Barnes & Noble wants to get smaller, more bookish

Discussion
Photo: Getty Images
Dec 04, 2017
Tom Ryan

Barnes & Noble originated in 1886 as a small bookstore named Arthur Hinds & Company located in the Cooper Union Building in New York City. Known in more recent decades for the development and proliferation of big box bookstores, the retailer is now looking back to a smaller presence.

“We believe that our store base today is too big at roughly 26,000 square feet per store and we believe that the future store format will be much smaller than that,” said Demos Parneros, CEO, last week on its second-quarter conference call with analysts.

Mr. Parneros said the company continues to test a variety of format sizes, running from 5,000 to 20,000 square feet, and has just opened a 10,000-square-foot prototype in Plano, TX. He said, “They all have the consistent look and feel, which is our new look that we’re thrilled with and more importantly customers love and are giving us that feedback.”

Barnes & Noble had 632 stores at the close of its third quarter and approximately 120 leases come up for renewal annually. The goal is to be “net positive” across stores starting in 2018. The preference is to relocate or downsize if possible to “give customers a brand new store that’s exciting and different and reflects our newest thinking.”

The smaller format focus comes as Barnes & Noble plans reduce its assortments of gift, toys and games to reemphasize books. The retailer in the past had touted its success diversifying and has benefited from hot trends like coloring books and vinyl records, as noted by Fortune. But the extensions “got a little bit off track,” said Mr. Parneros last week and non-book categories are now generally underperforming. B&N will narrow its assortments to categories with a higher turnover, primarily books.

“It’s simply who we are,” said Mr. Parneros. “I mean that’s our heritage. That’s what customers expect from us. If in doubt, we go and listen to our customers. We’ve been listening very carefully to our customers for many, many years. We’ve done recent research that reinforces and validates that and we want to be the best at selling books.”

DISCUSSION QUESTIONS: Do smaller stores and a greater emphasis on books make sense for Barnes & Noble’s future? What qualities present in its larger stores should Barnes & Noble hold on to?

Braintrust
"Barnes & Noble needs to concentrate on the core customer; people who like to read and who still enjoy the thrill of holding a book."
"Shrinking the footprint is one way to drive sales per square foot. Twenty-six thousand square feet seems to be very large for their assortment..."
"In Canada, there’s a book store called Indigo ... Indigo has just posted its 16th consecutive quarter of growth. Barnes & Noble what’s your why?"

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22 Comments on "Barnes & Noble wants to get smaller, more bookish"

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Mark Ryski
BrainTrust

Trimming the square footage of stores and narrowing the assortment seem like reasonable moves to improve short-term results, but neither of these speak to the more fundamental issue Barnes & Noble is dealing with — is there a sustainable model for book retailing? The traditional book retailing industry has been in a state of tumult since Amazon launched in 1994 and its future has never looked more uncertain. While I give senior management points for continuing to look for ways to re-set their business, it’s hard to see a clear path to success.

Peter Messana
BrainTrust

Absolutely, smaller stores that focus on the core will always be a positive. Too many times businesses try “new” things to drive sales per square foot. The problem is that they are driving non-core sales which, while great, will never lead to a raving fan. Just because Barnes & Noble had a toy near the checkout doesn’t mean I will come in for toys. They only need to retain the same look and feel, which reminds me of a library.

The key to retail success in the online world is relevancy. This will make Barnes & Noble more relevant; add some forms of personalization through technology and they would be even better off.

Kim Garretson
BrainTrust

One of the most popular memes on social media in the last couple of year has sobering data on the book industry, including “80 percent of U.S. families did not buy or read a book last year”. Of course, no source is cited, but still the data points to why Barnes & Noble is making moves like this.

Ben Ball
BrainTrust

The world will always have a place for physical media and the stores that house them. At least, that’s what I believe. Whether it is vinyl, paper or celluloid — there is just something about examining and purchasing a physical item and taking it home to enjoy that is rewarding. Maybe a bit like opening Christmas presents?

But I don’t think a return to the “corner bookstore” is the answer to Barnes & Noble’s current woes. Hopefully the new stores are more than that. One thing I didn’t note in the description of the stores is whether they will maintain the coffee shops. Losing that aspect of the experience would be a step backwards I think.

Phil Masiello
BrainTrust

Reducing the square footage and focusing on the core product is probably a good move. However, I think that these are defensive moves for the company. This is not going to make the company thrive into the future. There needs to be a re-thinking of the model. What is it that a customer wants in a bookstore today? Who is that customer? What is the model that is going to allow the company to thrive and not re-trench?

