Barnes & Noble is on a mission to declutter its stores of gifts and games and make room for what it sees as its next big moneymaker—books.
“There’s too much stuff in the stores,” said Barnes & Noble Inc. Chief Executive Demos Parneros, in an interview after the company’s earnings call. “We’re drawing a line in the sand and reducing the assortment of gift items and what I’d call tchotchkes. For example, we love journals. But we have way too many. We’re refocusing on books.”
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Mr. Parneros described the decision to refocus on books as a “definite shift in strategy” prompted by what he said were disappointing sales results over the past 10 quarters. Barnes & Noble entered the educational toys and games sector aggressively in 2010, when digital books were growing fast, and later broadened its gift selection.
That gift merchandise will remain, said Mr. Parneros, but there will be less of it, partly in response to customers who said they wanted to see more books.
Barnes & Noble is the latest retailer to discover that less is more sometimes.
Coming off another awful quarter, the big-box retailers’s executives said on Thursday that the path to better financial performance could lie in operating smaller stores more focused on books with a more limited selection of items like games and toys.
“Our goal is to get smaller,” Barnes & Noble Chief Executive Demos Parneros, who took the reins in April, told Wall Street analysts on a conference call. “We want to have smaller stores that are more efficient.”
It’s easy to see why one of the pioneers of big-box retailing would be interested in making a major change to its business model. Barnes & Noble said that comparable sales fell 6.3% in the quarter ended Oct. 28., the seventh straight three-month period to see sales decline. The company said half of that decline stemmed from big sales last year of a Harry Potter book and the absence in this year of a similar blockbuster. But the problems also stemmed from non-book products that aren’t catching on with customers. Comparable sales of those products were down even more sharply than the company average.
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“Going forward, we will place a greater emphasis on books, while further narrowing our non-book assortment,” Parneros said, signaling a reversal of Barnes & Noble strategy to diversify its offerings and jump on hotter categories like games and toys. The company has nonetheless benefited in recent years from hot trends like coloring books and vinyl records to prop up sales. (Last year it blamed the absence of a hit like Adele’s 2015 album “25” for its dismal holiday season numbers.)
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So Barnes & Noble isn’t exiting such categories, but will offer fewer such items, lest it find itself again with an overflow of unsold merchandise it can only clear at bargain basement prices. Such deeply discounted clearance sales were one of the reasons Barnes & Noble’s net loss rose nearly 50% to $30 million in the quarter.
As for the future Barnes & Noble stores, Parneros said two new different-format stores would be instructive in how the chain opens new locations or remodels old ones. A new store in the Dallas suburb of Plano is only 10,000 square foot in size, compared to about 26,000 square feet on average. And another prototype is in Ashburn, Virginia.
Luckily for Barnes & Noble, its store leases tend to be relatively short, meaning some 20% of its 632 stores (it has closed about 20 a year in recent years) come up for renewal a year, allowing it to close stores as needed, or downsize them.
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One thing Barnes & Noble is doing is giving customers who bought a book a coupon to get a discount on a coffee at its café.
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Another is to encourage its booksellers to engage with customers, something that should go without saying for a bookstore given that it is a rare reason to buy a book in a store rather than online from Amazon.com.
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Barnes & Noble’s shares were down 12% on Thursday
Link to the rest at Fortune and thanks to Dave for the tip.
When Amazon.com burst onto the nascent online retail scene in 1995, the future seemed bleak for brick-and-mortar independent bookstores—which already faced competition from superstores like Barnes & Noble and Borders. Indeed, between 1995 and 2000, the number of independent bookstores in the United States plummeted 43%, according to the American Booksellers Association (ABA), a nonprofit trade association dedicated to the promotion of independent bookstores.
But then a funny thing happened. While pressure from Amazon forced Borders out of business in 2011, indie bookstores staged an unexpected comeback. Between 2009 and 2015, the ABA reported a 35% growth in the number of independent booksellers, from 1,651 stores to 2,227.
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Five years ago, [Ryan Raffaelli, an assistant professor in the Organizational Behavior unit at Harvard Business School] set out to discover how independent bookstores managed to survive and even thrive in spite of Amazon and other online retailers.
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Here are some of Raffaelli’s key findings so far, based on what he has found to be the “3 C’s” of independent bookselling’s resurgence: community, curation, and convening.
