After Its Sale, What’s The Next Chapter For Barnes & Noble? – Forbes

Barnes & Noble, forgive the obvious cliché, has been through enough chapters to fill a good-sized book. It began as a small Manhattan store selling textbooks. Then it exploded into the largest seller of books in the country, with hundreds of stores that were as much social experiences—before they were called that—as retail establishments. That was followed by a long stretch of bad news, courtesy of both Amazon and its own bad decisions and high CEO turnover. Finally, it has gone through its treading-water period, floating solution after solution to try to keep its head above the retail surface.

Now, it’s about to write its latest chapter, following news that it will be bought by a private equity firm, Elliot Advisors, which lists on its résumé the successful ownership of the big British bookstore chain Waterstones.

Getting a read on what Elliott—and projected new B&N chief James Daunt, who also runs Waterstones—will do to turn around the American operation is at this point pretty much speculative. But a look at what it did with Waterstones and best practices from other book sellers around the world—including from B&N itself—provides a possible look at what the next chapter will be for Barnes & Noble:

  • A hallmark of the Waterstones strategy has been localized assortments and one-size-does-not-fit-all stores. The company has given its individual managers much greater leeway to tailor their assortments to the local marketplace even as central management picked a book of the month and refused to let publishers dictate assortments or minimum order sizes based on promotional incentives. This is largely in contrast to the way American bookstores have operated.
  • A 2017 story headlined “How Waterstones Came Back from the Dead” in the British newspaper The Guardian detailed how Daunt closed underperforming stores and laid off some 200 workers. Those who remained were paid more to make them more valuable on the selling floor, the report said. The new owners could take similar actions with the 600 or so stores B&N continues to operate.
  • Reports announcing the B&N purchase, while stating the two companies would continue to operate separately, noted that Elliott hoped the two operations would “benefit from the sharing of best practices.” One of those has been Waterstones’ investment in its physical stores; it says “readers continue to value the experience of a great bookstore.”
  • Waterstones has also been effective in tailoring store size and design to local markets, something that will be difficult to replicate in the U.S., where so many B&N stores are in or near malls with similar footprints. New independent bookstores, such as the spectacular Guiyang Zhongshuge Bookstore in Guizhou Provence in China, are stressing distinctive architecture and interiors to set them apart from online sellers and have to be viewed as role models for new stores going forward.
  • Barnes & Noble itself has taken steps to create more of an in-store experience, opening a number of hospitality sections within its stores, including coffee shops, snack bars, cocktail lounges and even full sit-down restaurants. One new store in Austin, Texas, devotes nearly half its space to non-book activities.

Still, the elephant in the book room remains Amazon, which has a commanding market share and in fact now has 19 physical stores itself. While reports on Waterstones’ turnaround say little about its digital efforts, Daunt says the worst is over in the competition with e-commerce. “There are limits to the online experience,” he told The Financial Times when the deal was announced. “In the world of books it is as good as it can be. We endured the fire, and it forced us to dramatically improve our shops and raise our game.”

Nevertheless, Barnes & Noble’s new owners—and there have been reports of a second offer coming in for the chain, but nothing has been confirmed yet—will certainly have their hands full turning around the operation in an extremely competitive marketplace.

“You have to be focused,” Daunt said in that Financial Times interview. “You can’t drift off and be writing poetry in your head.”

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