEO met their spouses while working for HPB (HPB, 2013a). However HPB does
not just hire anyone who wants to work in the bookstore. Their employees are all book lovers
and can recommend a variety of great books to the customer.
Half Price Books is socially responsible and values ethics. They are supporters of many
charities committed to promoting literacy. They work with the National Center of Family
Literacy, Feed the Children, and Laura Bush’s National Book Festival (HPB, 2013d). Half Price
Books give a 10% discount card to school teachers, librarians, and educators. Half Pint Library
project is a program that donates and distributes books to many organization benefiting children
in need (HPB, 2013d). Some places they donate books to are schools, community centers,
shelters and hospitals. In this year alone they have donated close to 1.3 million books (HPB,
2013d). Another charity Half Price Books donates to is HOME, which stands for Help Our
Military Endure. Every month this organization sends out care packages filled with books and
magazines to soldiers overseas.
Half Price Books strives to be a green company. Half Price Books started “Become
Green” in 2008. The website gives tips and advice to help protect the environment. They also
plan activities for Earth Day. Half Price Books employees organize “green teams” that go out
and volunteer to clean up litter, plant trees, and help improve parks in different neighborhoods
(HPB, 2013b). Half Price Books sell reusable tote bags, 100% recycled plastic gift cards and
purchase recycled office supplies. They use environmental friendly materials when building new
stores and power all of their Texas stores with wind energy (HPB, 2013b). Half Price Books
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even offers incentives for their employees to go green with their home energy. The company’s
literacy and environment friendly position stays true to the founders’ idea of “waste not and read
a lot”. Closing sentence I think closing on this quote is a good idea. It gets straight to the point.
The invention of the e-book reader changed the demand for traditional printed books. XX
Overall book sales, traditional and e-book, started to decrease in 2008 (See Exhibit 1). The total
decline in sales from 2007-2011 was about $3.3 billion, a 19.3% decrease in 4 years. Print
book’s market share in the second quarter of 2012 was 69% while the e-book segment held only
22% (See Exhibit 2). Out of 69%, the hardcover segment held 27%, trade paperback books 30%,
and mass market paperbacks held 12%. The print book’s share looks good compared to 22% ebook segment; but this segment is the only one exhibiting any growth in the book sales industry.
In the second quarter of 2011, e-books accounted for 14% of all book spending and gained eight
percentage points within the next year (Milliot, 2012). GROWTH RATE DECREASING,
OVERALL MARKET SHARE INCREASE. ENTER QUOTE FROM CEO> I have more on
this will finish this later
Gjemre and Anderson had a passion for books and preserving the environment. Their
“spirit of activism and acceptance” spread into their company culture and attracted a specific
type of consumer (HPB, 2013a). Crossing demographics, from counter-culture veterans of the
late 1960’s to the often derided but well-lined pockets of the “hipster” culture that embraces the
same values. The company still caters to a mindset that shirks consumerism and capitalism,
embracing a culture of reusing, recycling, and sharing. The founders were strong supporters of
the First Amendment, so they bought and sold any book that found its way into their store (HPB,
2013d). Their store appealed to the value conscious consumer and the green conscious consumer
in the 1970’s and the chain still appeals to the same type of consumer today. Each customer has
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a unique experience every time they visit a HPB store. Some customers compare their experience
to a treasure hunt. They go into these stores, hoping to find more than just a book but an artifact.
This subgroup places a premium on warmer, more human consumer goods based on older
technology. As a group, it embraces thrift store clothing, film cameras, and vinyl records. HPB
targets anyone who likes to read and cherishes the touch, smell, and look of a traditional book.
According to a study by Pew Internet Library Services (2012), 75% of Americans over
the age of 16 read at least one book in 2012 which is only a 3% decrease from the year before.
Their average number of books consumed is 15 books and 50% of the book readers read more
than 6 books in 2012. Exhibit 3 displays various book reading demographic groups. 90% of
Americans between ages 16-17 and 80% between the ages of 18-29 read books. 90% of college
educated Americans read books. 66% of Americans with an annual household income of less
than $30,000 and 84% with annual income over $75,000 read books. The Statistic Portal found
that a consumer spent an average of $117.45 on books in 2011. There is little difference between
readers living in urban, suburban, and rural areas. The percentages of people who read books in
those areas are 78%, 75%, and 72% respectively. HPB windows usually display books like The
Hunger Games, The Twilight Saga, and the Harry Potter Books, targeting the young consumers.
