Big box panic: Americans have been afraid of chain stores for nearly a century, but independent outlets keep thriving

Reason, Jan, 2008 by Michael C. Moynihan

But it was a pyrrhic victory for Macy's, which would be repeatedly targeted by the ABA in decades to come. 1934 brought the National Recovery Administration's "codes of fair competition," including a "bookstore code" that disallowed discounting of books until six months after their release. In 1935, much to the ABA'S dismay, the U.S. Supreme Court ruled the codes unconstitutional.

Later that year, New York's state legislature passed the Fair Trade Act, which would force Macy's to abide by its resale price maintenance agreements with certain publishers and to cease loss-leader discounting. The New York State Supreme Court invalidated the legislation the following year, with a judge declaring, "The act attempts to give to private persons unlimited power over the property of others." When the U.S. Supreme Court reversed the decision on appeal, finding that the state's Fair Trade Act was indeed constitutional, Macy's exploited a loophole in the law exempting book clubs from discounts. Thus, Macy's Red Star Book Club was born.

During the 1930S campaign to punish stores selling below cost, a Carnegie Corporation report complained that the business of bookselling had inexorably changed--it had become a business: "The old-fashioned bookstore was a charming place, but charm alone will not solve the problem of modern book distribution.... Hard though it may be to face the fact, the bookstore of today cannot primarily be a place for those who revere books as things-in-themselves." An ABA representative later complained to a Senate committee that "non-book-minded merchants" were killing the industry and "price-cutting, unless stopped, will ultimately eliminate the personal bookstore from the national scene and in turn will have a serious effect on the quality of our national literary production."

This, of course, has yet to happen. Chain stores are still the undisputed kings of bookselling, but their sales figures have remained flat in recent years. Meanwhile, the ABA announced in 2004 that "independent bookstores' ... sales increased, in terms of both dollars and number of units sold, capping a three-year period of sustained growth," citing an Ipsos BookTrends study. In 2004, an ABA spokesman told The Wall Street Journal, "Even though there are fewer stores, the survivors are doing better." As for our country's literary production, 2005 saw 172,000 books published in America, a dramatic increase from the 39,000 released in 1975.

Today's attempts at anti-chain legislation follow a similar pattern--and have, in most cases, met a similar fate. Maryland's anti-Wal-Mart law, which mandated that the company spend at least 8 percent of its payroll on health care, was recently voided when a federal judge ruled that "state laws which impose employee health or welfare mandates on employers are invalid." In 2006 the Chicago city council passed a resolution requiring stores of at least 8,300 square meters in floor space and earning at least $1 billion in revenue annually to pay a "living wage"--approximately $13 per hour-only to see the rule vetoed by Mayor Richard Daley. In California, Gov. Arnold Schwarzenegger vetoed a similar law that would have forced Wal-Mart and other big box stores to provide health care benefits for their employees, arguing that "singling out large employers and requiring them to spend an arbitrary amount" on insurance would have no appreciable effect on "the health care challenges we face."