Business Movers: Saving Barnes and Noble

Episode: Saving Barnes and Noble | Industry Expert Jane Friedman Discusses The Resurgence Of Barnes & Noble And The Future Of Bookselling | 4
Host: Lindsey Graham
Guest: Jane Friedman, Publishing Consultant and Author of The Business of Being a Writer
Release Date: January 30, 2025

Introduction

In this riveting episode of Business Movers, host Lindsey Graham delves into the dramatic turnaround of Barnes & Noble (B&N), once a titan of American bookselling teetering on the brink of collapse. Joining him is Jane Friedman, a seasoned publishing consultant and author, who provides expert insights into the strategies that resurrected B&N and explores the future landscape of bookselling.

The Decline of Barnes & Noble

Barnes & Noble's struggles began in the early 2000s as the rise of Amazon revolutionized the book retail industry. Originally the crown jewel of American bookselling under Leonard Riggio's leadership since 1971, B&N expanded to hundreds of locations by the late 1990s. However, the emergence of online shopping introduced unprecedented competition, offering consumers convenience, competitive pricing, and an expansive selection that physical bookstores couldn't match.

Jane Friedman notes, “Amazon used books as a loss leader to build a customer database to sell other products. This created an uneven playing field for bookstores that couldn’t compete with such discounting” (13:55).

B&N's initial response was lackluster, marked by frequent changes in leadership and a failure to innovate store layouts or merchandising strategies. This period saw the closure of numerous stores and significant financial losses, similar to other retailers like Borders, which succumbed to similar pressures.

James Daunt: The Turning Point

James Daunt, a British bookseller renowned for reviving the struggling Waterstones chain in the UK, was recruited to lead Barnes & Noble in 2019. Bringing a wealth of experience from his independent bookstore and successful turnaround of Waterstones, Daunt aimed to shift B&N’s focus back to serving customers rather than prioritizing publisher demands.

Lindsey Graham observes, “James Daunt made few central decisions and instead empowered local managers to tailor their stores to regional tastes” (16:43).

Strategies for Revival: Localization and Curation

Central to Daunt's strategy was the transformation of B&N from a uniform national chain into a collection of locally curated bookstores. This involved:

1. Empowering Local Managers: Daunt dismantled the corporate top-down structure, allowing store managers to make inventory decisions based on their specific regional markets.

   Jane Friedman explains, “Barnes & Noble ceased dictating what each store should stock, enabling booksellers to curate selections that resonated with their local communities” (23:37).

2. Reducing Return Rates: By eliminating costly publisher-funded display units, Daunt significantly reduced the return rates of unsold books. Waterstones, under Daunt, had already lowered its return rate from 20% to 3%, and similar strategies were implemented at B&N aiming for around 15%.

   Friedman highlights, “Cutting out the co-op deals with publishers reduced unnecessary returns and allowed more meaningful customer-focused selections” (28:50).

3. Enhancing In-Store Experience: Renovating store layouts to create inviting and unique environments encouraged customers to spend more time browsing and purchasing.

4. Community Engagement: Organizing author events and fostering local literary communities helped rebuild B&N’s presence as a cultural hub rather than just a retail outlet.

Challenges and Solutions

Despite the successes, Daunt faced significant challenges:

• High Operating Costs: Maintaining physical stores is inherently expensive, especially when competing with the efficiency of online retailers like Amazon.

• Labor Relations: Implementing changes led to layoffs and staff reductions, which sparked criticism and labor strikes. Friedman acknowledges, “The layoffs were part of ensuring the long-term health of the business, though they were met with resistance” (27:14).

• Balancing Publisher Relationships: Moving away from publisher-driven merchandising sometimes strained relationships with authors and publishers who felt their books received less visibility.

Friedman remarks, “By prioritizing customer preferences over publisher demands, B&N improved overall sales but occasionally faced pushback from authors who felt underserved” (32:37).

Resurgence and Growth

Under Daunt’s leadership, Barnes & Noble has seen a remarkable turnaround. The company has not only stabilized but is also expanding, opening new stores in strategic locations without encroaching on independent bookstores. This careful expansion ensures that B&N enhances its community presence without stifling local competition.

Friedman points out, “Barnes & Noble is now operating more like an independent bookstore, focusing on personalized experiences rather than standardized offerings” (34:49).

The Future of Bookselling

Jane Friedman remains optimistic about the future of the publishing and bookselling industry despite the challenges posed by digital transformation and changing consumer behaviors:

1. Print Books’ Enduring Appeal: Contrary to expectations, print books have maintained strong sales, accounting for approximately 70% of the market.

   Friedman expresses surprise, “The persistence of print has been a pleasant surprise, defying predictions that digital would dominate entirely” (10:21).

2. Growth in Audiobooks and Digital Services: The audiobook market continues to flourish, complemented by platforms like Spotify and Wattpad, which bridge traditional publishing with digital innovation.

3. Niche and Independent Bookstores: The resurgence of independent bookstores with specialized offerings suggests a shift towards more personalized and community-focused retail environments.

However, challenges such as the potential removal of TikTok—a platform that significantly boosted book sales through influencer-driven marketing—pose threats to current marketing strategies.

Friedman warns, “The potential ban of TikTok could challenge how books are marketed and discovered, necessitating new strategies for engagement” (10:21).

Lessons for Business Leaders

James Daunt’s successful turnaround of Barnes & Noble offers valuable lessons for business leaders across industries:

1. Empower Local Leadership: Allowing local managers to make decisions tailored to their specific markets can lead to more effective and resonant business practices.

2. Customer-Centric Approach: Prioritizing customer experience over corporate or publisher demands fosters loyalty and increases sales.

3. Adaptability and Innovation: Continually evolving business strategies to meet changing market conditions is crucial for long-term success.

4. Effective Cost Management: Reducing unnecessary expenses, such as high return rates from publisher-driven displays, can enhance profitability.

Friedman encapsulates it best, “Serve the customer above all. By shifting focus back to what customers truly want, Barnes & Noble was able to rediscover its relevance and thrive” (46:03).

Conclusion

The revival of Barnes & Noble under James Daunt's leadership exemplifies the power of strategic localization, customer focus, and adaptive business practices. While the bookselling industry faces ongoing challenges from digital transformation and shifting consumer behaviors, the resilience and innovation demonstrated by B&N offer a hopeful blueprint for the future of retail.

Notable Quotes:

• “Amazon used books as a loss leader to build a customer database to sell other products. This created an uneven playing field for bookstores that couldn’t compete with such discounting.”
  — Jane Friedman (13:55)

• “James Daunt made few central decisions and instead empowered local managers to tailor their stores to regional tastes.”
  — Lindsey Graham (16:43)

• “Barnes & Noble ceased dictating what each store should stock, enabling booksellers to curate selections that resonated with their local communities.”
  — Jane Friedman (23:37)

• “Cutting out the co-op deals with publishers reduced unnecessary returns and allowed more meaningful customer-focused selections.”
  — Jane Friedman (28:50)

• “By prioritizing customer preferences over publisher demands, B&N improved overall sales but occasionally faced pushback from authors who felt underserved.”
  — Jane Friedman (32:37)

• “The persistence of print has been a pleasant surprise, defying predictions that digital would dominate entirely.”
  — Jane Friedman (10:21)

• “Serve the customer above all. By shifting focus back to what customers truly want, Barnes & Noble was able to rediscover its relevance and thrive.”
  — Jane Friedman (46:03)

Further Reading:

• The Noble Legacy by Betty Noble Turner
• The Late Age of Print by Ted Streifus