Reading A Market

This story appears in the July 1999 issue of Entrepreneur. Subscribe »

The war was raging on between retail superstore book chains and the nation's small, independent booksellers. And though they waged valiant battles to survive, most independents were dropping like flies. In reality, it was hardly a battle at all. The out-gunned independents were posing no contest for the superstores' massive power to offer large-volume savings and huge selections of book titles to their customers. But buoyed by a sense of mission, entrepreneur Sherry McGee was unfazed by the odds--and in 1996, she dove headfirst into the fray.

McGee, 41, is the founder of Apple Book Center, an upscale, multicultural bookstore that has charmed residents of Detroit. McGee and her loyal customers agree it's more than a bookstore. Apple Book Center is a widely heralded neighborhood hangout where multiple generations form a base of repeat customers--and whose second-year sales rang in at $1 million plus.

How did McGee, a former sales and marketing executive in the staffing industry, find the gumption needed to jump into a field most of today's entrepreneurs fear to tread? "I [simply] saw a void," she says, downplaying the guts it took for her to enter the land of such giants as Borders and Barnes & Noble. The void she saw was in the urban ethnic marketplace.

"It started on a very personal note when I attended a seminar for minority business execs. The speaker closed by saying that as a culture, African Americans have to start reading more. I started paying attention to reading statistics and the urban marketplace--and [learned that] lower scores on standardized tests are directly attributable to a lack of regular reading in the home," says McGee. "It just got in my heart from there."

It doesn't just take a village, McGee realized; it takes a village bookstore. "[Once] I could see something was missing in our community," she says, "I decided to put my skills and my own money on the line to make it happen."

Read All About It

McGee began spending evenings at the library saturating herself with book-industry research. "When I did my research, I saw both ends of the spectrum," she says. "I saw the totally focused bookstore that has just mysteries or just feminine titles or just ethnic titles. And at the other end was the superstore, all 70,000 square feet of it with 200,000-plus titles. What I was looking at was that point in the middle."

McGee envisioned a "neighborhood" superstore that would target the multicultural market. Despite an apparent lack of family reading time, the statistics pointed to a viable niche: African Americans were spending more than $300 million annually on books. She knew that by devoting her selection to multicultural titles, she could offer a wider array than the multicultural sections of bigger bookstores could.

With the help of a local Small Business Development Center, McGee added some finishing touches to her business plan. Then the search for start-up financing was on. "[Several] bankers turned me down flat without even reading my business plan," she says.

McGee had no luck until the vice president of small-business loans at Comerica Bank in Detroit helped her find her way. "She believed in what I was trying to do as much as I did," says McGee. "[She pointed to] my background in business, my personal credit history, my career track record and my MBA, and told the [loan] committee that if anybody could make this store happen, I had the best chance."

Another boost to her financing appeal was the prime location McGee found in a newer strip mall anchored by a thriving supermarket. Located in a "healthy income" area, the 3,500-square-foot space was perfect. The best part? There wasn't another bookstore for miles around.

"Other [businesses] wanted the same location," says McGee, a fact which quickly became a motivation to get her financing pushed through. The company that owned the space liked McGee's community-bookstore concept so much that its CFO gave her a written commitment that the company would hold the location until her start-up financing came through, turning away larger, established businesses in the process. "I'm sure they lost a great deal of rent doing that, but they thought it was a good cause," says McGee.

With the location set, the financing came through shortly thereafter. McGee had secured backing from the SBA and leveraged the equity in her home to get the $250,000 in start-up money she needed from Comerica. Now it was time to put her plan in motion.

When Christmas 1996 rolled around, McGee proudly opened the doors of Apple Book Center, boasting 10,000 multicultural titles. Thanks to a publicity drive, more than a dozen articles about Apple Book Center appeared in local publications during its first few months of business. Radio and cable-TV spots, as well as direct-mail ads, helped spread the word.

The new store on the block created quite a stir, but sales growth was slow. By September 1997, McGee faced serious cash-flow issues. Significant sales volume remained a fantasy. "From the first day we were open, I'd been eating up my working capital," remembers McGee. "With the level of sales [we had in September], I knew I'd be out of cash in a month."

Although she knew she could go back to Comerica for additional funds, McGee committed herself to not putting another borrowed dime into the store. "I was determined that enough money had been put into Apple Book Center that it was going to have to make it on its own," she says. So she took the remaining cash in her checking account--roughly $10,000--and launched a do-or-die advertising campaign, with heavy emphasis on a local radio station whose primary audience was Apple Book Center's largest target market: women over 25. Says McGee, "I put [the whole sum] into advertising. I just rolled the dice on the whole square."

You've Got Sales

"The book industry spends an average of about 2 percent of its gross sales on advertising," says McGee. "That month, we went to about 10 percent of gross sales. We gambled."

The payoff? Visible results within days. "It was a match made in heaven," McGee says of her fortuitous plunge into a narrower scope of radio advertising. "There was about a 50 percent increase in sales within 30 days," she says.

As the store's repeat-customer base mushroomed, McGee was delighted to find that some customers were driving miles to come to Apple Book Center, passing several superstores on the way.

With the plethora of activities the store offers, it should have come as no surprise. Apple Book Center's exciting and positive environment has stimulated a loyal following from all age levels. The store features high-profile book signings, celebrity storytellers, eight different book clubs for children (including a mother-daughter club), business and investment seminars for boomers, and travel and financial planning meetings for seniors. Add to that a monthly newsletter that goes out to 7,000 of the store's faithful customers.

McGee is committed to offering something for everyone. "About 25 percent of our floor space is dedicated to children's books," she says, "but if you want the latest Stephen King, Barbara Kingsolver or Mary Higgins Clark, you can get those [here], too, as well as [find] one of the broadest selections of multicultural titles in the area."

Booked Solid

Looking back, McGee marvels at how far she's come in just two and a half years. "I got into this business not knowing a lot about it other than what I'd researched at the library," she says. "I had to roll up my sleeves and learn the distribution system and the margins, the whole nine yards. [Just a few months] before the store opened, I couldn't even have told you where the books came from."

Today, Apple Book Center boasts more than 25,000 titles and has a staff of more than a dozen full- and part-time employees, and--expecting a boost from online book sales at its recently added Web site--McGee is forecasting a 20 percent growth in sales this year. Her latest inspiration should also boost the bottom line: The "Apple Kids," nine different multicultural, three-dimensional characters with specific academic areas of interest, will be spun off into books to be released in the fall of 1999.

Propelling McGee and the Apple Book Center phenomenon is her continuing sense of mission for her younger customers. "If you're well-grounded in reading, then you're going to do better in other academics," says McGee. "Better reading skills translate into better [college educations], and that translates into better jobs," she says.

As for those dreaded superstores, at least in the case of Apple Book Center, it turns out they're only paper tigers. And McGee's fearless roar may be coming to a neighborhood near you: "We're hoping that once our cookie cutter is final, we can pick up the [multicultural-bookstore] concept and lay it down in another community, regardless of its ethnicity, and have it work there, too," McGee says. "In the long term, the Apple Book Center concept is a community giveback. Somebody had to do it, and I got chosen as the one."

Contact Source

Apple Book Center, 7900 W. Outer Dr., Detroit, MI 48235, http://www.applebookcenter.com