Dear Barnes & Noble: Stop Playing Catch-Up!

What can Barnes & Noble do beyond struggling to stay afloat with digital in an Amazon-controlled era?

Digitalization is not lost on the priorities list of Barnes & Noble (B&N) executives; they can see the effects over the last 2 decades by looking at the company financial statements1. They have seen what has happened to Borders Group and scooped up some of its remains that fell by the wayside2. The word “digital” is found 72 times in the 2017 annual report1—the focus is there, but so far nothing has stopped the bleeding entirely. Their response has been understandable but predictable—cost-cutting, hiring a Chief Digital Officer (Fred Argir)3, trying their hand at an e-reader4, redesigning their web page5, running through CEOs etc6. In all of this, B&N’s efforts have failed to use digital innovations and explore how the consumer can be brought along to establish new in-store habits.

Fundamentally, there is a mismatch in digital between consumer expectations, current technological offerings, and what a given company like B&N delivers. Brand executives talk the talk of digital transformation, but often fall short on execution. A cluster of high performing companies have found success by prioritizing customer experience as a mindset7. In contrast to such successes, failure to adapt to customer expectations results in a decrease in brand loyalty and diminishing sales. Worse still is heavily investing in advanced technologies that consumers don’t want. Given the complex but ever-prevalent landscape B&N is navigating in being pitted against a tech company while clinging on to brick and mortar, some of B&N’s efforts have played missed the consumer mark8.

Currently, Fred Argir has boldly said that he doesn’t care what Amazon is doing. He said at Digital Book World Conference, “My win percentage on predicting what Amazon is going to do is very low. They’re going to do whatever they want to do.”9 B&N doesn’t consider itself to be a tech company10, but does recognize the importance of digital. Fine—but it’s going to take more than incremental changes such as website redesigns to win market share back. Argir’s answer, in conjunction with input from the new CEO, Demos Parneros, is trying to come up with creative ideas to invigorate the in-store experience. Parneros stated, “our stores are really much more about discovery and spending time walking through stores.”11

During the 2017 Summer, B&N launched the “B&N Podcast”, which is aimed at connecting readers with author’s sentiments on writing, their creative process, and what inspires their writing12. This seems a little late in the game, but is nevertheless a good tool to employ in trying to capture more customer purchases and enhance the B&N brand. To really gain any momentum, this needs to be combined with more far-reaching efforts to garner customers through digital means and match B&N’s offerings with customer expectations13.

Ultimately, B&N does not need to be Amazon; however, it should cultivate Amazon’s mentality of removing the friction in the in-store experience to make it enjoyable, seamless, and valuable in a way that Amazon cannot provide online. A portion of B&N’s recent efforts have been around creating an environment where people can relax, read and eat, but to complete the experience, building the capability for members to walk out of the store, book in hand, and be automatically charged would be an easy habit for consumers to cultivate. Furthermore, to reduce friction in its audiobook business, B&N stores could have phone setup kiosks to get the apps people need and/or download in-store trials for customers to start. This could also be positioned as a gift opportunity for parents and grandparents willing to use audiobooks, but wary of the technology. To match this throughout the store, as a customer walks around, select books could have display stands with codes for people to scan to be able to listen to books as they continue wandering the aisles. There are many ways to implement these suggestions, but it will come down to how the customer responds and is brought along to establish these kinds of habits to boost sales. The lower the friction and the pain point of adopting these digital delivery systems, the quicker the adoption rate, and the more it will proliferate. The iterative process that will ensue will help them stay in touch with consumers and keep up with their changing preferences.

Going forward, B&N will have to address some looming challenges. With Amazon coming into the brick and mortar scene in a technological fashion, how can B&N respond to retain its presence and remain unique? With consumer preferences being so liquid or fickle, how can B&N best build up its capabilities to stay informed and act quickly? How can B&N take advantage of the continued adoption of e-books and technology in education?

(775 words)

1Barnes & Noble, 2017 Annual Report (New York: Barnes & Noble, 2017), p. 4

2Galen Moore, “Will Barnes & Noble do business as Borders,” Boston Business Journal, October 3, 2011, https://www.bizjournals.com/boston/news/2011/10/03/will-barnes-noble-dba-borders.html, accessed November 2017.

3”Should Traditional Businesses in Digital Trouble Look to CDOs for Help,” Centric Digital, July 27, 2015, https://centricdigital.com/blog/digital-strategy/barnes-and-noble-cdo/, accessed November 2017.

4John Kell, “B&N Enters Hot Market With Its Nook Tablet,” The Wall Street Journal Asia, November 8, 2011.

5Natalie Gagliordi, “Barnes & Noble Looks to Boost Sales With Revamped Website,” ZDnet, http://www.zdnet.com/article/barnes-noble-looks-to-boost-sales-with-revamped-website/, accessed November 2017.