Some displays have classic, traditional hard cover books like appealing to the more traditional
book reader. Find another group they target to…Closing sentence
HPB’s main store competitors in 2011 are Barnes & Noble, Books-a-Million, and
Hastings Entertainment (See Exhibit 4). In 20 years, the number of leading book stores in
America dropped by 33%. Brick-and mortar book chains are not the only competition.
Department and retail stores like Walmart and Target also sell books at a slightly cheaper price;
however, books are not their primary product. Other key competitors for HBP are on HPB
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targets the value and green conscious consumers, that value line retail stores, like Amazon.com.
XXXX This sentence looks a little awkward and confusing and I’m not sure how to fix it XXXX
Full-service digital media products have kept originally book-centric retailers Barnes &
Noble, and Amazon.com afloat. Both companies have substantial digital marketplaces that
deliver content through their competing e-readers, Barnes & Noble’s Nook and Amazon’s
Kindle. The growth of these competing products helped spell the demise of Borders. In 2009,
Borders store sales fell 14.4% from the year before and in 2011 they filed for bankruptcy.
Around the same time, HPB increased its store sales by 4% (Levy, 2010). As many stores were
going out of business, HPB continued to grow.
Book stores are losing ground to online retail stores due to the fall of Borders and
increasing e-book popularity. Bowker Market Research found “43.8% of books bought by
consumers in 2012 were sold online”, a 74.5% increase since 2010 (as cited in Greenfield, 2013).
Exhibit 5 presents the book industry market share by channel. While the large book chain
channel fell 40.6%, the independent book store channel increased by 54.2%. This percent
increase is excellent news for independent stores like HPB; yet their overall retail share in 2012
was only 3.7%, leaving much room for improvement. Closing sentence
As mentioned before HPB is known for selling and buying new and used books,
magazines, and records. Local store employees buy used inventory from the public. 70% of the
inventory is used (“Every Trick,” 2012). Their new inventory comes from book publishers and
distributors. HPB buys overstock and closeout titles at a discount from these publishers and
distributors. The stores do not turn any customer away when they want to sell their books and the
company buys a lot of remainder books. Eventually HPB gathers more books than their stores
can keep. In 1863, HPB started their own wholesale division named Texas Bookman (“Every
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Trick,” 2012). It sells the extra books to other retailers. HPB sells many types of books like
hardback, paperback, fiction, non-fiction, horror, and comedy books. Some stores have rare
collectibles, out of print titles, and first edition books. HPB also provides good customer service.
They hire knowledgeable employees that are avid readers who are familiar with famous titles and
current best sellers. They can recommend a great read to an indecisive customer. Mention how
hardbacks are bought more than mass market paperback.
Since HPB purchase their inventory at discount prices, they can transfer their savings
straight to the consumer. They charge half off the book’s retail price or better. For sale or
clearance items, the prices range from $3.00 to .50 cents. HPB also sells books by the yard.
They take one yard of reference books, law books, or a mix of fictions and non-fiction books and
sell the yard of books for a $20.The customer receives a bigger discount if they order many yards
of books. This is a great way for the supplier to clean out surplus inventory and a great way for a
consumer to obtain a variety of books for a cheaper price. In 2012, the average transaction
amount at HPB was $15.45 (“Every Trick,” 2012). That seems like a low price but with $15 the
consumer can buy several books at HPB. At Barnes & Noble, just one new book could cost $15.
HPB’s discount pricing satisfies value conscious consumers looking to get more for their money.
Sharon Wright, the CEO of HPB, “credits marketing-driven brand positioning for the
company’s success” (Levy, 2010). They promote the company in local communities and charity
campaigns, making HPB more than just a book store, a part of the community. HPB also
advertises through the radio, paper flyers, and social media. Advertising through these channels,
keeps marketing costs down for the company. Even though they do not have TV commercials,
they make up for that with clever ad campaigns. One ad creates scenes from famous books, like
Charlotte’s Web, and The Hobbit using paper for the background and origami characters made
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out of money (See Exhibit 6). The idea behind the ad demonstrates that HPB supplies the same
books as all the other book stores but for half the price (Sylve, n.d.). By using paper to create the
images instead of digital or computer animation, HPB also highlighted their love for everything
paper. HPB also sends sales promotions and coupons to their email subscribers and Facebook
and Twitter followers. They have store deals called “Super Buy”. Each store has a different
selection of books. Sometimes they get too many copies of a certain book. So that week they sell
the extra copies for $1. These super buys are placed in key spots inside the store and in window
displays to catch the consumer’s eye.
