Picture your neighborhood bookshop shutting its doors for good. If you are a regular, you might shrug and assume you will just order the same titles online from now on. The book still gets read, the publisher still gets paid, and the only thing lost is a pleasant browsing spot. But what if a meaningful share of those sales simply disappears, because some shoppers never make the jump to the screen?
That question sits at the center of a study published in the Journal of Cultural Economics. The researchers set out to measure how much physical bookstores and online retailers actually stand in for one another in the eyes of shoppers. Their finding offers evidence that the two channels are imperfect substitutes: when a bookstore disappears, online sales do not fully absorb the loss.
Why the German Book Market Made a Useful Test Case
The team behind the work includes Georg Götz, Daniel Herold, and Jan Thomas Schäfer of Justus Liebig University Giessen, along with Phil-Adrian Klotz of the Düsseldorf Institute for Competition Economics. They focused on Germany for a specific reason. The country has a fixed book price system, which means a given title costs the same whether you buy it at a downtown shop or from an online giant.
That detail matters. In most retail comparisons, price is the loudest signal, and shoppers often go online to save money. By removing price from the equation, the German market lets researchers isolate the other reasons people choose one channel over another. Those reasons include the convenience of searching huge online inventories, the wait that comes with shipping, and the chance to physically handle a book before buying.
Books are what economists call experience goods, meaning you cannot fully judge whether you will enjoy one until you have read it. To reduce that uncertainty before purchase, shoppers lean on advice from booksellers or on online reviews and ratings. The authors point out that physical stores and websites offer different versions of this guidance, which may make them feel like distant rather than close stand-ins for one another.
Tracking Closures Across Seven Years
To study the question, the team built a monthly data set covering 2011 through 2017. It combined records on the number of physical bookstores in Germany with sales figures for both physical shops and online retailers, broken down across 14 federal states and nine book genres. The store counts came from the German Publishers and Booksellers Association, while sales data were drawn from scanner records provided by media control GmbH and consumer survey data from GfK.
Over that stretch, the number of physical bookstores in Germany fell sharply, from more than 6,300 to fewer than 4,900. Print book sales declined too, even though the surviving stores each sold more copies on average, a sign of concentration as smaller shops closed.
The researchers faced a tricky problem common to this kind of analysis. The relationship between stores and sales runs both ways. More stores might lift sales, but strong demand might also be what keeps stores open in the first place. Simply comparing the two would muddle cause and effect.
To work around this, they used a statistical technique called an instrumental variable approach. The idea is to find an outside factor that influences the number of bookstores but does not directly drive how many books each person buys. They chose population, measured through the size of the local labor force. The reasoning is that more populous states tend to support more bookstores, while the number of books an individual reads is shaped by personal taste rather than by how many people happen to live nearby.
What the Numbers Revealed
The central result: when a single physical bookstore closes, monthly print book sales in an average federal state fall by roughly 744 copies. Scaled up across the country, the closures between 2011 and 2017 were linked to a drop of about one million units in monthly sales. That accounts for roughly 37 percent of the total decline in monthly book sales over the period.
In plain terms, the loss of a store was not fully made up for by other shops or by online ordering. The authors interpret this as a sign that, for a large enough group of readers, e-commerce and physical stores are not close enough substitutes. Some shoppers who valued browsing a store appear to simply buy fewer books once that option is gone.
One result might seem counterintuitive at first. For certain genres, closing a physical store was linked to a slight drop in online sales as well, not a rise. The researchers read this as evidence of complementarity, meaning the presence of physical shops can actually help online sales rather than compete with them. They suggest a couple of possible explanations, while noting their data cannot pin down the exact mechanism. One is “showrooming,” where a shopper discovers a book in a store and later buys it online. Another is word-of-mouth, where browsing in a physical shop sparks conversations and recommendations that drive purchases on both channels.
Not All Books Behave the Same
The effect varied a great deal by genre. Fiction and children’s books showed the strongest declines when a store closed, dropping by roughly 208 and 210 copies per month per state, respectively. These were also the categories where online sales dipped alongside the store closures.
School books told the opposite story. The team found no meaningful effect of store closures on schoolbook sales. This fits intuition, since demand for required textbooks tends to be fixed regardless of how pleasant or nearby a bookstore is. Browsing, expert opinion, and atmosphere matter little when you have a mandatory reading list.
The researchers also checked whether digital books were quietly filling the gap. When they folded e-book sales into the analysis using the consumer survey data, the main pattern held. E-book sales did not compensate for the drop caused by store closures, which suggests that readers were not switching to digital editions one-for-one when their local shop disappeared.
A Note on Limits and a Policy Connection
The authors are clear about an important caveat. Their figures come from Germany, which has an unusually dense network of bookstores, roughly one for every 16,400 people. They leave open the question of whether closures hurt sales more in places with fewer shops, where finding an alternative store could mean traveling much farther. They also stress that the study is observational, and while their method addresses the two-way relationship between stores and sales, the precise behavioral mechanisms remain partly unobserved.
The work connects to a broader policy debate about fixed book prices, which several countries maintain to protect books as cultural goods. The authors argue that if a denser network of physical stores supports higher overall book sales, and if fixed prices help keep those stores in business by securing their margins, then this potential benefit deserves weight when policymakers evaluate whether such pricing rules are worth keeping. They frame this as one additional consideration rather than a settled conclusion, calling for more systematic analysis.
For readers, the takeaway is simple enough. The corner bookshop appears to do more than sell the books in its windows. It seems to generate demand that does not automatically reappear elsewhere when the lights go out.
