How Barnes & Noble went from villain to hero


After years of slump, Barnes & Noble’s sales are up, its costs are down – and the same people who’ve seen the superchain as a supervillain for decades are celebrating its success.

In the past, the book-selling empire, with 600 branches in all 50 states, was seen by many readers, writers, and book lovers as powerful publishers and indie outlets in search of market share.

Today, nearly the entire publishing industry supports Barnes & Noble, including most independent bookstores. Its unique role in the book ecosystem, where it helps readers discover new books and publishers continue to invest in physical stores, makes it an important anchor in a world where online sales are disrupted and Amazon, a much larger player.

“It would be a disaster if they lost their jobs,” said Jane Dystel, a literary agent with clients including Colleen Hoover, who has four books this week. The New York Times bestseller list. “There’s a real fear that the printing business won’t go very well without this book chain.”

The pandemic has put significant obstacles in front of Barnes & Noble. For nearly two years, most of the stores did not have reading and author signatures. The cafe business is still very bad. And in December, as the Christmas shopping season approached, Omicron stepped in. Many of the chain’s downtown stores are still underperforming due to a shortage of tourists and office workers.

Despite all this, sales at Barnes & Noble stores grew 3 percent last year, compared to their pre-pandemic performance in 2019. The company’s CEO, James Daunt, said the growth came the old-fashioned way: by selling books, which increased 14 percent.

“I would never have guessed that at the beginning of the year,” said Mr. Daunt, “but it was tremendous.”

For many years, independent booksellers’ animosity towards Barnes & Noble was so strong that it made even Tom Hanks an attractive, even believable villain.

This feeling was captured in the 1998 movie “You’ve Got Mail.” Co-written and directed by Nora Ephron, the film focuses on the owner of a major bookstore chain in Manhattan, played by Mr. Hanks, who puts the character of Meg Ryan, a beloved independent bookstore, out of business. (Also, they were both very cute and fell in love.)

The American Booksellers Association, which represents independent stores in the non-fiction world. filed an antitrust suit Against Barnes & Noble in the 1990s. A few years ago, the group to sue some publishers, saying they are unfairly charging lower prices than the big chains.

“There was a time when the competition was pretty ugly,” said Oren J. Teicher, former CEO of the American Booksellers Association. “Barnes & Noble was not only perceived as hostile, but anything related to corporate book sales was perceived as wrong.”

But over time, the booksellers developed a “common enemy,” said Mr. Teicher: Amazon.

Barnes & Noble grew from a single bookstore in Manhattan in 1917 to become a dominant player, offering massive discounts on bestsellers to attract customers. When they entered a store, readers were presented with an enormous selection of sometimes over 100,000 books, many of which were sold at full price.

When Amazon came out, it took Barnes & Noble’s game and played it better with deeper discounts and a seemingly endless selection of books.

Today, despite the rise of other formats, the industry still relies on physical books – they brought in 76 percent of publishers’ sales revenue in 2021, according to the American Publishers Association. And more than half of physical books in the United States are sold by Amazon.

It’s easy to buy a book you’re looking for online. You search. Click. you buy. What gets lost in the process is accidental finds, a book you bought from a store for its cover, a paperback you see while browsing through the thriller section.

No one has fully figured out how to copy such accidental discoveries online. That makes bookstores extremely important not just to readers, but to anyone but the greatest writers, as well as agents and publishers of all sizes.

Independent stores play an important role in this type of discovery, but because Barnes & Noble stores are so large, they can often keep more titles on hand. And in many parts of the country there are no independents: Barnes & Noble is the only bookstore in town.

“Discovery is very, very important,” said Daniel Simon, founder of Seven Stories Press, an independent publisher. “As Amazon’s market share increases, there are fewer discoveries overall and fewer new voices will be heard.”

For well-known authors, Barnes & Noble is important for a different reason – its size. A major stop on any major book tour, the chain’s 600 stores can handle massive orders and carry large numbers of copies.

“It’s funny how the industry has evolved to be the good guy now,” said Ellen Adler, publisher of the Independent New Press. “I can say that their rehabilitation is complete.”

The chain also allows publishers to invest in distributing physical books nationwide, said Kristen McLean, director of business development at NPD Books, which monitors the market.

This is good for bookstores of all sizes.

Michael Barnard, owner and director of Rakestraw Books in Danville, California, said Barnes & Noble opened a superstore about five miles from his shop nearly 20 years ago. A Super Crown bookstore, a Borders, and a Costco with a sizable book section were also nearby—and all just like Amazon’s rise.