HPB sells books mainly from brick-and-mortar stores. It has over 115 stores in 16 states.
Over 40 of its stores are in Texas alone and a few more in two Southern states, Kentucky and
Oklahoma. Another 45 stores are located in the Midwestern states. The rest of the stores are
located in a Northeastern state, Pennsylvania and three Western states, Arizona, California, and
Washington (See Exhibit 7). Each HPB store has a unique mix of books. Since the stores buy
from the local public, stores tend to reflect the taste of that local neighborhood (“Every Trick,”
2012). Stores normally resemble public libraries rather than glossy retail stores; a trip through
the aisles evokes more nostalgia than consumerism. A visit to the flagship Dallas store on
Northwest Highway showcases the best HPB has to offer. Once through the doors, old Life
magazines in plastic sleeves are stacked neatly to the right next to an open bank vault door,
housing collectible first editions and classics. Directly in front of the doors, a glass case displays
fossilized artifacts from the North Texas area. To the left, t-shirt racks surround row after row of
vinyl records, both old and newly pressed. Behind all this is a warehouse of books sorted by
genre in various conditions, almost all used and sold back for new consumers. HPB also sells
books online on HPB Marketplace. This online store sells the same products sold at the stores.
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Independent sellers throughout the world sell books through this site. The sellers set their own
prices and ship placed orders directly to the customer. HPB Marketplace is similar to Amazon
except they do not sell e-books.
Half Price Books’ largest issue is the same facing the book selling industry as a whole:
digital media and bridge products such as e-readers and tablets are steadily taking away market
share from traditionally printed books. Although studies show that e-book sales have slowed,
printed book sales still lose market share to e-books by 5% a year (“E-book sales,” 2013). A
second large issue is HPB has fewer locations than its competitors. Looking at Exhibit 4 again, in
2011 HPB only had 113 stores much less compared to Barnes & Noble who had 1,341 stores. A
third problem HPB faces is it has no proprietary e-reader. Barnes & Noble’s Nook and Amazon’s
Kindle have a firm hold on the e-reader market. Another problem for HPB is internet presence is
lagging behind its competitors. HPB Marketplace does not measure up to the magnitude of
Amazon’s online marketplace.
Borders’ bankruptcy can be attributed to the lack of an e-reader. Borders marketed its
content through Sony’s digital reader instead of its own proprietary product. This weak
association left the company behind in the lasts evolution of book selling. Barnes & Noble is also
having issues with the Nook. According to Berfield (2013), “the Nook business had an operating
loss of $475 million for the fiscal year ended in April 2013”. The e-reader market might be a
little risky but is still firmly held by the two competing e-readers. Add the encroachment from
Apple’s iPad and any number of Android tablets hitting the market monthly, launching a new
HPB e-reader would be harmful for the company. Competition is too mature and startup costs are
too high for HPB to enter the fray. Trying to compete with Amazon’s online marketplace would
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produce the same results. HPB should concentrate on solving the other two issues, print books
losing market share and increasing brick-and-mortar stores.
The book industry has to be “rebranded” in a new way to stem more encroachment. HPB
should also continue to market to the more authentic, counterculture based consumers and focus
on the modern, millennial consumers. Namely the 35 and under demographics who value
authentic vintage goods such as books, vinyl records, and old magazines. Unlike previous
generations, millennials are unprecedented in size and buying power. According to Forbes
(2013):
Unlike similar groups of the past, the current generation . . . is a bit more generic
in its self-labeling. Why? Because this scene is less focused on one idea, one
purpose or, one type of music. Instead, today’s hipster is defined by consumption.
An interest in vinyl records has come back with this generation. The Washington Post, The New
York Times, and Forbes all agree that LP sales are increasing. In 2012, vinyl sales increased by
52% from the year before reaching $171 million in sales (Dewey, 2013). Surveys have found
that 39% of vinyl consumers were under the age of 25, and 81% were under the age of 35
(Farber, 2013). HPB should not avoid this growing trend in young consumer spending habits.
They could gain music market share and increase stores’ revenue if they place more emphasis on
marketing the vinyl record. Vinyl records can be compared to hardback books. Customers who
like the feel and touch of a book most likely also prefer the look and feel of vinyl records to
digital music.
