Barnes & Noble Takeover Shows Retail Theme Is Technology Change

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From Seeking Alpha:

  • Takeover of Barnes & Noble highlights the importance of technology change in media retailing.
  • Lessons from Borders and Blockbuster bankruptcies are still relevant.
  • Loyal customer base supports ongoing Barnes & Noble mall presence.

Barnes & Noble, largest US book retailer with a total of 620 stores, announced plans this month to be acquired by Elliott Management (a $34 billion New York private equity hedge fund) for $683 million (including transfer of debt),

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The important benefit of this takeover for Barnes & Noble shareholders (as well as Barnes & Noble’s landlords, the Retail REITs) is that this is a takeover in anticipation of a turnaround. Elliott Management also owns UK book retailer Waterstones and plans to put Waterstones successful CEO, John Daunt, in charge of both companies. It appears that Barnes & Noble has found a good home.

With 627 Barnes & Noble stores in the US and 280 Waterstones locations in UK, Elliott Management is facing off against Amazon, online juggernaut that is believed to sell as much as 50% of all new hard copy books as well as a large share of e-books and used books. Barnes & Noble has a successful website allowing loyal customers to purchase books, movies, music, toys, and games, but cannot compete with Amazon in size or selection, customer history or ability to take advantage of cross-selling and financing opportunities.

Still, Barnes & Noble knows their customer base well, having used loyalty programs to reach out to their frequent shoppers and should be able to take advantage of their friendly environment for book lovers at well-established stores. I think we won’t see many Barnes & Noble stores close, at least not at first; we are far more likely to see discounting and special offers at Barnes & Noble. Customers should feel upgraded.

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Although the greatest threat to Barnes & Noble’s future remains Amazon (both for online sales of hard copy books and e-books sold on Nook), I think the true threat is technology change, as we have seen over the past 12 years of change in the way media is delivered and consumed by today’s shoppers. These 2 retail failures – Blockbuster Video and Borders – still have something to tell us about current retail challenges.

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11 thoughts on “Barnes & Noble Takeover Shows Retail Theme Is Technology Change”

  1. Although the greatest threat to Barnes & Noble’s future remains Amazon (both for online sales of hard copy books and e-books sold on Nook), I think the true threat is technology change, as we have seen over the past 12 years of change in the way media is delivered and consumed by today’s shoppers.

    Yes. Amazon is the technology change, and that means it is the true threat.

    • Yes and no as I get quite a bit of my online content from places other than Amazon. Just like Walmart is still a bigger threat to small B&M than Amazon is – Amazon is just what the talking heads like to bobble about.

      • Sure. The tools aren’t the competitive threat. The threat is the guy using the tools, and there are lots of them.

  2. I work at B&N part-time and have been a publishing professional for 20 years (where did the time go?). I wrote a post (which Daunt has apparently seen); you can read the post here: http://www.jcsimonds.com/2019/06/09/barnes-and-noble-bought-by-hedge-fund/.

    Mr. Torres point about the Nook is valid, and I agree the company should not pursue that avenue. But ebooks have settled into a niche that is no more or less important than mass market paperback (which were seen as an industry threat when they debuted).

    What I know about the customers we see in our Reno store is that – if they have walked in the door – they want to have the book they seek THAT MOMENT, at a price they saw on-line (B&N is toying with price-matching their OWN website). They also want to talk to knowledgeable booksellers about their interests and books/videos/music that might match that – something no Amazon bot really succeeds at (Amazon’s “if you like this, you’ll like that” feature is often hilariously wrong).

    Employees feel that this is a net positive sale, but we are also aware that there is likely to be a 10 – 30% store closure rate (any system has deadwood). It will be interesting to see what Daunt, the new CEO, does to turn the company around. If it is modeled on the Waterstone’s turnaround, it will certainly be positive.

    • they want to have the book they seek THAT MOMENT, at a price they saw on-line (B&N is toying with price-matching their OWN website).

      They’re only toying with price matching? Sigh. Do you happen to know why they think it’s a good idea to compete against themselves? A store would lose credibility very quickly with me if they don’t price match their own website. The only two B&Ns I’m “close” to are far enough away that I only go to them once in a blue moon. A deep, cerulean blue moon. If I found out that I will always pay more in person than I would at home, then that would eliminate any motive to go.

      I agree that a recommendation from a human might yield better results. Its been almost 20 years since I trusted the Amazon also-bought bot when it comes to books. I never, ever forgave the robot for recommending “Gormenghast” on the grounds that I liked “The Lord of the Rings.” That robot is still dead to me 🙂

      Your idea about stocking books specific to your hometown seems like a no-brainer. I’m curious if you and the other staff currently have the freedom to arrange a section of Reno-based fiction / non-fiction? I recall that I only picked up the Game of Thrones series when the staff at Borders arranged them in a stack in front of the aisles, with note cards explaining why they were into the series. Daunt sounds as if he’d allow leeway for you to do similar.

      Since you work at B&N, I do hope things work out for you.

      • B&N stores don’t generally price match online or do ship to store.
        They are structured as two independent companies.
        Also, their discount coupons are distinct and usually they only do coupons for the stores.

      • To your points: Right now the only way to get the lower online price in-store is (1) Buy On-line & Pick-up in Store (BOPUS) [I often have customers have a cup of coffee in the cafe and I’ll fulfill the order in about 15 minutes (the system is not fast)]; (2) place an order to be delivered to your home; OR… (3) ask very nicely and the price might be matched. There’s a new unofficial policy to price match, but it is not generally known (and the worker will have had to get the message that there’s been a change). Dumb? Yuh. But I think this will be harmonized soon. Best Buy price matches across the platforms, and it works.

        Currently our regional section is pathetic. PATHETIC. There is no local author section at all. There’s a teensy little local musician section in the CDs. There are no gardening books – we live in an alpine desert; gardening and landscaping in a mostly water-deprived place with alkaline soils is tricky.

        Daunt just might save this store. I think it’s worth doing. We are a VERY busy store, so I know people want to keep bookstores.

  3. Seriously misreads Kindle’s market presence, assuming Kindle ereaders are the only distribution channel for Kindle ebooks. Apparently nobody told her that 75% of all ebooks sold on phones and tablets are Kindle ebooks. Or that a good portion of library ebooks are read on Kindles.

    Her presecription for B&N is to get rid of Nook on focuse on B&M, btw.

    Thanks for playing.
    Next!

    • Hey, it’s from ‘Seeking Alpha’, you weren’t actually expecting them to be strong on logic were you? 😉

      MYMV and your news have at least some truth in all the fake (and good luck figuring out which is what!)

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