Photo: Wikipedia/Todd Van Hoosea
Barnes & Noble counts on store managers running its business better
At a recent virtual Annual Meeting of the Book Industry Study Group, James Daunt, Barnes & Noble’s CEO since August 2019, detailed his strategy to provide the chain’s store managers with more local autonomy over the books they stock and how they are displayed.
Empowering store managers, he believes, is necessary to not only provide customers with book selections geared toward local tastes but to offer the personality and passion that makes bookselling thrive. He sees the in-store experience as the way to win loyalty and differentiate from Amazon.com.
“If we are not inspiring within our communities and able to attract customers to us, frankly we will not exist,” said Mr. Daunt. “How is it that bookstores do justify themselves in the age of Amazon? They do so by being places in which you discover books with an enjoyment, with a pleasure, with a serendipity, that is simply impossible to replicate online.”
Mr. Daunt employed a similar strategy in driving a turnaround at Waterstones, the U.K.’s largest bookstore chain he has led since 2011. Waterstones’ owner, Elliott Management Corp., acquired B&N last year, which has seen seven straight years of sales declines.
The changes have caused friction. Nearly half of the chain’s corporate book buyers — touted in the past as the talent discovering tomorrow’s authors — have been laid off. Corporate still oversee decisions over new books, although store managers don’t have to reorder them.
B&N’s move has strained relationships with some publishers because the local focus is scaling back on the co-op practice of paying for title placement. Mr. Daunt told The Wall Street Journal the practice leads to high returns, or unsold books heading back to publishers. B&N’s return rate is at about 25 percent versus Waterstones’ 3.5 percent.
The local shift further means B&N loses some discounts from bulk ordering. Mr. Daunt is counting on shared practices across branches to help elevate the chain’s performance.
“As you let the stores diverge, a quarter will be brilliant and a quarter will be absolutely terrible,” Mr. Daunt told the Journal. “A significant number of your stores will become worse, not better. Then you teach and encourage them and, in time, everybody becomes better.”
- Conversation with B&N CEO James Daunt – Book Industry Study Group/Youtube
- Barnes & Noble’s New Boss Tries to Save the Chain—and Traditional Bookselling – The Wall Street Journal
- Daunt outlines his strategy for Barnes & Noble – Bookseller
- B&N CEO James Daunt Delivers Keynote at BISG Annual Meeting – American Booksellers Association
- Everyone Wants Barnes & Noble to Survive. Can It? – The Hot Sheet
- Bookstores could be in store for a post-lockdown boom – RetailWire
- Barnes & Noble’s plan is to be more like an indie bookseller – Bloomberg
Discussion Questions
DISCUSSION QUESTIONS: Do you see more pros than cons in Barnes & Noble’s new focus on local autonomy? What else may B&N have to change to compete better with Amazon.com?
Poll
BrainTrust
Joan Treistman
President, The Treistman Group LLC
Steve Montgomery
President, b2b Solutions, LLC
HQ should define the commander’s intent and broad rules of engagement, but if B&N wants to compete with the online channel for a product that is identical across all distribution channels, then the in-store experience will make the difference. Going to a bookstore should be part of our culture and the local managers – if given the right training and tools – will be key.
The move to give local managers more autonomy is noble, but I doubt that it will dramatically change the business trajectory at Barnes & Noble. The independent book selling business has seen a modest recovery as consumers have come to value the quaintness of a local book shop, but the pandemic has hurt in-person browsing behavior and, when it comes to online, it’s virtually impossible to compete against Amazon and its Prime machine.
Barnes & Noble’s localization play seems both obvious and late. Many consumers have strong feelings about supporting local bookstores and strong resistance to corporate cram-downs influencing book assortments. Now to the late part – milling around and serendipitous experiences are at odds with the current COVID-19 shopping environment. To make this work, Barnes & Noble will need to instead address intentionality or at least ensure that those “finds” are located near the door or maybe even on the sidewalk. Upgrades to Barnes & Noble’s website and leaning into BOPIS to allow some of that discovery to happen in advance also makes sense.
In addition to agreeing with Mark Ryski, I think B&N needs to address three factors to be successful. They need to find talented managers for every store (good luck). They need to pay commensurately with what they expect (will they?). And they need to empower these superstars-to-be so that they have the tools that they need in order to be autonomous and successful (accessible tools, adequate training). Good luck with that, too.
Local autonomy is not sufficient if the managers don’t get the proper training and guidelines for advancing a local strategy. While there are currently limitations for in-store events it’s up to management to find ways to engage consumers in a more personalized way. Breaking through email and Facebook with B&N ads won’t do the trick. If customers are to feel their needs are being addressed and that they are part of a B&N community, advertising and targeted correspondence may bolster the relationship between Barnes & Noble and their customers. This is a component of marketing Amazon.com doesn’t yet have.
I was a store manager in the early days of The Gap when managers were given leeway to make local decisions for their stores. It was exhilarating. I left and worked about 10 minutes for a chain that didn’t allow its managers to make any decisions at all. Working there was death by manuals and planograms. There is a happy medium and it sounds like Barnes & Noble has found it.
It is completely understandable to want every store in the chain to run exactly the same. On the other hand, allowing a manager to provide local flavor and personality to the store is exciting.
“…death by manuals and planograms.” Well put. In one of my retail assignments I watched as the CEO almost beheaded a store manager who expressed the opinion that they would like to exercise a little creativity on top of the planograms. I understood where he was coming from … “creativity” in unskilled hands is mayhem. But retail is supposed to be a creative business, so when it’s shut down it’s a problem. Yes there have to be standards for in-store brand execution, but local creativity can certainly have a role.
