From Barnes & Noble CEO Demos Parneros (the fourth BN CEO since 2013) on an investor call on September 7, 2017, about five months since he had become CEO. Prior to coming to Barnes & Noble, Mr. Paneros spent about 30 years working for Staples. During the call, Barnes & Noble announced yet another decline in revenues, down 6.6% from Q1 2017.
Per the observations of Nate at The Digital Reader, PG noted a word salad being thoroughly tossed during the call. A partial transcript follows with a link to the entire transcript at the end.
The first portion is excerpted from Mr. Paneros’ prepared introductory remarks. Partway down, PG includes a few answers he gives to questions from securities analysts. All statements were from Mr. Paneros:
As we look to reinvent our customer value proposition and growth sales, we’re focused on a number of initiatives to increase the value customers derive from shopping at Barnes & Noble. Our value proposition is comprised of membership, convenience, digital offerings and most importantly our stores where customers come to browse, discover, and interact with 26,000 knowledgeable booksellers.
Pricing is a key consideration and over the past few months, we’ve launched a number of price tests tied to our membership program to see which authors resonate best with customers and increase the overall value of the program. Our goals are to increase enrollment, conversion and visit frequency.
Beyond pricing, we’re also focused on growing sales by improving the overall shopping, browsing and discovery experience for better visual merchandizing and signage as well as personalized recommendations. This includes testing changes to existing store layouts and remerchandising certain businesses. We believe there are significant opportunities to manage our inventory better, increasing trends and reduce unproductive merchandize.
As part of our efforts to better understand customers and develop a robust data analytics program, we’ve recently installed customer counters in all our stores and reintroduced mystery shops. We plan to enhance customer engagement and personalization through improved customer insights. And recently we’ve established an analytics team building the foundation for better analytic rigor.
. . . .
In addition to the two new test stores we have in the pipeline, we are reviewing our entire portfolio in identifying opportunities to open new stores in new markets as well as opportunities to relocate stores as their leases expire instead of simply vacating markets. Our goal is to position the company for net store expansion.
Turning to our ecommerce business, online sales declined during the quarter as we cycled against last year’s eBook settlement and focused on improving margins and profitability through lower promotional activity. Our goals for this business are centered on improving performance and enhancements to our omni-channel capabilities.
. . . .
This includes our new prime-time program where booksellers focus exclusively on engaging with customers during peak hours as opposed to doing tests. We expect this initiative to increase conversion through higher customer engagement while decreasing costs by reducing non-productive tests.
. . . .
[Responding to questions from analysts]
And in terms of specific initiatives for the second half, I’d say that we’ve got a long pipeline of ideas and tests in place to drive sales, traffic, margin to really improve the business overall that range from store experience, conversion tactics to looking at offers, our efficiency membership program, price perception overall on the initiatives that we’re doing with our two channels. So there’s quite a bit in the pipeline and we’re actually meeting on a very frequent basis weekly to determine which things are really rising on our lift and which ones that we ought to drop off so that we can put things in place for the second half.
. . . .
In the past couple of years, we have closed some stores in markets we like very much. So we’ve got our eyes on those markets. There are also some very attractive targets where we don’t have stores. While that’s happening, we’ve been developing a smaller and newer very exciting store prototype that is almost ready but not quite there yet. So that’s some of our thinking. And our plans are to begin to replace very good stores and add opportunistically.
. . . .
So in terms of how far reaching, I’d say that at the moment we’re not very far reaching. We are more testing different value offers. We’re looking at different components from pricing, structures within the program. We’re taking a look at special timing for certain offers. So I’d say that we’re in the early stages of enhancing the program.
. . . .
I’ve had very productive meetings with our publishers who share similar goals to us. And they’re very focused on really providing the great experience in store. The teams I think partner very well together. We’ve actually established an even better cadence to meet frequently and to share successes and to challenge one another. So I think obviously having stores and product by using touch and feel and discovery have the highest importance to them and to us.
