Barnes & Noble Testing Toy Shops

Discussion
Nov 12, 2010
George Anderson

By George Anderson

Books are a tough sell these days and Barnes & Noble
is looking for ways to make the space in its stores more productive. One possible
answer the chain has come up with is toys.

William Lynch, CEO of Barnes & Noble,
told Reuters the company is
testing 3,000 square-foot stores-within-the-store at five locations in Connecticut,
New Jersey and New York. The chain will sell educational toys and games in the
space.

"It could be huge for us," he told the news service. "We
think we should be the largest seller of educational toys and games in the
U.S."

The toy areas within the test stores is much larger than the space
currently given to kids’ books in existing locations. The store-within-the-store
is organized in five areas based on the educational objective of the toy or
game.

Pete Wahlstrom, an analyst with Morningstar, told Reuters that
toys had the potential to grow to 10 percent of Barnes & Noble’s business.

"On the margins, this is something that can drive traffic, and probably
targets more affluent customers that have more disposable income for the holidays," he
said.

Discussion Questions: What do you think of the potential for educational
toy departments in Barnes & Noble stores? What will it mean for other
toy sellers?

[Editor’s Note] William Lynch told Reuters, "We’re not trying
to create Toys R Us."

Please practice The RetailWire Golden Rule when submitting your comments.

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21 Comments on "Barnes & Noble Testing Toy Shops"


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Joan Treistman
Guest
10 years 6 months ago

Barnes & Noble is a perfect environment for educational toys. Given the omnipresence of their stores, it’s a good opportunity to bring in customers for the toys and family experience. Customers will be able to enjoy and buy the games but I suspect also become engaged with other products in the store. Aren’t we all?

Steve Montgomery
Guest
10 years 6 months ago

I see this as a logical line extension from children’s books for Barnes & Noble. By keeping the selection to educational toys and games, they limited the risk of head-to-head competitive pricing pressures with Walmart, Target and Toys “R” Us. This product niche fits their customer profile. Hopefully this enables them to keep the brick and mortar locations open so I, and others who like reading a book/book versus and ebook, will have a place to buy them.

Bill Emerson
Guest
Bill Emerson
10 years 6 months ago

Educational toys tend to be a very cyclical business. Remember LearningSmith and Zaney Brainy? They came, they flourished, they disappeared.

With the challenges that B&N faces with the surge of e-books and their demonstrated strength in the Kids world, this seems a natural (if short-term) solution to building revenue. To be successful, however, they need to be aggressive, which has not been a strength of theirs in the past (introducing the Nook last year and promptly selling out by mid-November until after the first of the year).

Susan Rider
Guest
Susan Rider
10 years 6 months ago

Hmmm…seems to be a well saturated market. Wouldn’t it make more sense to join the evolution and have book download stations, go in preview a book, then have a way to download it to your Kindle, Nook or whatever? Looking at toys is going back to what others have done and expecting a different result, can you say FAO?

Barnes & Noble’s best bet is to get innovative to push the envelope and do something out of the ordinary that ties back to their core competency. They already have some educational and craft toys that seem to always be on clearance? Interesting.

Ian Percy
Guest
10 years 6 months ago

Are we really talking “toys” here or is there something deeper? I hope the latter or soon we’ll see luggage, household items and oil change bays.

In the article the key word is “educational.” And that’s where I think there could be the critical intentional congruence essential for B&N success. Books (even fiction) are about education–the idea of reading is to learn something about something, perhaps even yourself. If they get into product lines that ‘teach’ you something in some way, then it will work and not seem so desperate.

Thomas Edison said “We don’t know a millionth of a percent about anything.” That means there’s lots of room for B&N and creative educational ideas.

Doug Stephens
Guest
Doug Stephens
10 years 6 months ago

I admire their willingness to experiment and think that this might have the potential to infill some lost sales. There’s going to be a lot of grandparents out there over the next 10 years buying a lot of toys for their grandchildren.

A good mix of e-books, traditional collectible books and educational gifts/toys, all in a really great interactive environment could be a good start in a new direction for B&N.

Maybe they could even offer ECE support and classes to help people teach their children learn to read early.

Dick Seesel
Guest
10 years 6 months ago

I agree with Joan…there is a natural synergy between children’s books and educational toys. While the discounters and big box stores like Toys “R” Us focus on “name brand” and licensed toys and games, the educational market seems fragmented and underserved. It also provides a reason for parents and kids (and gift-givers) to visit B&N on a more frequent basis, even though books for kids aren’t migrating to e-versions as fast as general-interest books.

One more benefit: A good redeployment of some of the unproductive space that B&N has devoted to CDs and DVDs over the years as this industry moves quickly to digital delivery.

Gene Hoffman
Guest
Gene Hoffman
10 years 6 months ago

Barnes & Noble, where never is heard a discouraging word about the printed word, is toying around in toyland to keep their ship of sales afloat. A good move, perhaps. But one wonders if the practice of seeking reading material in silence is enhanced by kids screaming in a nearby toyland.

Rick Moss
Guest
10 years 6 months ago

I have to just say that George’s side note about how the in-store toy shop is bigger than the kids’ book department made my heart sink. I think of a generation of kids growing up with a love of reading thanks to those fabulous, roomy B&N superstore departments. If educational toy and game engagement can be leveraged to support kids’ reading, B&N would be buttressing its own foundation. If they’re grasping at another revenue stream at the expense of kids’ books, they’re undermining themselves.

Gene Detroyer
Guest
10 years 6 months ago

First, let’s be sure to define that this isn’t a move into “TOYS.” This is an extension into educational toys. The difference in definition makes critical sense.

With that in mind, this move starts to evolve B&N from the bookstore to the store that stimulates minds. Once that distinction is made it opens B&N to many opportunities further outside of their current core business. Further, it gives reason to actually visit the store, explore and interact with the products. It offers something that can not (currently) be duplicated online.

