Tzomet Sfarim CEO: Labor Shortage Costs Us Tens of Millions in Sales
Tzomet Sfarim CEO Avi Shomer reports 230 million NIS in annual sales but warns that severe labor shortages hinder further growth. The bookstore chain faces high rents, shifting reading trends, and declining cookbook sales.
Tzomet Sfarim, one of Israel's leading bookstore chains, is wrapping up a year of notable growth, but according to founder and CEO Avi Shomer, a severe labor shortage is preventing the company from boosting its revenues by tens of percents.
Sales and Profitability Challenges
Shomer stated that the company's annual sales currently total approximately 230 million NIS, following a 15% increase over the past year. Books remain the core engine of the business, accounting for 65% to 70% of the revenues across the chain's 94 branches. However, this volume remains below the historical peak when annual sales reached 300 million NIS.
"The biggest problem for us, and for the entire retail industry, is employees, not sales. If I had more workers, I would sell another 100 million NIS a year," Shomer said.
Despite a gross profit margin of about 46%, profitability in the sector is constrained by aggressive discounting and promotional campaigns. Although the list price of a book may stand at 98 NIS, it is typically sold at a 20% to 25% discount. Aspiring authors also face modest returns, receiving roughly 12% of the amount transferred to the publisher, translating to about 6 NIS per copy sold, including VAT.
Shifting Consumer Habits and Rental Pressures
Online activity has established a growing footprint, normally accounting for about 8% of sales, but surging up to 30% during wartime periods. At the same time, high rental costs continue to burden operations. Shomer noted that the chain recently exited a location at the Mall Hayam in Eilat after being asked to pay more than 1,200 NIS per square meter, amounting to 70,000 NIS monthly for a 50-square-meter store.
Consumer habits have drastically transformed entire product categories over the years:
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Cookbook sales collapsed from nearly 300,000 copies in 2009 to just 3,000 in the past year.
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Travel guides, encyclopedias, dictionaries, and school textbooks have nearly vanished from shelves.
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Romance novels have surged, now driving about 15% of book sales in Israel and globally.
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Economic non-fiction, English-language titles, and literature related to the events of October 7 continue to see robust demand.
Bestseller benchmarks have similarly shifted. While top authors like Eshkol Nevo once easily sold 100,000 copies of a single title, a major bestseller today typically reaches around 30,000 copies, with 50,000 considered a massive celebration.