But Rakestraw has endured and even grown. Mr Barnard said last year was the best year his store has ever had.

“Sometimes they’ve been extremely competitive and hard to own,” he said. But at the same time, “they are the other big part of the industry that depends on print and in-person book sales, and I think they share some of our challenges.”

“Having said that,” he added, “I’d rather not have one just down the road from me.”

Company board of directors in 2018 fire CEO, fourth in five years. People in the industry were worried that the largest bookstore chain in the country might close.

The next summer, hedge fund Elliott Advisors, Purchasing sold the chain for $638 million and blamed Mr. Daunt.

Mr. Daunt, a respected bookstore that opened the first Daunt Books store in London in 1990, was brought to England’s largest bookstore chain, Waterstones, to solve a similar problem. The company was on the verge of bankruptcy when it took over in 2011. His theory was that chain stores should act less like chain stores and more like independent shops, and should have the freedom to tailor their offerings to local tastes. worked and Turned Waterstones into profitability.

He repeated this approach at Barnes & Noble. While orders for nationwide locations were formerly placed by a head office in New York, today a shrinking head office places only a minimum order for new books, leaving store managers free to choose whether to bring in more copies based on local sales.

“I take all the glory, but what I’m actually doing is getting people out of the way and letting them run decent bookstores,” said Mr. Daunt. “All work continues in the workshop.”

Barnes & Noble has also focused on selling books, rather than the wide variety of items it once carried, which were only tangentially – if at all – related to reading.

“We were selling a lot of irrelevant things to a bookstore,” said Mr. Daunt. “No one thinks, ‘I need a Duracell battery – I’m going to my bookstore’.”

Shannon DeVito, book director at the company, said the chain has strengthened its manga selection and is confident it has the inventory to fuel the boom in demand over the past few years. He also paid close attention to the books. Removed on TikTokwhere viral clips of readers crying for their favorite books have pushed many books to bestseller lists.

Barnes & Noble has also stopped charging publishers for placing certain books in highly visible spots such as an entrance or window. Mr. Daunt said this looked like free money, but it caused a number of problems: Books that no one wanted to buy stood out, and large orders that didn’t sell had to be sent back. (One quirk of the book business is that unsold books can be returned to publishers for full credit, a practice that dates back to the Depression. Shipping and handling costs can be substantial.)

Now store managers can choose which books to promote.

“Although it seemed as if we were religiously raising our hands and saying, ‘I don’t want to take the money’,” said Mr. Daunt, “in fact, we said, ‘I don’t want to put up with everything.’ aside from the fact that it forces me to run really awful bookstores, the costs involved in getting that money.

After years of unpopular devastation, Barnes & Noble began renovating its stores, many of which hadn’t seen a new carpet in nearly 15 years; Shortly after being named CEO, Mr. Daunt said the Barnes & Noble stores were “a bit ugly”. When the company closed all of its stores in 2020 due to the pandemic, it used that time to freshen up. The walls have been painted. Furniture has been rearranged. Some bulky screens have been replaced with smaller tables. And at the end of last year, it started doing more extensive redecoration.

Barnes & Noble’s online business has also flourished. Mr Daunt said this segment is 35 percent above pre-pandemic levels, but only accounts for 10 percent of the chain’s total sales. After years of using the Nook e-reader, the company is reinvesting. It recently redesigned the Nook app to integrate audiobooks and released a new version of the device before the holiday last year.

The company’s restructuring did not go smoothly. Mr. Daunt estimated that the head office staff was half as large as before. Much of this reduction came from layoffs, including many book buyers, as their duties shifted to local stores.

But a smaller central staff allowed the company to forego expensive New York City office space. The remaining staff work over two floors at Barnes & Noble’s flagship building in Manhattan’s Union Square, which the company is currently renting out.

Many questions remain about the future of Barnes & Noble. Costs are rising in the book business, which initially had low margins. And like all in-person retailers, Barnes & Noble needs to convince more customers to stop buying everything from their phones.

But there is a good headwind behind it, as sales in the industry have increased. With so many people stuck at home in 2020, a lot of people bought a lot of books. As the country opened up, broadcasters expected sales to drop back to pre-pandemic levels. But so far they haven’t.

McLean of NPD Books said that generally strong sales are due to blockbuster releases by well-known authors, and while some are coming this year – Marie Kondo will have a book this fall about how to manifest your ideal life by organizing it. Not much lately. Right now, there is something else behind all these acquisitions.

“At the moment,” said Mr. Daunt, “is driven by his enthusiasm for reading.”



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