Does Barnes & Noble Have a Future?

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Barnes & Noble has had a terrible time recently. It even “lost” its CEO.

There have been a lot of interesting suggestions about what Barnes & Noble should do to survive the storms that are battering it — and no storm is stronger than the one blowing down from the Pacific Northwest (read: Amazon).

David Carr of the New York Times has argued that Barnes & Noble is good for Amazon. That is very true, but can Amazon extract value from “showrooming” all those books? Would bookstore visitors be willing to pay an admission fee? Doubtful (notwithstanding the rare example to the contrary). Would Amazon be willing to keep BN afloat the way Microsoft kept Apple afloat? Also doubtful. The sad truth is that bookworms love browsing a physical book store, but the bookstore is not really able to extract the full value it provides for this service.

Roger Martin, writing for the Harvard Business Review, has suggested that Barnes & Noble should turn itself into a cultural mini-mall as Indigo of Canada has done. Well, lets first note that Indigo sold its very successful ebook subsidiary Kobo to the Japanese online retail giant Rakuten, so maybe Barnes & Noble should fully divest its Nook Media to Microsoft? Wall Street already values all of Barnes & Noble at less than Microsoft values Nook Media. Secondly, becoming a Selfridges, Harrod’s or Nordstrom style mini-mall is not a trivial undertaking. It would require a different kind of merchandising team. It may also require a move to vendor-managed inventory (i.e. publishers controlling what books are displayed). It would be a very different Barnes & Noble. Maybe it’s a viable strategy, but it would be a huge cultural shift for management and above all Mr. Riggio himself. It was he who built the chain from humble beginnings. It is tricky for founders to let go of what worked well for them in the past.

Then there is the fundamental shift from Main Street to the Internet. Can any bricks-and-mortar shops survive? Pundits point to Apple’s hugely successful retail stores, but Apple stores are successful for two reasons: They are designed to provide an experience — they cater to shopping therapy like few other stores do; and Apple ensures that there is no price competition. You cannot buy Apple goods for less anywhere else then they’re priced at the Apple store itself. This essentially kills “showrooming.” Why wait for the item to arrive in the mail, when you can walk out of the store with the object of your desire? Maintaining price equality is critical and this can only be achieved if you control all distribution channels. This is utterly unfeasible for books.

Waterstones of the UK has been much criticized in the past (including by me), but it is enjoying somewhat of a renaissance under its new CEO James Daunt. Like Indigo, it achieved this by divesting itself of the capital and management demands of developing an ebook business. This was outsourced to Amazon. Instead it has placed all its bets on catering to those who love printed books. It is creating an enjoyable experience and basically saying, “if you are focused on price, then don’t come to my store.” Let’s see, if this will work (it just may), but the store footprint may have to shrink, because most of us are price sensitive consumers. We vote with our wallets.

So where does this leave Barnes & Noble? Well the truth may be that being a bricks-and-mortar retailer in the book vertical is not an attractive industry to be in anymore. I think WHSmith is the example to follow. Manage the decline, franchise where possible, monetize your brand and accept the inevitable: the world has moved on.

Andrew Rhomberg

About Andrew Rhomberg

Andrew is the founder of Jellybooks, a start-up focused on exploring, sampling and sharing ebooks. He previously worked at txtr (whitelabel ebook retail platform), Skype (internet telephony), Reciva (internet radio), gate5 (now Nokia Maps), and Shell (oil). He holds a science Ph.D. from MIT. Follow him on Twitter at @arhomberg.

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One thought on “Does Barnes & Noble Have a Future?

  1. As a publisher of digital children’s books, we have been very supportive of B&N’s Nook Kids because their children’s reader delivers a far superior experience (clean, intuitive interface supported by narration) to the Kindle Fire (no sound on children’s books….really? Really). Our founder, the author Seymour Simon, also created B&N’s first Nook Kids eBook – FUN FACTS ABOUT PETS – which was given away as a promotional book to anyone who bought the early Nook Color devices. We have been unfailingly supportive of B&N, spending the time and money to produce Nook Color versions of all our eBooks, even as sales declined at Barnes and Noble.

    At the very least, I would have hoped that the Nook ePIB files that we painstaking produced would at least live on via Nook Kids Reader apps for iOS and Android. Unfortunately, B&N has paid no attention to debugging or improving their reader apps. We used to loyally promote our Nook Kids books to our consumers: “Don’t have a Nook? Buy our eBook from B&N.com anyway, and you can use it on your iPad with the “Nook Kids for iPad app.” But we have long since stopped doing that because the “Nook Kids for iPad” app is terribly buggy and crashes when you try to open the book. And although reviewers/users have been calling this out for the past two years, B&N have not done anything about trying to fix it.

    Publishers have spent valuable time and money producing ePIB files for the Nook Color and Nook Tablet. Those assets should still have value, even though B&N is getting out of the hardware business. Pay attention, people! You need the support of publishers to soldier on in this very challenging, Amazon-dominated marketplace. You could at least act like you’re serious about it.

    Liz Nealon
    Publisher, StarWalk Kids Media

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