6”Barnes & Noble Announces CEO Departure,” Barnes & Noble press release (New York, NY, August 16, 2016).

Phil Wahba, “Barnes & Noble Names a New CEO, Again,” Fortune, April 27, 2017, http://fortune.com/2017/04/27/barnes-noble-ceo-2/, Accessed November 2017.

7Anatoly Roytman, “Expectations Vs. Experience: The Good, The Bad, The Opportunity,” Accenture, https://www.accenture.com/us-en/insight-expectations-vs-experience-good-bad-opportunity, accessed November 2017.

8James Manyika, Gary Pinkus, and Sree Ramaswamy, “The Most Digital Companies Are Leaving All the Rest Behind,” Harvard Business Review, January 21, 2016https://hbr.org/2016/01/the-most-digital-companies-are-leaving-all-the-rest-behind, accessed November 2017.

9Michael Kozlowski, “Barnes and Noble CEO Doesn’t Care About Amazon,” Good Ereader, March 15, 2016, https://goodereader.com/blog/electronic-readers/barnes-and-noble-cdo-doesnt-care-about-amazon, accessed November 2017.

10Joe Keenan, “Inside Barnes & Noble’s Digital Transformation,” TotalRetail, March 1, 2017, http://www.mytotalretail.com/article/inside-barnes-nobles-digital-transformation/, accessed November 2017.

11Phil Wahba, “Barnes & Noble Is Falling Further Behind Amazon,” Fortune, September 7, 2017, http://fortune.com/2017/09/07/barnes-noble-books/, accessed November 2017.

12“Barnes & Noble Launches ‘The B&N Podcast,’” Barnes & Noble press release (New York, NY, August 16, 2017).

13Edwin van Bommel, David Edelman, and Kelly Ungerman, “Digitizing the Customer Decision Journey,” McKinsey, June 2014, https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/digitizing-the-consumer-decision-journey, accessed November 2017.

 

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3 thoughts on “Dear Barnes & Noble: Stop Playing Catch-Up!

  1. Sergio, you present a very creative proposal for the new-age bookstore experience! I agree, that Barnes&Nobles is facing an almost existential crises – especially with Amazon book’s first brick and mortar store having opened in NYC this summer. I would recommend B&N take a dramatic turn in business model and invest heavily in both an online store/reading experience: dramatically increase R&D. They tried before with the Nook (not sure how successful that was) but I do think they need to revisit the idea and try again. I don’t think they can rely heavily on their in-store footprint going forward. They need a big online pull. I agree with you that incremental changes are not enough. I see them as similar to Blockbusters, who went out of business because they could not adapt to the changing consumer trend.

  2. I really like your idea of customers listening to excerpts of books as they walk around the store. It’s a rapid way to test out the product before purchase – and I think it could be implemented for all there books (using QR codes perhaps), not just audio books. Perhaps this could be built in to the kiosks you mention (every book in the store could be in that catalogue). I do imagine that this would require additional steps such as getting permission from publishing companies to play their content before purchase.

    Barnes and Noble could also consider implementing a subscription model where customers pay a monthly fee and then receive a certain amount of books every month. B&N can collect information on individual customer preferences for books, which they can then use to suggest new books for upcoming months through an app/website login. This delivers multiple points towards an improved customer experience – cost savings if they are frequent/loyal customers, and serving as a trusted recommender of new content (which is a friction that reduces customer purchase). Also, this model could then be extended out where customers could decide that recommended books be delivered to their house instead of coming into the store. Even in this case B&N is serving as a more valuable intermediary than pure internet delivery because it would be based off in store/out of store purchases and supported by subscription model which keeps customers on their platform.

    On a high level, I really like the distinction between implementing technology just because people expect you to/you are trying to keep up with industry versus thinking what is really core to your customer promise.

  3. I completely agree that B&N does need to be Amazon (and trying to be will put them out of business). While I don’t know whether they will ultimately survive, I agree that their best option is to leverage their massive store base and focus on providing customers with the best in-store experience, which is something that Amazon or any other e-tailer cannot provide online. What B&N and other physical book stores can provide is the ability to discover new titles and authors in store without having to buy a book first; this is an experience that Amazon has not yet mastered across any of its categories (a buyer largely needs to know what they are looking for in order to purchase on Amazon). As B&N, I would invest in ways to focus on the discovery element through events such as book signings, author readings, etc. Part of the challenge that B&N and traditional retail is facing is that their strategy has been reactive and in the process, they have lost grasp of what their value proposition truly is. B&N needs to figure out why consumers come to B&N and then how they can use digital to improve their customer promise, rather than investing in digital just for the sake of investing.

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