Barnes & Noble needs to pay attention to consumer behavior and develop a model that addresses those questions. If just reducing the size is the only answer Barnes & Noble can come up with, then this is just a slow slide backward into irrelevancy.

Brandon Rael
BrainTrust
Smaller format stores, curated assortments and a laser focus on the customer experience are most certainly the way to go forward for Barnes & Noble. However, the fundamental challenges the company has faced has been the marketplace disruption caused by both Amazon’s disruption and the fact that the brand has lost touch with their core customer. In the short-term, Barnes & Noble should seek methods of returning to their roots so to speak. In visiting one of their new concept stores, the format seems to have the winning combination of a curated assortment, comfortable format to shop in, a nice cafe and restaurant offering. For long-term sustainability, Barnes & Noble will have their challenges competing on price and convenience. Up against Amazon, however, what could turn the momentum in their favor is to leverage their in-store talent to provide more of a guide shop-like showroom experience. For the moment, Barnes & Noble has a clear advantage of having these brick and mortar locations, which could be transformed into an experienced focused format. Returning to their… Read more »
Phil Chang
BrainTrust

I don’t think this gets to the heart of the matter. Smaller stores mean less risk financially but it doesn’t necessarily equal what the consumer wants. We never have all the answers, but where does the e-commerce/marketing part of Barnes & Noble fit in with the smaller store strategy? Will they plan to implement deliveries to home? What else does the consumer want with a smaller book store?

One example of the opposite — in Canada, there’s a book store called Indigo that has taken a similar footprint to Barnes & Noble and turned it into a gathering place for all things that book lovers want. So when you come in, there’s a Starbucks in the corner, a book signing near the front door, children’s book reading in the back and lots of unique home accents that one can purchase all over the store. In other words, it’s an experience. One that the shopper loves.

Indigo has just posted its 16th consecutive quarter of growth. Barnes & Noble what’s your why?

Ron Margulis
BrainTrust

This is simply one more step toward a fire sale to Amazon, which can turn the locations into combo showrooms/Go stores/fulfillment centers. I expect this will happen before the end of the decade.

Neil Saunders
BrainTrust

From the amount of room Barnes & Noble devotes to CDs, DVDs and assorted tat, it is clear that its current stores are too large. It is clearly a retailer looking for ways to fill the space of legacy shops.

That said, smaller stores are not an automatic savior. Barnes & Noble has to give people reasons to visit. Based on its current proposition, there is a great deal more work to be done here. A second-rate Stackbucks store, a few book signings and some readings aren’t enough to cut it.

Bob Amster
BrainTrust

The challenge for any bookstore chain today is whether or not there are sufficient book readers out there who prefer hard-copy books to a digital source, like a Kindle. While the answer isn’t obvious, it is a safe bet that large bookstores are not needed. Barnes & Noble may be able to survive as a smaller company, changing to smaller stores, catering to a smaller audience than years ago. Including some related items in the assortment, especially this that appeal to children in the learning stages of life appears wise. I agree with Mark Ryski.

Art Suriano
BrainTrust
This is very smart. Barnes & Noble needs to concentrate on the core customer; people who like to read and people who still enjoy the thrill of holding a book when they are reading. I read a lot of materials online and on my devices, but there is nothing like holding a book. Smaller stores can work well for Barnes & Noble as long as they create the right atmosphere and give customers an excellent in-store experience. They will need to make customers feel welcome and provide them with an opportunity to browse and look through the books. In addition, they will need to have well-trained associates that can guide the customer, make suggestions and offer assistance. If they do that, they will be successful. I think smaller stores makes sense today for most retailers not just Barnes & Noble. Going forward that is what we’ll see, and the customer will get used to having the item delivered because the stores won’t have the inventory. We can still have a great time in a smaller… Read more »
Gene Detroyer
BrainTrust

Why would anybody go to a bookstore to buy a book? OK, of course there are many reasons. But to that point, let’s adjust the question a bit: Why would anybody go to a bookstore to buy a toy or a greeting card or vinyl records?

I believe the way to go is to downsize the stores, focus on the experience (yes, the coffee shops are extremely important), have more couches for people to sit and read on and sample a book. Make it a gathering place or a place to unwind or a place to escape.

Frank Riso
BrainTrust

In retail it is best to do what you know best. Selling just books is the right move for Barnes & Noble’s future and doing it in smaller stores is the right format. Reading books has not changed but how we read them has and Barnes & Noble needs to adapt too. I think keeping a coffee shop and reading areas should continue, all else should go!