Not only could this distinction be game changing for B&N, think of the fun they could have brainstorming where the “stimulation” business would take them.

Paul R. Schottmiller
Guest
Paul R. Schottmiller
10 years 6 months ago

The extension from books to educational toys is not a hard link to make (for consumers and B&N), however, I think that challenge will be offering “educational toys” that will create material differentiation from Walmart, Target, Toys “R” Us, Sears and all the niche online companies focused on the toy space. Seems we have been down this path before, so what is B&N going to do differently to make this a successful long-term strategy?

Kai Clarke
Guest
10 years 6 months ago

This is a poor decision. Is Barnes a retailer of information or toys? If they really want to impact their business, they should start selling the devices which people are downloading books on…iPads, smartphones, etc. This way they can sell both sides of the same market…the hardware and the downloadable books. Going to a Barnes for a handheld device will bring new customers in their doors, while balancing their appeal as a destination location. This will drive business in their stores!

Matt Hahn
Guest
Matt Hahn
10 years 6 months ago

Maximizing the productivity of your space is always important, but it must fit well with the brand. Educational toys work as B&N is a retailer you visit to gain knowledge or entertainment. However, this strategy is too small to ensure that B&N stays competitive in the media arena. The Nook is a good try, but yet to show it can compete with the Kindle and certainly not the iPad.

What B&N needs to do is break the mold and get ahead of the competition, rather than try to catch up. If it ever does make up ground on Amazon, I am almost certain that Bezos & company will leap ahead with another innovation. Perhaps a subscription book service on the Nook? Educational games & apps that can be downloaded?

Aakash Pahwa
Guest
Aakash Pahwa
10 years 6 months ago

Sounds like a logical extension–from books to educational toys. Having said that, if and when the educational toy business takes off (which it most likely will – B&N know what they want to do and are good at it too) somewhere down the line B&N does risk alienating its core customer base; hard-core, not-so-Kindle-or-Nook-loving book reader.

And books and reading means a lot to these people. They look to cultivate reading habits in their kids and grandkids. If I may take the liberty–its almost a family and generational thing. What happens to this customer set? Would B&N be able to find a good balance? And yes, to Susan’s point, preview and download should certainly be a part of the B&N future.

Dan Berthiaume
Guest
Dan Berthiaume
10 years 6 months ago

It’s a logical extension, but I’m not sure how popular “educational” toys really are (probably more popular with parents than kids!) B&N may want to also look at toys with tie-ins to popular fictional vehicles such as Star Wars and Harry Potter that may not be educational in the strict sense.

Ed Rosenbaum
Guest
10 years 6 months ago

Several years ago my friend was selling educational toys to the typical retailer and zoos. The company marketed animal replicas so zoos were a natural (no pun intended).

Taking this to the present, Barnes & Noble’s plan to sell educational toys and games are again the right tools for the right problem. There are probably plenty of ways B&N can rearrange their stores to allow this to be effective.

I find this exciting when a typical retailer thinks outside the box to stretch the limits of possibilities. The timing is right. There are not many places to find toys that correspond with learning. And to have them in one location is value added.

Ted Hurlbut
Guest
Ted Hurlbut
10 years 6 months ago
The thing to keep in mind is customers’ expectations of B&N. B&N is correct to ask themselves what else their customers would be willing to buy from them, but at some point they run up against those expectations. An important part of B&N’s cachet, I believe, is in the assortments they offer, and the ability of a customer to browse through a broad array of titles in any category they’re interested in, and in the casual ambiance of the store. This hasn’t necessarily been good business, and B&N has been trying to finesse this for several years now. There is a tipping point, however, and my sense is that B&N is getting close to it. They’ve already layered in more limited assortments of educational toys, and other educational materials, while scaling back book categories and assortments. While they are trying to find a more sustainable long-term business model for their stores, I suspect that their customers would rather see more books and fewer educational toys. In some ways, this is analogous to Walmart’s SKU rationalization… Read more »
Mark Price
Guest
Mark Price
10 years 6 months ago

I admire B&N’s willingness to test alternative products to drive incremental traffic and revenue to their stores. Educational toys are one avenue that certainly seems to be worthwhile to test. However, several challenges exist:
1. Toys tend to be a bit faddish, even in the educational segment.
2. Often toys must be ordered 6 months or so in advance and require storage of inventory.
3. The bulk of toys are sold during the holiday season.
4. Toys are sold at a discount in Walmart and other mass retailers all year long.

It will be interesting to see if educational toys become a mainstay at B&N. I believe they will in a smaller way, but that toys will not be the “silver bullet” to solve the fundamental problem that B&N faces — lack of traffic due to alternative digital channels.

Craig Sundstrom
Guest
10 years 6 months ago

And coming soon, a well equipped buggy-whip department: “It was a market that seemed neglected,” remarked …

OK, I’m being a bit harsh; as some have noted, this seems – superficially at least – a natural expansion: thoughtful people are the ones who buy books, they probably also buy (thoughtful) toys. But the problem is getting them into the store in the first place…something which B&N has had trouble doing lately…hence the line extension idea. And that of course is the real problem here: perception. What might seem like good idea when a company is doing well (e.g. Nordstrom expanding from shoes>clothing in the early 1960s) sounds instead like one-idea-after-another desperation when it isn’t.

Greg Callahan
Guest
Greg Callahan
10 years 5 months ago

Seems they are following Borders’ lead. Borders added educational toys a couple of months ago.

Ed Rosenbaum
Guest
10 years 5 months ago

After thought: I had lunch with my friend in the toy business and told him about this discussion. He tells me this is not new for B&N. They tried this before in the early 90s. So are we “back to the future”?

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