Community: Independent booksellers were some of the first to champion the idea of localism; bookstore owners across the nation promoted the idea of consumers supporting their local communities by shopping at neighborhood businesses. Indie bookstores won customers back from Amazon, Borders, and other big players by stressing a strong connection to local community values.
Curation: Independent booksellers began to focus on curating inventory that allowed them to provide a more personal and specialized customer experience. Rather than only recommending bestsellers, they developed personal relationships with customers by helping them discover up-and-coming authors and unexpected titles.
Convening: Independent booksellers also started to promote their stores as intellectual centers for convening customers with likeminded interests—offering lectures, book signings, game nights, children’s story times, young adult reading groups, even birthday parties. “In fact, some bookstores now host over 500 events a year that bring people together,” Raffaelli says.
Link to the rest at Quartz and thanks to Dave for the tip
PG is in favor of people being free to start and run businesses which they believe will provide useful products/services that customers will enjoy and pay for. According to the OP, that appears to be what the owners of Porter Square Books are trying to do.
Porter Square Books is located in Cambridge, Massachusetts.
For those unfamiliar with Cambridge, it is full of people who are those associated in one way or another with extremely expensive private universities – Harvard (estimated annual undergraduate cost of $63,025 for tuition, room, board, and fees) and the Massachusetts Institute of Technology (estimated annual undergraduate cost of $ $65,478 for tuition, room, board, and fees).
Harvard pays its full professors an average salary of $198,400 per year. The median price of a single-family home in Cambridge hit $1,675,000 during the first four months of 2016.
PG is not denigrating Cambridge or its institutions in any way. He has always enjoyed his many visits there. It’s a stimulating and active community environment and right across the river from downtown Boston which offers an even wider range of attractions and amenities for those who are able to afford them.
PG’s point is that the business environment in which Porter Square books operates is probably optimum for a physical bookstore in 2017 and also atypical of most US cities and suburbs.
The population of Cambridge is currently estimated at 105,162. Fargo, North Dakota, Charleston, South Carolina, and Green Bay, Wisconsin, have populations about the same size.
Green Bay has a median household income of $43,063. The median home price is $129,600.
PG wonders how Porter Square Books would do if it were operating in Green Bay.
A quick internet search found something PG had not expected, Readers Loft Bookstore in Bellevue, a suburb of Green Bay, which appears to be doing well as an indie. PG will leave his earlier remarks in place so you can see a failed snark setup in action.
This is a C-span video and PG apologizes for not being able to get it to embed.
If you studied at a university in Sydney, chances are you’d have a memory of one of Bob Gould’s shops. My first encounter was when I was 18 and had just moved out of home into Newtown, with an empty used bookshelf I found on the side of the street.
I unpacked and walked straight to Gould’s Book Arcade on King Street: a legendary, cavernous warehouse-type space, crammed floor to ceiling, side to side, with what seemed to be every used book and dust mite in the world.
The bearded Gould, then in his 60s, sat at the front desk, swamped in piles of paper and peering out into his realm. I asked him for a specific author – something Russian, ostentatious, arts degree-esque – and he slowly pointed from one side of the shop to the other, with a shrug: it could be anywhere out there.
The service was gruff, but it was also kind of perfect, and I spent hours tiptoeing through aisles and over piles that day. I never found the book I came for, but left with so many others that I had to catch the bus back home.
The federal Labor MP Andrew Leigh told his own, livelier memory of the shop in a parliamentary tribute to the activist and bookseller, who died in 2011.
“I was walking down an aisle and brushed past two precarious stacks of books on either side. Both collapsed on me, trapping me for about five minutes, until Bob heard my cries for help and ambled over,” Leigh said.
According to Natalie Gould – who has been running Gould’s with her mother, Bob’s first wife Mairi Petersen, since her father died in 2011– that risk of literary avalanche is one of her favourite things about it.
“It’s always been part of this place,” Natalie says.
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“It’s the book that falls on your head, or the book that you stumble over – it’s the one that you didn’t know you wanted,” she says. “That’s one of the things I love about this place … secondhand bookshops are much more interesting, and more fun.”
Gould’s Book Arcade has been the dusty wonder of Newtown since it opened on King Street 30-odd years ago, and soon the doors will close. Rising rents have collided with a dip in demand for tattered reads, magazines and preloved records – to say nothing of the looming threat of Amazon – and Natalie and Mairi can no longer afford to keep the place.
PG has certainly put in his time wandering around old and somewhat legendary bookstores with no discernible organizational principle, but he wonders if they are an idea that has come and gone.
