Forecasting the death of retail book shops: a time series forecasting


“The internet is killing retail. Bookstores are just the first to go.” — quoted in this NYT article. Retail bookstores are in a death row; looks like it’s just a matter of time for those to be in the museum. eBooks are partly to blame, but with eBook sales leveling off recently, the remaining affect seems to be online book sales, dominated by, with no surpirse!, Amazon. So, exactly how long retail bookstores are going to survive? Is it going to be “Gradually and then suddenly”? Or could it be just 5 years from now? One might ask: “5 years? no way!!”. But imagine the Amazon effect just few years ago; or the Facebook effect in 2008.

To examine this I’ve got a nice time series dataset from the Census Bureau database. This is a monthly retail sales data (in millions $) from bookstores all across the country. Data are collected monthly as part of Monthly Retail Trade Survey and cover 26 years since 1992. A number of popular forecasting methods are out there but since the data has seasonality, I choose to run the Holt-Winter Exponential Smoothing (HW) — a popular forecasting method in machine learning field ( I also ran ARIMA, but the results are less definitive). 

So what exactly does the forecast tell? The analysis shows that bookstore sales peaked around 2007, but since then the sales are going downhill. The HW forecasting predicts that the bookstores may at best survive another 15-20 years from now due to decline in retail sales. This roughly puts the lifeline around 2040.

Signs are everywhere. Book World is closing it’s stores. Barnes & Noble closed 10% of it’s stores in just the last 5/6 years and this February it shedded 1800 jobs. This will keep accelerating in the next few years. That said, some bookstores may well survive beyond 2040, but not as traditional stores, rather as antique books stores.

[For data, codes and further analysis on this topic visit my website. Follow me on Twitter for updates on new analysis. Photo credit: M Alam]

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