For some, nothing will ever replace the experience of opening a new book, leafing through the pages, an adventure awaiting within. But as the world increasingly moves online, this may be a slowly dying moment, one that generations may miss entirely. Borders has already closed its doors after filing bankruptcy in 2011, and Barnes and Nobles might follow suit if it doesn’t embrace the digital world quickly.
Barnes and Noble, one of the country’s largest book stores, has seen a rapid and sustained decline in sales over the past several years as books move to e-readers and consumers move to online markets like Amazon. Books purchased for e-readers, like Kindle, hovers around 35% of total book share, although in recent months that number seems to be trending downwards. Meanwhile, Amazon Books accounts for 7% of the company’s total revenue, bringing in a staggering $5.25 billion annually (compared to Barnes and Noble which posted revenues of $4 billion in 2015).
What’s Being Done
- New Branding: To increase foot traffic, the retailer is trying to position itself as a “lifestyle” brand, a third place for consumers to hang out and socialize (and hopefully buy a book or two). Results are mixed on this front as many consumers still consider the chain a bookstore and nothing more.
- The Nook: This was originally envisioned as a tablet, letting B&N play in the same space as Apple’s iPad and Amazon’s Kindle Fire, but was more widely compared to e-readers alone. It was an attempt to steal market share away from Amazon as well as find a new reason to drive customers to the retailer’s brick and mortar stores. While customers could read books from a wide variety of companies, they could only download apps produced (badly) by Barnes and Noble. Not to understate it, but the Nook was an epic failure and continues to hemorrhage money.
- Online Play: Barnes and Noble focused on its website, hoping to take more of the market there to offset losses in its physical stores. Unfortunately, this also backfired when a relaunch of the website caused major issues and caused sales to drop 12.5%. In fact, in the same period, in store sales increased by 1.3%. Why might this be? The company has expanded its percentage of non-book items around the store and spent significant capital to host events at the stores in order to increase foot traffic.
- Close Stores: Finally, when all else fails, the company has been closing stores consistently, decreasing its total store count from 798 to 640 over the last 8 years. While this hasn’t helped revenues of course, it does provide some relief on the company’s bottom line and helps it stay afloat for another year.
So, what’s next? The retailer is looking at a slow and painful decline unless it takes immediate steps to embrace the newly digital world and find its place within it.
- Figure out Nook: Easier said than done of course, but this move is essential for a company looking to stay competitive against Amazon. CEO Ronald Boire acknowledged this recently and plans to cut operating costs significantly in the coming months. Another key step will be opening the app store to outside developers, giving the tablet the increase functionality that consumers expect. Even with a $39 million loss in the division, B&N can’t walk away from the investment given that many of its most loyal readers are on the platform and drive high volumes of sales.
- Master discovery: One thing Amazon does very poorly is helping costumers explore new options which is a huge gap for dedicated readers. These individuals often wander the aisles looking for a new author or genre, waiting to be inspired by a handwritten “staff favorite” card or a vibrant cover. Online, there is a massive hole in the market for these individuals. By figuring out “discovery” in the digital age, B&N will set itself up nicely to be the preferred book store, online and offline.
- Stay Physical: The chain needs to close some of its stores, but in order to thrive in this new economy, Barnes and Noble needs to celebrate the fact that it exists online and in the local community. The company needs to find ways to create experiences that straddle both worlds and more tightly tie the consumer to them.
It’ll be a bit of a rocky road for the bookseller, but as Jack Keruoac says in On the Road, “Nothing behind me, everything ahead of me, as is ever so on the road.” Barnes and Noble, keep looking forward – the road ahead is mostly inside that computer in front of you.
Word Count: 794