Is it really fun to regularly stumble around an old store for significant numbers today’s college students and twenty-somethings?
PG can find far more exotic books online than he ever could ambling through a dozen physical stores. Perhaps it’s the incipient codgerdom talking, but PG would rather get the book instead of looking for the book.
He has no problem thinking of a great many more enjoyable activities than looking for books. When finding an interesting book required that he spend time looking through shelf after shelf for an interesting book, PG was willing to put in the time, but now that it’s not, he’d rather not be thumbing through crumbling paperbacks.
Whenever PG hears about an interesting book, it goes on an Amazon wish list and happily resides there, ready for instant download upon PG’s slightest whim. He doesn’t specifically think about it, but the time saved from book-searching goes into book reading which is much more fun.
For the past few generations, some say we’ve been living in the Information Age. Or the Space Age. Or the Atomic Age. But if I could name it, I’d call it the Mall Age.
Since the first U.S. indoor mall – the Southdale Center in Edina, Minnesota – opened in 1956, the mall has been the place to be. Future historians will look at movies from “Fast Times at Ridgemont High” to “Dawn of The Dead” to “Paul Blart: Mall Cop” and know that there was once this place where we all gathered, a place that meant a lot to us.
But Black Friday is well-named this year. The day after Thanksgiving, when shopping is supposed to kick into high gear, may instead sound the death knell for that great American institution of the mall.
Why? The short answer: Amazon. A slightly longer answer: online shopping saves money and makes it unnecessary to drive to the mall. And one-stop shopping at stores like Walmart and Target – not to mention dollar shops popping up like mushrooms – is more convenient and generally cheaper than shopping at the mall.
Over the last decade or so, U.S. department stores have lost about a third of their revenue. Giants like Sears, J.C. Penney and Macy’s have been shedding outlets like a St. Bernard sheds fur.
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In fact, with thousands of stores closing, 2017 looks to be bleaker for brick-and-mortar retailers than the crash of 2008.
I live in Los Angeles, a mecca for malls, and can see the collapse happening before my eyes.
My favorite mall is the Westside Pavilion, where Tom Petty shot his video “Free Fallin.” Petty left us this year, and I wonder if the Westside Pavilion won’t be following him.
Not that long ago, when the mall’s Barnes & Noble closed, I thought there might be trouble. But that was nothing. This year, one of its anchor stores, Nordstrom, relocated. And its other anchor, Macy’s, will be closing in 2018.
Hundreds of malls are expected to shutter in the next few years.
Sales of adult books dropped 9.8% in July, compared to the same period in 2016, while sales in the children’s/young adult segment fell 36.8%. The statistics are derived from figures released by the Association of American Publishers as part of its StatShot program.
The plunge in children’s/ya sales was due to the release last July of Harry Potter and the Cursed Child, which was a huge hit in 2016. The publication of Potter had the greatest impact on the children’s/ya hardcover format, where sales fell 61.1% in July compared to a year ago. E-book sales were down 16.0%.
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In the adult books segment, mass market paperback and physical audio saw declines of 26.3% and 41.7%, respectively.
It is no surprise that the public remarks at Frankfurt by Penguin Random House CEO Markus Dohle and Simon & Schuster CEO Carolyn Reidy contain gems worth pondering. Book publishing has been fortunate to have really smart people leading the biggest companies during our period of digital transition. The apparent collusion over the implementation of agency pricing — which is itself proving to be a mixed blessing — was definitely a collective setback and has to be seen as a very big mistake (that I didn’t see that way at the time.) But, for the most part, book publishers have done very well in a time of great turmoil, certainly better than other publishers of print or any other big media from the 20th century.
Now we have settled into a period of apparent stability. The two big shifts that were big challenges to navigate — from printed books to digital books and from in-store purchase to online purchase of the content — are no longer occurring at a dizzying pace. From the commercial publisher’s perspective, the ebook market is flat or declining and the print book share is holding its own.
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Dohle’s speech delivered virtually unqualified optimism. He is jubilant about the stability in the market with print holding an 80% share. (He takes a dig at the fact that prognosticators would have predicted that it could be ebooks that would hold the 80% share by now.
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Dohle points out that his company is now publishing John Green’s follow-up to “The Fault in Our Stars”. I’m sure his marketers will tell him that they’re aiming for lots of adult readers with their efforts, whatever the original intentions of the author were about the audience.
