Barnes and Noble Bought by Hedge Fund

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From JC Simonds:

By now, you will no doubt be aware that Barnes & Noble Booksellers (for whom I work part time) has been sold to Elliot Advisors, a Private Equity/Hedge Fund that had already bought out the U.K.’s Waterstone’s.

. . . .

There is no question that a private equity company snapping up a retail chain usually involves the sale and liquidation within 5 years. It’s almost a given. See stores like Toys R Us for a cautionary tale. And that may be the case here. Time will tell.

James Daunt, who has run the Waterstone’s since 2011, will be the CEO of Barnes & Noble, as well. He bought the failing Waterstone’s (about the size of Walden Books before it went down) in 2011, and has since returned it to profitability. Daunt is apparently a physical book zealot who involves himself in every aspect of bookselling.

. . . .

The hallmark of his turnaround method? Something American indie booksellers figured out 10 years ago: your bookstore’s community is what’s important. Focus on what your area wants in a bookstore and do that. Specialty scones and math books in one town? Do that. Harry Potter nights and kids books in another? Do that. Which makes buckets of sense.

So, the model is a collection of independent bookstores run overall as a chain.

The B&N store in which I work is the most profitable in the district. Yes, I know, you’re thinking, “Reno reads?” Yeah. Madly and passionately. And they drag their kids out to every event we can manage. The store is fairly crowded from open to close, and we usually have to throw people out at closing. Friday and Saturday nights it’s a popular date spot. And yes, I have found couples, um… But there are also refugee Moms and Dads in the café.

. . . .

You know what we don’t have? A decent “Nevada” or even “Reno” section. It’s tiny. We only get in 10 maps of the area per month. TEN. They are sold out in a week (yes, maps sell), and only restocked monthly. (I’ve got 50 copies of a Dallas map. Twenty-five of Athens.) We don’t have any books on local gardening. We hide the Nevada ghost town books in the Paranormal section. We only do 2 local author events a year, and have no local author section at all.

So, it would be terrific if we could be more “Reno-centric.”

A large problem that B&N has faced is the founding father of the company, Len Raggio. He was the retail book bombfather back in the 90s, but he has not worn well in the ebook/ecommerce age. I’m told he’s a wonderful individual, but he’s missing a few cogs in the old brainbox these days, as evidenced by the weird C-Suite antics in the last 2 years. Here are some of the problems I see as just a low-level retail grunt:

• ~B&N the store does not match prices with its own B&N website.
• ~The registers and computer system run off Windows XP, on ancient machines with cranky pin-pads, on an unreliable AT&T internet connection.
• ~There is no way they can track what is selling and what isn’t; they have a very antiquated inventory system with no depth or real search/data management tools.
• ~Has BOPIS, but makes you stand in line at register to pick up.
• ~The AC at our store is broken, so the upstairs can be up to 90 – 100 degrees. (Our store is 20 years old and the physical plant is suffering.) It took a total desperation move by an assistant manager to get it fixed after almost a year (now people are complaining it’s too cold).
• ~The company fired almost all the full-time employees when “Obamacare” was implemented. There are only 2 bookfloor positions that are full time with benefits, out of about 35 booksellers (not counting managers, of which there is a Manager, 2 Assistant Managers, and 2 Merchandising Managers).
• ~Management has no control over how much of any book/music/gift item is sent. That’s up to the folks in NYC, who have apparently never left their office to see a real bookstore, or checked to see the consequences of their merchandise decisions.
• ~Barely supports (or sells) its proprietary ereader, the Nook.

Link to the rest at JC Simonds