Barnes & Noble is the largest US retail bookseller, operating 638 bookstores in 50 states. B&N is also a major seller of online content, digital media, and educational products. Since its early stages, the company has been seeking ways to innovate in order to reign over the retail bookstore industry. For example, B&N was the first US bookseller that advertised on TV, launching memorable award winning advertisements, and a pioneer in offering discounts on bestsellers. Despite the company’s thirst to embrace innovation, the digital disruption of the retail bookstore industry has caused financial distress to B&N, which for the last decade has been struggling to catch up with changing consumer habits and digital innovation.
Following Amazon’s rise in 1995, the retail bookstore industry was shocked by an increasing wave of low price on-line internet sales of books by the new company. Through its online platform, Amazon could work directly with authors of bestselling books and sell directly to consumers, eliminating the need for traditional publishers, distributors, and brick and mortar bookstores. Disintermediation enabled Amazon to start offering thousands of books at prices that were less than those offered by bookstores . Introduction of the e-book reader Kindle in 1997 further disrupted traditional book sales as customers now had the ability to conveniently search and purchase e-books online and instantly download them to their Kindle.
Over the years, B&N has fallen far behind Amazon in online sales and has been forced to close many physical bookstores. Since 2009, the number of the company’s retail bookstores has decreased by approximately 20% from 798 to 638 . Many company critics have been arguing that B&N’s attempts to embrace innovation have failed and that the firm may soon have to face the destiny of its early rival Borders, which in 2011, not being able to compete in the changing retail landscape, filed for bankruptcy .
What is B&N doing?
In 2009, B&N launched the company’s e-bookstore and introduced the e-reader Nook as a response to Kindle. The Nook Color, came out one year later and the company managed to sell during the 2010 holiday season one million units, instilling the company with false hope . Despite Nook’s early success, later versions of the device failed to compete with the technological standards set by Kindle and Apple’s iPad. For example, the version launched in 2012 had insufficient memory, which not allowed customers to load their entire collection of e-books . Sales of the device have plummeted and customers have been continuously criticizing Nook for offering an inferior experience compared to that of competing products.
B&N has sought to establish several strategic partnerships with leading tech companies. In 2012 the company partnered with Microsoft, which invested $300m in Nook while B&N would create e-reading content for Microsoft products. Despite the partnership’s efforts, B&N did not manage to attract new customers and the two companies parted two years later . In 2014, B&N teamed-up with Google and integrated with Google Shopping Express, enabling B&N to achieve same day delivery of its books to customers at no additional cost. The market perceived this partnership as a desperate move to gain customers. B&N was already offering free express shipping from its website. The move solely tried to capture incremental sales from Google Shopping’s customers, which were not expected to have a material effect on B&N’s bottom line .
So far, B&N’s various attempts to compete head to head with major tech companies such as Amazon and Apple have been unfruitful. As a result, the company has failed to drive customer adoption through its digital ecosystem and cement its position in the digital retail landscape.
B&N is mainly a brick and mortar bookstore company. The firm’s physical presence provides it with a competitive advantage over rival Amazon, which recently took the decision to open physical bookstores. B&N needs to focus on finding innovative ways to transform its stores in a manner that will enable it to attract traffic and engage new customers. The company has already announced the introduction of a new concept for its stores. It remains to be seen how successful the new setting will be.
On Nook, B&N recently announced a plan of cost reductions, including discontinuing the ability to rent or purchase video content from the NOOK store and shutting down e-books in the UK . Although this might be a sound plan to reduce losses in the short-term, B&N should strive to increase its market share in the e-reader space. B&N recently reached an agreement with Samsung to release a new Nook device in 2017 . It is critical to focus on solving existing technical issues and develop a device that will be technological robust since e-books are expected to be the dominant medium through which people will consume books going forward.
 McCray, J. P., Gonzalez, J. J., & Darling, J. R. (2012). Transformational crisis management in organizational development: A focus on the case of barnes & noble vs. amazon. Organization Development Journal, 30(1), 39-52. Retrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/963777463?accountid=11311