HPB should also concentrate on building more stores in other states in the Northeast and
states in the South. They target demographics in the high education levels, communities with
green tendencies, and moderate disposable income levels. HPB should open locations in highly
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populated areas like cities and college towns. They should also concentrate on areas with strong
music roots. (Continue later)
(Ryan There are also a couple of cities that this would be most effective in. Brooklyn,
New York and Nashville, Tennessee both have huge music presences and consumers who would
be willing to spend money on vintage vinyl records.
Brooklyn has a large music presence along with many colleges and universities with
students looking for better deals on books. This would be a great site for a Half Price Books
because of the clientele along with a vinyl record pressing plant called Brooklyn Phono. This
would help raise attention to the Half Price Books store, and also help bring in new vinyls and
new vinyl customers. Brooklyn also has a large population of 2,565,635 people. This is also
growing at a rate of 2.4% annually. This is a huge market with many consumers in a small area.
This does not even include those who live in New York City either. The median household
income in Brooklyn is $44,593 allowing for enough disposable income for new vinyl records,
but it also is not so significant where there are more price conscious buyers giving Half Price
Books the edge over there competitors. The colleges and universities in the area also give them
the student customer base. Students are always looking for better deals and steals to save an
extra dollar. The students will also be able to sell their books back to Half Price Books once they
are done with them to make some of their money back.
Nashville, Tennessee is another ideal spot for Half Price Books to really market and sell
their in-store vinyl records. Nashville has one of the biggest music presences in the nation. It is
the music capital of the United States bringing in plenty of music festivals. These festivals
attract hundreds of thousands to Nashville every year to see the music industry’s top performers.
Nashville is also home to the Country Music Hall of Fame; which also brings in many music
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tourists and should help boost Half Price Books vinyl record sales. The population is not as big
as Brooklyn’s with only 624,496, and is only growing at 0.53% annually. However, the big
music tourism makes up for the lost population because they would be more willing to buy
original vinyl records. Half Price Books could even have the opportunity to go to the actual
music festivals themselves and market directly to their main target consumer. They might even
be able to sell their vinyl records on-site at the festivals. The median household income in
Nashville is $46,141, which is around the same amount as Brooklyn’s median income. There are
going to be price conscious customers looking for the best deals on printed books and vinyl
records. The colleges and universities are more present in Nashville as well. Vanderbilt
University is a major school with around 12,000 students in need of discounted books. Nashville
has many opportunities to market their products and make a strong vinyl record presence. Ryan)
(Domingo Brooklyn is an excellent place to establish a new Half Price Books location
with an emphasis on record sales for a few reasons. According to an Article by David Peschek,
Brooklyn is THE music spot in the New York area. This is due to a huge surge of local acts and
an overall independent taste for music. This taste leads scores of people to flock to more “noncommercial” forms of music like small clubs, local concerts, and more analog forms of music.
This means that the area is primed and ready for vinyl sales. This media form allows the grass
roots feel and experience Brooklynites are seeking. Also, vinyls fall into two main categories:
vintage and new. The vintage albums will draw collector and younger individuals seeking old
school forms of music at a cheaper price, allowing for a larger customer base. The newer records
will appeal too those looking for a different way to experience the music they already know.
These will most likely be priced higher but neighboring Manhattan will provide higher income
individuals.
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This brings us to another reason Brooklyn is a great locale: shipping costs/ supply. There
is a large vinyl press plant in Brooklyn called Brooklynphono. This plant was producing more
than 10,000 records a month in 2011 according to The New York Times. It would provide an
excellent source for fresh prints and there is a potential for teaming up with the factory and
perhaps running a “Bringing Vinyl Back” campaign. Additionally, being located in close
proximity to the factory and doing business with I and the city allows for a visual support of both
art movements and the community itself, something that goes a long way in a big city.
Also, supplementary to the intangible benefits and a well like supply of vinyls, the stores
proximity to Brooklynphono will lessen the burden of shipping cost as records could simply be
trucked to the store either by company vehicle or by the factory. This would mean no need for
flying or freighting things in which saves on time, money, and environmental impact. The
distance would also allow for swifter delivery should a quick boost in inventory be needed
during the holidays and other high volume times.
To summarize, Brooklyn stands as a potentially strong market given three main reasons:

Dense music scene geared not only toward music purchases but vinyl specifically

Brooklyn and surrounding area contain individuals with disposable income, who would
spend toward this liking of vinyl

And the presence of a pressing plant provides numerous benefits including cheaper
shipping, steady supply, campaigning opportunities, and furthering the vinyl buying
culture
All of this, coupled with a low number of competitors spells out a robust opportunity for not
only the company to make money but for Brooklyn and its inhabitants to benefit as well.