Totally agree, Jeff!
What’s old is new. During my department store era, the biggest change I made was that store managers were king. That led to better operational control and a high level of staff involvement from customer service through to merchandising and floor presentations. As a result, our people knew the store extremely well and this all paid off in spades. Performance levels soared and customers were thrilled. By the way, my favorite book store in our neighborhood is an independent where this operational strategy is alive and well. What other book store have you been in where at a minimum, at least one staff person has read the book you are inquiring about? Where else can you go?
If you train them how to display and what guidelines should be followed to a T and which have some wiggle room, I’m all for it. Frequently however we give managers freedom without training and they are chastised for doing things they didn’t know they couldn’t do.
Frankly, what choice does B&N have but to follow a strategy of leveraging its one asset over Amazon – local stores? While this seems like an obvious decision, especially in an era where local independently-owned bookstores are seeing a resurgence of interest with shoppers, B&N must execute flawlessly by supplying the right training and tools to its store managers to make this transition a success. Their immediate challenge is that this will be difficult to execute during the COVID-19 pandemic when a strategy of lingering in the store is not what consumers want. However, if B&N doesn’t give consumers a reason to come into their stores, how will they survive? I expect a combination of this strategy and delivering a more robust and innovative loyalty program is the formula B&N needs to effectively compete with Amazon and provide a distinct experience to their customers that will have them coming back for more.
I have seen this type of strategy in more than one retail company including one I took over. I can sum up what happens in one sentence: Empowerment before education equals chaos.
Barnes & Noble appears to be expecting its local managers to somehow quickly develop the expertise that its current procurement and mechanizing staff gained over a long period of time. A better solution would be a combination of local knowledge and corporate expertise. Admittedly this is not an easy feat to pull off but one that would be worth the effort.
We are long past the stage where there are Amazon-proof business strategies. Amazon and other retail giants have penetrated all retail segments, and are an intrinsic part of our everyday lives. However, pre-COVID-19, there was a revitalization of the local book store and community-based Main Street shopping, as a way of customers connecting with their town.
The paradox of choice sometimes reaches a point of fatigue, and this is where an outstanding experience at a B&N or a community-based store could drive new business opportunities. While data and analytics strategies help to fuel the digital personalization algorithms, there is nothing like the multi-sensory experience of visiting your local shops.
Somehow, B&N and local stores have to find a way to recapture the magic of knowing their communities and the customers they serve.
In any business there must be a system and process in place. Because of the diversity of the communities that B&N serves, their system must have flexibility. While it’s more than a guideline, the managers must be able to localize their stores. If they can manage the business well (the process/system), they should be given the autonomy to create a better local experience.
I’m rather surprised that none of the esteemed commentators noted that before Amazon destroyed much of B&N’s core book-selling business, B&N was essentially the same type of malevolent force that slayed many an independent bookseller. Consequently, with B&N caught between playing “victim” vs “vanquisher” it is hard to be too sympathetic to their plight.
Further, the kind of intimate experience espoused by the CEO is hardly feasible in the too-large-for-their-own-good sizes (and non-Main Street locations) of most B&N stores. (Incidentally, most Waterstone stores, as far as one can tell throughout London, are infinitely more manageably scaled and located to begin with.) Plus, the kind of community-centric ambiance they want isn’t exactly something you can do merely by re-assorting your assortment or pinning up local school pennants. Nor can a manager, no matter how empowered, come off as your friendly, knowing, neighborhood proprietor, without being made to work 24/7 and greeting and getting to know (nearly) every customer who walks in the door. (Were it even possible.)
I do not wish them ill, or job loss to their individual workers. But I simply do not see B&N becoming more precious while at the same time needing to stay in and be all about everything related to books. Maybe this is just going to be their last, yet nobly intended closing chapter.
Store managers are the pivotal variable in terms of a retailers locational performance. I’ve seen many examples where great managers trade poor locations well, and weak managers destroy value in great locations. I wrote about it here.
Physical retailers need to invest in their store managers, and ensure they are well armed and prepared for the strategic challenges the business sets them.
Barnes & Noble has the right idea, but needs to ensure manager selection, training, support and guidelines are all in the right place.
The good news is that BN stores will cater to local tastes; the bad news is the stores will be different and difficult to manage across the chain. Since uniformity has not worked, perhaps responding to local tastes will work better. This will be very difficult for BN to manage, but may provide them a winning formula like is has for Waterstones in the UK. To compete more with Amazon, BN will need to be more aggressive on book pricing and provide better delivery services from its website.
I have a hard time believing that if a significant number of Barnes & Nobel stores become worse, not better, that this merchant would be around long enough to course correct. Daunt is playing the long game with a company that has been in successive annual decline for the better part of a decade. I worry time is not on his side.
Barnes & Nobel has demonstrated resilience in a very difficult retail environment, even before Covid. It’s clear that their stores still resonate with consumers. Giving store managers autonomy to play to local preferences is a good move. But this strategy needs to pay off sooner vs. later for this beloved book giant.
It’s ironic that the tools used by indie bookstores to compete with national chains are the same tools needed by national chains to compete with Amazon. The difference is that B&N might have the resources to fully fund local customization.
It also feels like this is a critical step — beyond pros and cons, for the survival of the chain. Purchasing behaviors and technology have limited B&N options.