THE BUSINESS: Kids' bookseller, pioneer of bookstore as community resource

FOUNDED: 1985; CLOSED: 1996

PRIMARY CAUSE OF DEATH: Superstore invasion

SECONDARY CAUSE OF DEATH: Owner's aversion to supergrowth

The Children's Bookstore closed its books last spring after nearly a dozen years of operation. In 1985 owner Andy Laties and his wife combined his children's-theater experience with her business background to create a retail store whose ambitious program of events would turn it into a community resource. At its peak the store held about 250 events a year, including readings, dance recitals, author visits, and art workshops.

One key to the store's demise, Laties says, was the decision six years ago not to expand but to remain focused on the nearby community. "If we had tried to grow very sharply in the Chicago market by bringing in venture capital and doing an aggressive expansion, we'd still be in business," he says. "We could have gone to 10,000-square-foot locations in the late 1980s, but we made the conscious decision not to. I was still doing two story hours a week and enjoying it. I didn't want to become an executive."

Last year walk-in sales dropped to $250,000, half the store's peak of $500,000 in 1991. Five superstores have opened within a one-mile radius of the bookstore's Lincoln Avenue location in the past year, nearly quadrupling the amount of retail space for children's books, from 4,000 to 15,000 square feet, while population growth in the region has been flat.

Over the past five years, independent bookstores have steadily lost market share to superstores and chains, declining from 32% in 1991 to less than 20% last year. "Children's is a perfect example of a very fine bookseller that serviced the community with great integrity, but the simple economics of competing with giant corporate entities made it impossible to continue," says former American Booksellers Association president Avin Domnitz. Among the more than 150 independent bookstores that have closed in the past two years are such famous shops as Odegard's, in Minneapolis, and Huntington's, in Hartford. "Staying power--that is the issue," Domnitz says. "How long can you lose money while the market absorbs all this square footage?"

Last spring the Children's Bookstore held two closeout sales and then returned its leftover inventory to the publishers. Laties now runs the Children's Museum Store at Chicago Children's Museum, a venture he started in October 1994. About a dozen former Children's Bookstore employees now work at the museum shop, whose book inventory is smaller than the Children's Bookstore's but turns over far more quickly.

Laties says the Children's Bookstore supported his family for seven years but the business model it followed was no longer viable. "I'd have loved to continue running a children's bookstore with 25,000 titles, an expert staff, lots of special events, and free story hours. But I don't think there's any place in Chicago that can support that type of store anymore." Nevertheless, Laties still owns the Children's Bookstore name and says he's waiting for the chance to get back into the game: "I'm waiting for some of the superstores to go out of business, and then I plan to reopen with a whole new model."

--Tom Ehrenfeld