Domingo)
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What HPB offers is a choice in a larger lifestyle, a grass-roots company started by partners
who sold from their own collection CONCLUSION??
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Exhibit 1
Book store sales in the United States from 1992 to 2011
(in billion U.S. dollars)
Exhibit 2
Book Industry Market Share from 2011-2012
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Exhibit 3
Book Readers Demographics in 2012
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Exhibit 4
Leading U.S. Bookstore Chains
Exhibit 5
Retailer Share of Books Bought by U.S. Consumers
from 2010-2012 by Market Channel
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Exhibit 6
Half Price Books Marketing Ad
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Exhibit 7
Half Price Books Store Locations by State and Region in 2013
Exhibit 8
Make a table comparing Dallas demographics to Nashville and Brooklyn
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References
Berfield, S. (2013, July 25). The End: Barnes & Noble in Silicon Valley. Bloomberg
Businessweek. Retreived December 2, 2013, from http://www.businessweek.com/
articles/2013-07-25/the-end-barnes-and-noble-in-silicon-valley.
Clark, T. (2013, April 18). The beat goes on: How vinyl records are making a comeback. Forbes.
Retrieved December 1, 2013, from http://www.forbes.com.
Dewey, C. (2013, April 11). Vinyl record sales have hit their highest point since 1997. The
Washington Post. Retrieved November 24, 2013, from http://washingtonpost.com.
E-book sales are up 43%, but that’s still a ‘slowdown’. (2013, May 16). USA Today. Retrieved
November 24, 2013, from http://www.usatoday.com/story/life/books/2013/05/15/e-booksales/2159117/.
Every Trick in the Book. (2012, July 14). CEO Sharon Anderson Wright explains how half price
book’s counter culture attitude is the secret to its retail success. Texas CEO Magazine.
Retrieved November 30, 2013, from http://texasceomagazine.com/features/every-trick-inthe-book-2/.
Farber, J. (2013, February 3). Vinyl love: Not only are sales of old-fashioned albums booming,
it’s the young who are buying. New York Daily News. Retrieved December 1, 2013,
from http://www.nydailynews.com.
Greenfield, J. (2013, March 18). E-Retailers now accounting for near half of book purchases by
volume, overtake physical retail. Digital Book World. Retrieved December 4, 2013, from
http://www.digitalbookworld.com/2013/e-retailers-now-accounting-for-nearly-half-ofbook-purchases-by-volume/.
Half Price Books, Records, Magazines, Incorporated. (2013a). First Forty. Retrieved from
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http://www.hpb.com/about/40years/.
Half Price Books, Records, Magazines, Incorporated. (2013b). HPB Gives Back to the
Community. Retrieved from http://www.hpb.com/community/.
Half Price Books, Records, Magazines, Incorporated. (2013c). Our Executives. Retrieved
from http://www.hpb.com/about/bios/.
Half Price Books, Records, Magazines, Incorporated. (2013d). Our Story. Retrieved from
http://www.hpb.com/about/.
Kozinn, A. (2013, June 9). Weaned on CDs, They’re reaching for vinyl. The New York Times.
Retrieved November 24, 2013, from http://nytimes.com.
Levy, P. (2010, September 30). A Day With. Retrieved December 4, 2013, from
http://www.marketingpower.com/ResourceLibrary/Publications/MarketingNews
/2010/9_30_10/A%20Day%20with.pdf.
Milliot, J. (2011, August 12). Tracking the transition: Bookstats. Publishers Weekly. Retrieved
December 2, 2013, from http://www.publishersweekly.com.
Milliot, J. (2012, November 5). E-books market share at 22%, Amazon has 27%. Publishers
Weekly. Retrieved December 2, 2013, from http://www.publishersweekly.com.
Rodriguez, N. E. (2010). BOOKS vs E-BOOKS. Newsweek, 156(6), 56.
Don’t forget to cite graphic data. https://owl.english.purdue.edu/owl/resource/560/10/
ONCE THEY OWN AN E-READER, ONLY 15 PERCENT OF CONSUMERS SAY THEY STOP
PURCHASING PRINT BOOKS ALTOGETHER. (Rodriguez)
Change all Half Price Books to HPB? Sure
http://libraries.pewinternet.org/files/2012/12/Book-readers.jpg consumer demographics
http://cargocollective.com/KatCSylve/Half-Price-Books-Ad-Campaign dollar ad campaign