Why Local Brick-and-Mortar Retailers Need to Rethink Everything They Know by Brian Hibbs @FortuneMagazine January 23, 2017, 10:52 AM EST E-mail Tweet Facebook Linkedin Share icons I own two comic book stores in San Francisco. Despite being in retail for over 30 years now, I have to admit I’m worried the future of businesses like mine. As Americans continue to do more of their shopping online, local brick-and-mortar retailers are suffering. I can already see the impact in my neighborhood, where there are fewer businesses that sell goods, and more that sell services. The four-block commercial corridor near my home is packed with restaurants, cafes, nail salons, and businesses offering financial services. Many of these spaces used to be retail stores. If there’s any solution to reverse the trend, crowdfunding efforts and patronage programs may be it. In my immediate vicinity, a number of bookstores are already doing this, giving away benefits such as priority seating at author events and dedicated Wi-Fi to customers who participate. Beyond ongoing patronage, there are a tremendous number of “one-time” crowdfunded cash infusions, like this campaign to raise money for Video Wave, a local video store in one of San Francisco’s wealthier neighborhoods; this one to save G&O Family Cyclery, a bike shop in Seattle; and this one for Ray’s Ragtime, a used-clothing store in Portland. Do these patronage models work? So far, my answer is a cautious yes. Despite the ease of online shopping, I believe many people still prefer shopping for physical goods in physical stores. In many cases, they’re even willing to pay a premium for the experience (I don’t sell a single product that can’t be found for a less expensive price online, and yet our customers and gross sales have strongly increased over the last 10 years). Still, none of that is enough to cover our rising costs. In San Francisco, where the already notoriously expensive rents continue to climb, the minimum wage will soon be increased to $15, a one-two punch for stores like mine. I launched a patronage program of my own in the form of two Graphic-Novel-of-the-Month Clubs, one aimed at adults, and the other aimed at middle-reader kids. The adult club in particular, where membership costs $20 per month, functions exclusively as a revenue-raiser to cover San Francisco’s new minimum wage. We need to increase revenue by $80,000 to remain viable in 2018, which translates into 334 memberships. Currently, we’re sitting at around 275 members. If we exceed our goal, our staff wages are set to increase indefinitely. If we get to, say, 1,000 members, my staff would make a minimum of $21.50. If we get to 1,500, minimum pay would be $26.50, and so on. To encourage more members to join, we’ve made the club a true experience. I believe that comics and graphic novels are an amazing American artform that drives the pop-culture conversation, and my staff helps act as sherpas to help guide people through each month’s curated selection. In addition to the book itself, we provide extras such as exclusive signed bookplates, as well as monthly livestreaming meetings where we discuss the specifics of creation and general philosophy of process with the creators of each month’s book. To date, we’ve facilitated vibrant conversations between our members and authors such as Neil Gaiman, Raina Telgemeier, and Dan Clowes. They worrying part of all this is that the club is a form of patronage that my business may not be able to do without. Our ability to properly pay our staff is now partly tied to the success of the club and our ability to convince people to stay a part of it. Thanks to rising costs, it seems like we can no longer survive solely from the sales of books alone – despite our gross sales being higher now than they have ever been in 27 years of business! Related: A Five-Time Entrepreneur Explains Whether You Should Raise Money or Bootstrap This isn’t just a conundrum for me, but one that will face the next generation of retailers. It’s not just rising costs, either. For physical stores, where margins are tight to begin with — a 2% change in gross sales can be the difference between profit and breaking even, or even taking a loss — even a small shift in customers buying online can cause businesses to crumble. And while we have many strong examples of businesses rising to the challenge, it seems clear that not every store can depend on extra patronage. There’s only so much to go around. While you might be willing to support my business, can you support 10 other businesses? Twenty? As the measures of success for retailers start to expand beyond merely “filling a niche” or “serving your clientele” into “can you successfully crowdfund?” it seems to me that the very nature of retail will inevitably change and mutate. In this, small retail bookstores like mine, who have little price control over our merchandise, are the canaries in the coal mine. Brian Hibbs owns and operates the Comix Experience in San Francisco.