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Two observations from [Simon & Schuster CEO Carolyn] Reidy seemed extremely important to take on board. One is that self-publishing is taking a growing share of the market. She characterized the self-publishing share in America as “huge, no matter what statistics you use.” And the companion observation should be a wake-up call to publishers. As she was quoted by Michael Cader in Publishers Lunch:
“The romance market, which used to be huge in mass market, has pretty much dried up and gone to digital original. [And] it has put pressure on pricing of all ebooks…. Those are consumers who, if they wanted a book, they used to come to us, and now they go elsewhere.”
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The other elephant in the room which got no mention, as near as I can see, from either CEO, is Amazon. That growth in print sales that publishers are so happy about was given a huge boost by Amazon shifting promotional dollars from ebook-discounting to print-discounting when Agency forced them to reconsider their strategy.
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The growth of sales at Amazon presents a number of potential challenges to the big houses. It means that their biggest trading partner will push them for more margin. It means that the channel with the growth is one where big publishers don’t have an automatic advantage because of size. And, if the print sales being boosted in relation to digital is because Amazon’s pricing strategy can whipsaw the consumer in that way, it can also reverse itself if Amazon decides to change its strategy.
One additional point PG would add, the biggest elephant in Big Publishing’s room, is that Barnes & Noble is going to disappear.
Whether it continues to disappear slowly (Barnes and Noble has been closing 15-20 bookstores annually in the US for the last ten years) or if it collapses all at once (like Borders did seven years ago when 511 Borders superstores and 175 stores in the Waldenbooks Specialty Retail division closed and, within a few weeks, disappeared into bankruptcy court).
If Big Publishing continues to hitch its wagon to hard copy books, it will be relying upon a retail distribution network that becomes more mom and pop with each passing year.
A major marketing push for a new title through Barnes & Noble can be a powerful tool in launching books for big publishers. Doing the same thing through a bunch of shops run by Fred and Ethel that carry inventories perhaps 20% of the size (at best) of a typical Barnes & Noble is a whole different story.
Bookstore sales declined 6.5% this September, compared to September 2016, according to preliminary figures released by the U.S. Census Bureau Wednesday morning. Sales in September were $1.01 billion, down from $1.8 billion a year ago.
The poor September performance in bookstore sales, for the second consecutive month, showed a significant decline compared to the prior year. In August bookstore sales tumbled 10.9%, compared to a year ago.
An activist investor in Barnes & Noble Inc. has proposed a transaction that would take the bookseller private with the help of current shareholders and a hefty dose of borrowings, an effort that could face formidable obstacles.
Sandell Asset Management Corp. has approached the company with a plan that would value Barnes & Noble at more than $650 million, or more than $9 a share, according to people familiar with the matter. Its shares closed Wednesday at $6.60. The price is roughly $750 million, including Barnes & Noble debt.
The proposal faces a number of obstacles and indeed several attempts to take Barnes & Noble private in the past decade have fallen apart.
It calls for $500 million in debt financing, which could be a difficult ask at a time when the company and the retail sector more broadly are struggling with online competition.
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The fact that Mr. Riggio has no intention of rolling his shares into a private company means Sandell would need to find other significant shareholder backing or put up the cash itself if it can’t find a new outside investor.
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Sandell has said Barnes & Noble is a unique asset in retail and believes it can generate enough cash to handle a larger debt load, especially given the company’s relatively low level of borrowing currently and access to a $700 million credit facility.
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In its 2017 holiday survey, Deloitte found that for the first time, consumers expect to spend more of their holiday budgets online than in-store.
Bookshops have faced a year without “walloping bestsellers” to boost takings, the head of Waterstones said, as he unveiled a book of the year shortlist dominated by children’s fiction.
James Daunt said 2017 had been notable for the absence of novels from literary heavyweights. There had also been no breakout thrillers in the vein of Gone Girl or The Girl On The Train.
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“It has been a funny old year. There hasn’t been nearly the number of big, walloping bestsellers coming through,” said Mr Daunt.
“There have been plenty of good books, and John le Carré was a highlight,” he added. “But there wasn’t an Ian McEwan or a Julian Barnes or a Sebastian Faulks, or those sorts of heavyweight.” Le Carré’s A Legacy of Spies was published in August this year.
Fallow years came along every so often, he said. “Every seven years or so you have a slight lull, but it has a benefit in that it gives lesser known names an opportunity.”
Link to the rest at The Telegraph and thanks to Dave for the tip.