Link to the rest at here
Leonard Riggio, Barnes & Noble’s 76-year-old Chairman and the guy who really calls the shots in the company says Paneros has brought a lot of energy to the company.
“One hour ago, our entire crew assembled on the Titanic’s promenade deck in a spirit of unprecedented optimism to meet the challenges ahead. And, as the ship’s captain, I’m delighted to report to you, our investors, exciting news of our progress to date.
“Engineering has determined that only 10% of the hull was breached during the unanticipated incident. That means, of course, that a full 90% remains structurally sound to provide safe, reliable, continued transportation.
“Besides safety, customer service remains our next most important priority. Our dedicated cleanup crew has already removed 38% of the ice from the lower decks, providing convenient and unimpeded foot traffic for passengers in those areas. We’ve also selected and dispatched only the youngest and fittest of our crew for search-and-rescue efforts below decks, insuring the highest likelihood of happy outcomes. The removal of blankets from upper-deck cabins and their transference into the lifeboats is well ahead of schedule. And we are proud that the violinists on the main deck are the finest professional musicians performing on any ship sailing, anywhere.
“In short, these measures assure our passengers of the kind of unparalleled customer service they have come to expect. But this is only the beginning. Given our current rate of progress, we are confident that we are now poised to take full advantage of future opportunities as they arise, even while providing our clients the most meticulous care and attention to detail possible, even under ever-evolving market circumstances.
“So, in conclusion, on behalf of the entire cruise line, I want to thank you, our investors, for your loyal and ongoing support, as we navigate these challenging seas to a brighter dawn…for the Titanic, her passengers, and our entire company.”
Brilliant. Thanks for this creative comment, Robert. And here’s to the violinists!
Maybe to strike the proper mood, B&N phone calls and board meetings ought to have Celine Dion in the background singing “My Heart Will Go On.”
Reevaluate their what now? Sounds like new speak to me, just empty word salad. Why in the world is anybody still holding B&N stock anyway?
Mr. CEO, you want to know what you guys need? Stop opening restaurants and cafes with a few books and endless rows of junk. Get on board with the new way of selling books, which is online. Make your site easy to use, clean and logical.
Another thing, stop treating indies as second-class citizens. Embrace the new age! Some of us actually have books readers want to buy (here’s a hint: they’re buying them from Amazon, not you), and you act like it’s dirty money.
But really, who cares what could save your failing company, right? The people who own it and run it don’t seem to, but some of us would like some real competition for Amazon.
What’s the competitive advantage for B&N? For years B&N and Borders offered a wide selection of books that couldn’t be found anywhere else.
Now that advantage is gone. Somebody else does it, and in some ways does it better.
There is no point in a company doing things because they can be done or because it’s a new way. They need a competitive advantage. B&N doesn’t have it at their present size.
They may exercise a competitive advantage at a much smaller size. There will alwayts be paper books, and they will be sold somewhere. But, B&N is geared to a market where paper is dominant. That dominance will continue to shrink long into the future.
They started selling toys because books stopped selling. That’s why they are still in business.
Wall Street knows this. The price of the company keeps going down, but nobody wants it. They know the problem goes far beyond toys, coffee, online, and independents.
And Riggio’s stock? Who’s going to buy 19% of B&N?
The one competitive advantage of bookstores over online retailers is the fact that devoted readers can meet their favorite authors there. I’ve been at quite a few events in which authors speak, answer questions, meet and greet, then sign books for a packed house of devoted fans. That is an experience that Amazon can’t duplicate.
Not yet. Once they have sufficient stores, you can bet that Mr. Bezos will take advantage of the lackadaisical, sporadic way that most bookstores approach this valuable competitive distinction. All it would take is for chains like B&N and/or indie bookstores to get together and arrange regional “circuit tours” of popular authors, so that the stores had a constant *daily* flow of celebrities, local writers, and related events.
In short, bookstores have a ready platform to host events for readers…if only they would get together to arrange a packed touring schedule for authors, and share tour costs. It would be “win-win” for everyone: stores, authors, publishers.
