Can Barnes & Noble be saved?

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From Retail Dive:

The intensifying struggles of the last remaining national U.S. bookstore chain indicate a hard truth: big-box book selling may be over.

Sure, Amazon can be blamed in part — the ease of browsing titles and buying online (nearly always at a discount) then having items shipped directly to one’s door for free is a convenience play that’s hard for consumers to pass up. But the rise of e-commerce and e-books aren’t the only reasons Barnes & Noble has been spinning its wheels on a turnaround plan. Consistently declining sales may have more to do with an inability to remake itself in a different era of retail — and a lack of stable leadership to guide that transformation.

Over the last five years, four first-time CEOs have walked in — and quickly out — of the chief executive role.

. . . .

[Chairman Leonard Riggio] noted that the company needs to do more than simply cut expenses in order to be not just a viable, but growing business. Consolidated sales in its most recent quarter decreased 6.9% to $795 million, a decline executives were quick to blame on a poorly rolled out buy online, pick up in store service. “Comparable store sales sequentially improved each month throughout the quarter declining 7.8% in May, 6.1% in June and 4.5% in July,” CFO Allen Lindstrom said on the call, adding that August comps declined just 0.8% and the company is set up for positive comps over the holidays.

Despite obvious financial and management instabilities, the Barnes & Noble brand is still strong — so strong in fact that a bookseller made a bid for the retailer in the spring, but ultimately withdrew the offer after doing due diligence, Parneros’ lawsuit disclosed. A Barnes & Noble spokesperson declined to comment on this story aside from its public statement on Parneros’ lawsuit and its recent earnings announcement.

It’s unclear exactly why the bookseller ultimately dropped the deal, but executives and some industry insiders still see a path forward for Barnes & Noble. Others say it’s on borrowed time.

Link to the rest at Retail Dive

25 thoughts on “Can Barnes & Noble be saved?”

  1. Title be a question so ‘no’ is the proper answer.

    A better question would be if Riggio and fellow clowns actually want it saved – or if they think there’s more money for them in watching it sink.

    (My bet is on them wanting it to die … 😉 )

    • The clowns are doing a very good job of squeezing as much cash out of it as possible. They aren’t confused about what they are doing. Authors are.

      • “Authors are.”

        And ‘Retail Dive’ and all the other rags trying to make this sound like new and exciting news. 😉

        Just like in the circus, the ‘clowns’ know how to befuddle the crowd.

  2. But Barnes & Noble may have lost its opportunity to radically right the ship, Raff said. “It might be that being a physical bookstore chain on a very large scale just isn’t such a promising future,” he said. “The real challenge for them is to manage what is going to be in the long term a decline, but that is still a perfectly viable idea with a profitable interim.”

    Others hold a grimmer outlook. “The only sensible thing to do with Barnes & Noble, is to accept the fact that it will die and take as much cash out as you can over as long a period as you could take cash out,” a veteran in the book business told Retail Dive. “The thing to do is to put Barnes & Noble in hospice. And obviously you want to keep it alive as long as you can, you want it to be comfortable, you want them to feel as little pain as possible, but the fact is it’s going to die.”

    It sounds like the business press already has the obituary written and waiting.

    • They had a bit piece slot to fill. They’ll keep using B&N to help keep up that ‘recognizable brand’ going, milking it until that cow runs dry. 😉

  3. “the Barnes & Noble brand is still strong”

    It’s a recognizable brand, but the only time I hear it mentioned these days is with the words “failing company”. I’m not sure that makes it “strong.”

    • Not online, no.
      Not in publishing or business circles.
      But among the general public that tracks neither, it still means something.
      Especially if they haven’t been in one for years. 🙂

  4. If discounted books were such a big part of it, retail stores like Hastings wouldn’t have gone out of business. No, it isn’t the discount, or even the free shipping (which is nice) it’s the SELECTION. If B&N carried more genre fiction and actually hired employees who read something besides 50 Shades of Grey, they might be worth going to.

      • Indeed, look at the success story in Canada. Emphasis mine.

        https://www.bnnbloomberg.ca/indigo-profit-soars-60-as-book-seller-shifts-into-general-merchandise-1.432226

        Indigo launched its own e-reader Kobo before it was sold in 2011. The new competitors were supposed to cut sales about 20 percent based on some estimates, she said.

        “The minute you take 20 percent out of any business, you’re taking away your profit,” she said. “So, we said, how do we re- imagine this?”

        The transformation plan called for Indigo Books to start selling everything from toys to iPads, Fitbits and dinnerware alongside the kids, tech, personal fitness, and cook books to drum up sales. Those efforts are starting to take hold.

        General merchandise now accounts for about 40 percent of sales, Reisman said.

        I would point this out to all the people who complain that B&N stocks too many non-book items, and to the ones who say B&N should be “only books, and more of them”. The margin on books is too low, and the velocity of sales (which is even more important) is too slow. B&N may not be stocking the right stuff, but they do have the right idea, if they could find a way to stick with it and make it coherently attractive.

      • Eh, you can have more genre fiction and still keep the shelf space. Just cull out the stuff that only Manhattanite book critics and people who want to be Manhattanite book critics want to read.

        • This assumes that genre readers will be willing to buy and read *any* genre book that B&N puts on the shelves. I doubt that’s true. Maybe there’s 10 times more demand for science fiction than for Manhattanite blather, but there’s also 100 times more supply. Even a skilled retailer (not B&N) would have a hard time predicting which 10% of the science fiction supply would catch on with its customers and which 90% would bomb. Given that, “A Heartbreaking Work of Insufferable Pretension” can be a much safer bet for bricks-and-mortar shelves than “Battlestar Warz 13: Attack of the Clowns”.