Robert DiPietro
BrainTrust

Shrinking the footprint is one way to drive sales per square foot. Twenty-six thousand square feet seems to be very large for the assortment they need to carry — which is books. It is good that they are going to refocus on the core and shrink the store but that won’t change customer behavior.

Immediate need is why customers will go to a physical location. The other reason is they enjoy the process of browsing and hopefully buying. It will be interesting to see what Barnes & Noble is doing to increase the store experience. The book store/coffee shop vibe is one they should continue.

Lyle Bunn (Ph.D. Hon)
BrainTrust

Book stores need to be event locations that bring together people of common interest. This offers traffic and can fuel more conversion than carrying large inventories. Books are often an impulse buy or gift purchase, so offering products that fit into these categories while being part of the reading experience makes business sense.

Brian Kelly
Guest
10 days 33 minutes ago

Smaller stores, sure. Sadly, fewer stores too.

Unfortunately, all “software” has been disrupted and owning a hard copy is now a rarity. I suggested a favorite music CD swap for Christmas gifts. I got a blank stare from my nieces and nephews.

I’m not sure what legacy brand attributes I’d bring forward because I don’t know what a modern book shopper wants. I haven’t been in a Barnes & Noble in years and I’ve got a library full of books.

My desire for the tactile reading experience is now satisfied by my public library.
While it’s true for all of retail, it is especially true for book retail. It ain’t for sissies!

Dave Bruno
BrainTrust

I agree with many comments that experience is everything, and if downsizing their square footage helps B&N focus on designing experiences that encourage lingering, browsing, exploring and — gasp!!! — reading, then I am “all in” on this decision.

Craig Sundstrom
Guest

Honestly, what choice do they have? They aren’t selling the volumes (no pun intended) to justify the larger stores, so this is the only alternative (short of, perhaps, a desperate measure like trying to become a supermarket or general merchandiser).

The real question here is whether/not the decline will keep on going to the point that even the smaller stores can’t be supported … and while I hope that isn’t the case, I wouldn’t bet against it.

Shep Hyken
BrainTrust

This is what got B&N to the dance! They are, and always have been a bookstore. With technology, they don’t need to be a big book store. They can have their core books and have on-demand books printed in just minutes. There are obvious super-store locations that still work, but I like that they are going back to their roots. And of course they still have their big online presence.

Ricardo Belmar
BrainTrust

“If in doubt, we go and listen to our customers.” This quote says it all — perhaps B&N should have listened to their customers long ago instead of searching for new product categories to help their same store sales. Reducing store footprint and product assortment will help them strengthen their core business with customers, but this is a short term result.

Long term, B&N needs to understand why they matter to their customers. I suggest they look at an Amazon Books store for inspiration and focus on the reading experience to highlight their stores.It must be about more than just browsing through shelves of books — customers can do that online or via their mobile. They are coming to the store to see the book in ways they can’t online. Keep the cafe and the comfy seating areas. Add events and other ideas that make B&Na destination people will talk about. And oh, by the way — then people will buy some books while they’re there!

Kai Clarke
BrainTrust

Barnes & Noble is doing the right thing, but not for the reasons mentioned in the article. They should be downsizing their stores and limiting their selection of books because the entire book publishing industry is going electronic. The model has changed and it is either adapt or perish. This is just like the buggy whip industry when cars took off during the 1920s, cassette tapes, CDs, DVDs, landline phones, etc. It was adapt or perish. Books, in printed form, are not in our future. E-books are replacing books rapidly. Barnes and Noble is changing … and they need to manage this rapidly.

Matt Anderson
Guest
8 days 19 hours ago

There will always be a space for a well run operation in the physical bookstore space; emphasis on “well run.” Amazon acknowledges as much with the opening of their brick and mortar locations. The keys are to provide a localized, personal shopping experience for your guests while properly managing your product assortment; balancing depth in current bestsellers and breadth in back list titles and remaining competitive from a price perspective. Another major factor that B&N is addressing with this strategy is effective real estate management — with 20% of the system up for renewal annually and a smaller footprint, B&N can be more nimble in exiting underperforming locations and relocating to more desirable real estate. The ability to stay on the customer’s primary route is an invaluable tool in the customer acquisition and retention arsenal.

wpDiscuz
Braintrust
"Barnes & Noble needs to concentrate on the core customer; people who like to read and who still enjoy the thrill of holding a book."
"Shrinking the footprint is one way to drive sales per square foot. Twenty-six thousand square feet seems to be very large for their assortment..."
"In Canada, there’s a book store called Indigo ... Indigo has just posted its 16th consecutive quarter of growth. Barnes & Noble what’s your why?"

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