It’s such a good idea that it will never occur, until Amazon opens enough stores to once again show Big Publishing how to run a book-selling business.
Actually, with streaming technology, Amazon could most certainly host authors speaking and taking questions. People SKYPE and Youtube is full of live interactive events.
If anyone can make an online “author meet” fun, profitable for the author, and virtual, Amazon could. 😀 Shoot, they could even arrange for signed print copies to go out to the first 100 who buy during the virtual meet. (And imagine what that will do to rankings–visibility on Amazon–if a hundred plus books are sold within an hour or two?)
The other thing is that it’s assuming fans are the same as in the past. I used to run to bookfairs and conferences to meet authors I admired. I don’t anymore. I might want to attend a con, but not for an author per se. If the author is there, great, I can attend their panel. If not..shrug.
With all the interaction we have these days with authors on blogs, FB,Twitter, online conferences, etc, the mystique is not what it once was.
Plus which is better for a fan–an author going around a bookstore tour? Or an author writing the next book faster because their time isn’t constricted by travel?
And which is better for the author, especially one with a family or an introverted one? 🙂
I don’t think Skype and “Go To Meeting” events are as compelling as meeting a celeb or local author face-to-face, getting an autograph, interacting directly. As a thriller author myself (now), I enjoyed the hell out of spending time with the likes of Brad Thor, the late Vince Flynn, Lee Child, Stephen Hunter, and others. It was inspiring, educational, and I got them to inscribe their books to me with the words “Finish your novel!”
Maybe the cachet of these events isn’t what it once was. But I still think bookstores make for natural meeting places, where socializing and author/fan events can take place. Frankly, I don’t think bookstores have a choice, if they aim to survive: It’s the only real competitive advantage they’ve got.
It’s the only real competitive advantage they’ve got.
Agree. It’s a minor advantage. They can also serve coffee, host kids story time, provide book club meeting space, and highlight local history books.
But none of those is a core competitive advantage that comes anywhere near what they once had. If we were trying to sell B&N to an investor, would we tell them its major competitive advantage is hosting book signings?
There are more than a few authors (my wife included) who hated book signings, Robert.
She always regarded them as a waste of time, money and energy.
But not all authors are alike.
Frankly, I’ve done many, and I hate them, too. Which is not to say that they can’t be turned into something a lot better for all concerned.
But Mirtika, Terrence, and PG, you make good points. I could be wrong about this…which means B&N really does have no useful competitive advantage. Personally, I have not bothered to try to get my books into stores generally. I sell far more audiobooks than paper, and far more ebooks than anything else.
“The avalanche has begun. It is too late for the pebbles to vote.”
The last time I saw buzzword bingo like that, I was moved to write an article comparing it to Weird Al Yanovic’s “Mission Statement.”
When did they start paying CEO’s by the syllable?
As wishy-washy a value proposition as I’ve ever seen. Compare to Amazon’s which is to do everything possible to put customer first. #ValuePropFail.
Do vs Value Proposition
The response here was “the only thing we do even halfway right is to have a bunch of stores, so we’re going to try to make that part better.”
I’m sure this does resonate with Riggio because he has previously been quoted as saying, effectively, that he doesn’t understand why people have stopped coming to his stores, and he thinks they eventually will once they stop watching the news on TV, except that they still haven’t, so it must be something wrong with the stores and they need to fix that part somehow.
I’ll bet you a dollar that Lenny has never ordered anything on the internet, nor read an ebook.
I’m kind of cynical about B&N, and think he knows what he’s doing: keeping stockholders distracted with false promises. Just keep the shareholders on the hook for one more season with a promise of miracles just over the horizon. “Look over there! Any day now! (psst – is the lifeboat loaded with all the food and water?)”
“Our value proposition is comprised of membership, convenience, digital offerings and most importantly our stores…”
As a strategy consultant that has helped executives like Mr. Paneros craft value propositions for the past 10 years, I would respectfully remind him that value propositions need to be UNIQUE. That’s why it’s properly called a “unique value proposition.” Nothing about the above statement is unique…or particularly compelling.