Home » Bookstores » What’s Barnes & Noble’s Survival Plan?

What’s Barnes & Noble’s Survival Plan?

20 April 2014

From The Wall Street Journal:

In mid-January, Daniel Fidler worked his final day at what was Barnes & Noble Inc. ‘s store in Chestnut Hill, Mass., putting in a few extra weeks stripping out books and bookcases after the store closed at the end of the year.

“I was depressed but I kept a smile on my face because I didn’t want to think about what would happen,” said the 24-year-old, who is still looking for a new job. “We had a party at a restaurant, and everybody who left came back, but it was bittersweet.”

Barnes & Noble is making its last stand in towns just like Chestnut Hill. Its 663 stores still stretch across all 50 states, but there are 63 fewer than five years ago. Stores in Georgetown and the heart of Greenwich Village have closed. Gone, too, is the rambling college store in Manhattan’s Flatiron district that was the sole Barnes & Noble retail property when Leonard Riggio bought that business in 1971.

A franchise built on cappuccino, children’s story time, and tables stacked with the latest from Stephen King, Neil Gaiman and Doris Kearns Goodwin is retrenching. A shrinking market for print books, competition from Amazon.com Inc., and the costs of investing in its own e-reader and tablets had led to three straight years of losses.

. . . .

Speaking of the consumer stores business that accounts for most of Barnes & Noble’s revenue, Mr. Riggio said in a recent interview, “This is not a growth company.” He is already looking ahead to what he describes as a “really, really critical” Christmas shopping season “in terms of casting a die for the future.”

Barnes & Noble shares dropped 12% on Thursday on news of Mr. Riggio’s sale.

. . . .

The 73-year-old Mr. Riggio remains bullish on the company. In the extended interview a few weeks ago, he said, “In my mind, the story isn’t yet written as to where this is all going. There’s promise to it.” He reiterated that sentiment on Thursday.

But the tide of history may be flowing against the retailer. In recent years the rise of e-commerce has killed some well-known brick-and-mortar stores, including Circuit City and Borders Group Inc.

Forrester Research analyst James McQuivey said he is hard-pressed to name any traditional companies selling physical media that have shown revenue growth since consumers warmed to digital books, movies, and music.

“If Barnes & Noble is in its current form by the end of 2015, I’ll be very surprised,” he said.

Link to the rest at The Wall Street Journal (Link may expire)


17 Comments to “What’s Barnes & Noble’s Survival Plan?”

  1. It sounds like Riggio has already made up his mind about B&N’s fate between selling off his stock and saying that it’s not a growth company. B&N doesn’t HAVE a survival plan.

  2. I think B&N’s survival plan is to give up and hope that death isn’t too painful.

  3. I hate like hell for anyone to lose their job, but I can’t help seeing the irony in the B&N closings. A couple of decades ago, stores like this were putting independents out of business and a lot of people lost their jobs (and their businesses) when B&N flexed its muscles.

    • Yep. The circle of life. It sucks for people employed by these businesses but while they’re in distress right now, they were doing it to other businesses not too long ago. They rarely see their OWN demise coming, though.

  4. Should we establish a “dead pool” on B&N?

    • If I remember correctly William Ockham or Marc Cabot started one. I know my date came an dwent.

      • I might have commented on it, but I don’t recall exactly. I’ll give William the credit.

        However, here’s my “new” prediction. Barnes and Noble, in its current form, will survive Borders by five years, +/- 10%.

        That gives a “window” which closes on or about March 15, 2017. Now that I look at the date it actually seems optimistic, but I’ll stand by my totally arbitrary deduction.

  5. Probably the most informative bit here:

    Barnes & Noble has widened its offerings to include educational toys, games and other nonbook categories, which carry higher profit margins. Revenue for that category jumped 12% in the recent Christmas quarter. At the same time, the retailer has cut back on its book inventory: Its stores, depending on size, carried about 21,000 to 170,000 titles in 2013, down from 60,000 to 200,000 titles in 2004, according to Securities and Exchange Commission filings.

    Assume the average store carries 50,000 titles. Let’s say SF accounts for 5 percent. That gives 2500 titles, which just can’t hold a candle to Amazon’s tens of thousands. I just can’t see any amount of genius planning that can overcome those facts.

    • It sounds less like they’re in the book business and more like they’re in the random odds and ends business. The good news is the latter has potential to make money for them. The former not so much.

  6. I have a love/hate relationship with BN. Part of me is sad. I was just in New York City and it took me forever to track down a BN (let alone any bookstore) that I could visit while I was in town.

    At the same time, I know that if BN goes bust and no one saves them, they will be, at best, a shell of who they once were and that will drastically change an industry that is already scrambling to find its place in the world, as it is.

    • …an industry that needs drastic change.
      A live B&N gives trad publishers false hopes–a restructured one will force them to face reality. That too much of their business is structured to deal with big chain book buyers and not enough to deal fairly with writers and readers.
      If they are being disintermediated it is because they’ve made it desirable, not just because Amazon makes it possible. They’re not serving the needs of their suppliers.

      Likewise, if B&N’s business model is collapsing it is because they aren’t serving the needs of their customers.

  7. I wonder what the armchair financial geniuses would be telling us now if B&N had never launched the Nook?

    • Something like:
      “Trying to sell ebooks without a flagship dedicated reading device was sheer folly.”
      “Partnering with Kobo and Sony and generic device makers gave away too much money to their partners.”

      The issue with Nook isn’t that B&N did the wrong thing but rather that they did the right thing oh-so-very badly. The strategy was spot-on, the execution… well, they executed the firing squad.

      Hindsight being 20-20 sight it is easy to see that at every critical junction they took a decision that looked good in the short term but was guaranteed to explode in their faces down the road. In the technology world too much is often made of vision but for Nook it was that very lack of vision that led them here.

      Riggio pretty much admitted he doesn’t know what to do next. That it has come to this is because he never knew what Nook needed to be or, worse, why.

  8. “What’s Barnes & Noble’s Survival Plan?”

    LOL. Massive Golden Parachutes for all the C-Suite reptiles. Zip for everyone else (i.e., employees and stockholders).

  9. “But the tide of history may be flowing against the retailer. In recent years the rise of e-commerce has killed some well-known brick-and-mortar stores, including Circuit City and Borders Group Inc.”

    It wasn’t e-commerce that killed Circuit City, it was firing all their knowledgable customer service people and replacing them with obnoxious hard-sell salespeople who didn’t know anything about the products they were selling. It became a seriously unpleasant place to shop. And from what I understand, Borders died because bad management killed it. It was gone long before ebooks became a factor.

    • Yeah, that quote bugged me, too. It’s a distortion of the truth, if not an outright lie. Borders folded because they stopped paying their bills. That would kill General Motors (which would probably blame it on Amazon, too).

Sorry, the comment form is closed at this time.