          None of which explains the way B&N botched the Nook store…

          • Yeah, Nook will keep business school students busy for decades, trying to figure out what were they thinking.

            The stores’ autopsy is really simple, though.
            It is no secret that the big boxes were designed to be all things to all people, to appeal to all genres, all demographics, all reading habits. Big regional draws that could serve as mall anchors.

            As oft-repeated, the (slow-moving) “deep” catalog attracted avid readers while the (fast-moving) new releases and “bestseller” bandwagons attracted casual and social readers. Avid readers bought year round and provided a revenue floor while casual readers and holiday gifters provided seasonal boosts. It worked beautifully for a generation so many assumed it would work forever.

            The model gradually lost a good chunk of its underpinings to online sales as commercial internet access went from a novelty in the early 90’s to ubiquitous this decade. And then ebooks hit the mainstream, bringing in their wake an Indie “storm surge” that stayed, changing avid reader expectations and habits.

            In the heyday of the bigbox stores almost all book sales were at B&M, with very little mail order action. Today 50% of the action is online and a quarter is digital. B&N moved into both spheres but did so halfheartedly, treating both as if they were expansions of the market, attracting new shoppers instead of a shift of sales away from B&M.

            Instead of reacting strategically, totally rethinking the stores (which their counterparts in Canada and the UK did), they reacted tactically, tweaking the model on the margins and addressing profitability on a store by store basis.

            They tried a variety of generic “traffic boosting” strategies, failing to accept that they were losing the Avid (mostly genre) readers and with them their revenue floor, leaving them at the mercy of the vagaries of casual shoppers. And then the “bestseller” bandwagons faded.

            What used to be an asset became a liability and they were left with what amounts to vastly oversized newsstands instead of regional draws.

            It no longer matters what mix of books they feature. They could fill entire bookcases with top rated Indie titles and it would achieve nothing: the shoppers they would appeal to just aren’t going there and aren’t going back.

            New habits rule.

    • Too much genre fiction has gone indie – which B&N doesn’t really want to deal with considering their actions to date.

      • And that was their biggest mistake of all. They didn’t grab the advantage they had with the heavy readers who love genre fiction. All they had to do was have a site that works for online sales and a big four-sided cubby with lovely big displays in each cubby to make a whole lot of sales of ebooks right in store. Have a big virtual shelf rotating with all those lovely genre books in big, full, enticing color and boom, people fill up their nook app or what-not.

        Heck, they could have turned one of those stores into a fun event by installing a POD machine behind glass so people can watch books getting made (even ones they order in store).

        But no..yucky indies. All that dirty money.

        I write SF and I tell ya, people read it!

        • “I write SF and I tell ya, people read it!”

          Oh I know. Even way the heck out there stuff from no-name wannabe hack writers (like me! 😛 )

          There are truly crazy people out there, the trick is finding them – or helping them find you! 😉

        • They didn’t grab the advantage they had with the heavy readers who love genre fiction.

          They couldn’t grab it because they couldn’t compete with the Amazon independents on price. Nobody can do that except another independent.

          • The key question is *how* they lost the independents to Amazon, particularly the romance writer-publishers.

            No secret around here, of course, but between that and their missteps on the reader side, they gutted the Nook value proposition.

            Their issues have all been issues of execution.
            And it might lead to B&N’s “execution”. 🙂

            • For B&N, embracing independents at low prices would have set up serious competition with their normally priced books.

              The same was true for Amazon, but they had zillions of other lines of goods, and were not nearly as dependent on books as B&N.

              At the time these decisions were made, nobody knew what path romance would take. The strong price competition was obvious. What was not so obvious at the time was the strong quality competition.

              • Amazon’s (unofficial) position is that $10 spent on Indie ebooks is the same as $10 spent on tradpub ebooks. They’re happy to process either transaction regardless of the number of books it involves. This works best with Avid readers, who operate on a budget and will buy however many books they can fit in the budget.

                It earned them the loyalty and budget of the heaviest book buyers and in the process gutted the big box bookstore business model.

                In contrast, B&N was caught actively downranking indie romance titles to keep them off the first page of their listings, to steer readers towards the more expensive tradpub titles, resulting in less reads for the unwary. Both authors and readers were…peeved.

                That kind of blatant bias was not well received. Or forgotten. The credibility of their listings was shot and to this day few brag of their B&N sales ranking.

                • Amazon’s (unofficial) position is that $10 spent on Indie ebooks is the same as $10 spent on tradpub ebooks.

                  Could be, but I don’t believe them. I suspect Amazon would prefer that avid readers pay $10 per eyeball-hour rather than $3. But, from an accounting perspective, they are right.

                  I’d be interested in knowing the demand elasticity for avid romance readers measured in eyeball hours. Do they devote more eyeball hours now that romances are cheaper? If prices rose, would they devote fewer? (Devoted eyeball hours differ from books purchased since there is a ceiling on the hours.)

    • If anything, survival in B&M bookselling is more likely to be sound stocking everywhere books for passersby and casual readers than in trying to bring back avid readers.

      I see no signs that Hudson is in trouble…

  5. Barnes and Noble won”t be saved but it’ll certainly be a case study for decades in business schools. A cautionary tales of how to screw up your advantages when you think you’re smarter than the customer.

    xavier

    • I think the case study will highlight the way competitive advantages disappear with the advent of disruptive technology. A strong advantage in 1995 was a weakness by 2005. The case will show how competitive advantage flows from one business model to another.

      • Also, that Close Followers need to actually commit to the strategies they copy, not just imitate leaders half-heartedly. “Me too” products need to do more than just show up.

        This is playing out in the Connected speaker space right now with Alexa, Google Home, and Apple’s entry.

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