Barnes & Noble Set To Be Sold To Elliott Management For About $683M
npr.org
npr.org
So why is Barnes and Nobles struggling? A couple of important points:
Their inventory and footprint IS HUGE. Large inventory with low turnover is a margin-killer in retail. And I doubt they make much money off the books in their shelves - real money is in the piled selection and special coffee table books and new features and what have you.
Wide inventory is their advantage over the smaller stores, but it comes at a huge cost and forces them to keep prices high. Remember, in retail, selection costs money consumers have to pay. Smaller stores can get away with a random selection and stacking books all over the place (the hunt is part of the experience). If someone can't find a copy of the Republic at B&N, they probably lost a customer.
I suspect they will switch over to a more curated model (like AmazonBooks) - basically only new and select books. Smaller store, less footprint, and less product to buy and eat costs on. And then they can compete on costs more.
That's understandable, but a bit of a bummer. Part of the joy of B&N is being able to just go and browse--finding something you didn't know you were looking for.
With it downsized, I imagine we'll get something closer to the bookstore at an airport: nothing but the most recent Tom Clancy novels and such.
I suppose the best-case scenario would be like your neighborhood comic book store, where you can place the order and B&N would ship it to store from one of their warehouses.
If my book is going to be shipped, it’s almost surely going to be shipped to my house, whether by B&N or by Amazon...
I feel this is less likely to be a valid business strategy since 2013.
There are far fewer shelves of books now. Of the books they do have, they are optimized for profit -- ranging from best sellers, new books by genre, and those few books from big authors that sell year over year.
Most of these books are now trade paperback instead of mass market paperback. I go in needing to get Tom Sawyer and the only option they have is $15.95.
They took the computers out where I could look up a book.
If I manage to find a series of books I want, there is a good chance the first book in the series is missing, since that is the most likely to be purchased. I could then ask at the counter, where they'll tell me they can order it for me.
The shelves themselves have fewer, larger books -- many place front cover out -- occupying fewer shelves. There is just no hunt left in B&N anymore. There is no discovery of something from the back catalog.
Granted, that section is a lot smaller now, with books front-cover-out, as you say. But it's still kind of a sucky move for steady customers.
I used to visit the local B&N every week. Now it's down to every few months, when I know exactly what I want to find there. And the B&N is about a quarter toys and board games now (this is not an exaggeration). We're down to two bookstores in our city of 600K+ people, hard to believe.
I asked a manager about it, and they told me it was a corporate directive.
I really wonder if these corporate directives are made by people who like bookstores, or read.
http://fortune.com/2018/08/29/former-ceo-parneros-sues-barne...
Honestly I'm amazed Riggio got as much as he did for the sale. I suppose there's a fair amount of value in the property portfolio, but the book business as a whole is in a very rocky place.
Mine has the same number of shelves as far as I can tell, but reduced the overall number of books on a given shelf. They keep the shelves looking full by drastically increasing the number of books with outward-facing covers.
I know it sounds like a minor change, but it really gives me an uncanny valley feeling.
It’s funny watching a movie like You’ve Got Mail today when the trend was reversed. That movie hasn’t aged well for many reasons now that I think about it.
https://en.wikipedia.org/wiki/Mikl%C3%B3s_L%C3%A1szl%C3%B3#P...
The independent stores that you think are doing great are not what many fans of independent bookshops are thinking of by the words “independent bookstores”.
I fondly look back on certain 1990s independent bookshops that had enormous stock, and books were all they sold. But these days, many independent bookshops have trimmed their book inventories to a bare minimum of “new and select books” like you speak of. Small bookshops have felt the same pressures as the large chains, and in the place of actual books come things like vinyl records, Kikkerland products, and fancy teas. That might help them stay afloat financially, but for actual book lovers, it feels like the soul has been ripped out of the shop, like the proprietors are not bibliophiles themselves.
One of the reasons I don't like B&N is because I feel it's a store no longer dedicated to books. They have books, but it's also a gift store, a toy store, and a stationery store. From just my estimate, I feel about 40 percent of its floor-space is for non-book items.
Another book chain in Canada, Indigo Books, operates similarly.
I think the last bastions for book-lovers are used bookstores. Also, Powell's in Portland seems quite dedicated to selling books of all sorts.
That said, I still loved the incredible bookstore, and the co-located English store. Not to mention the huge vertical garden, with some 600 plant species. Definitely worth visiting, whether you're a bibliophile, or not.
A major independent store in Denver, Tattered Cover, dropped from being spread across 2 large floors down to 1 smaller floor, and I heard the once had 3 floors of the building they’re in. They seem to have focused on keeping the best books in stock though, subjectively speaking. But a decent part of that space is also coffee shop, periodicals, etc as well. I think they also lost any space for authors to come do readings.
It's a cozier atmosphere too, more conducive to hanging out for a while digging around for things that look interesting. An all around more enjoyable experience than B&N or Borders ever were.
Edit: I guess I should also mention that ours was a Borders and then after they went out of business it reopened as a Books-A-Million maybe a year later. I think it was something else before it was Borders, but that was before my time.
Personally, I like to buy print books because I can give them away to friends or family after I read them. I also get a lot of print books from my local library, because there's nearly always less of a wait than for ebooks, due to the obnoxious DRM/copyright terms that ebooks for libraries entail.
For instance, I have no trouble reading most fiction on either my Kindle or my phone - I'm reading through in a linear fashion, and there usually isn't much besides text. I usually don't have to hold every detail in my head, and can just flow along.
If I get into non-fiction, that is usually where I switch over to either print, or failing that, reading on my computer. Sometimes I can get by with my large-format Kindle DX clone, but that can be dicey. With non-fiction, there is usually a lot more paging back and forth; I may be reading a paragraph, and want to go back and double-check a map or table of figures, or re-read a section that I didn't grok the first time. There might also be footnotes or endnotes that one wants to skip to, and the experience isn't great in most reading apps. It's also considerably easier to read non-fiction on a larger screen or a textbook-size physical copy, I find - for instance, any kind of programming book usually has large blocks of code listings, and looking at those on a 27" 1080p monitor or a physical book where I can see the whole thing at full size, on two facing pages, is much easier than on a 5" phone screen.
When I ride the subway and I see a lot of people reading on devices and relatively few books. Book sales seem to be propped up by gifts, where regular readers love the convenience.
This is especially true of older readers who love being able to increase the fount size.
Physical books have been with us much longer, culturally speaking, than vinyl records were. We're talking millennia. It's going to take much more than the iPad to kill them off.
The eInk device is a better comparison, and according to research(1) it's comparable in most ways to paper reading, but it has some problems with helping people maintain chronological order.
So eBooks as good as books don't seem so far off.
(1)https://www.frontiersin.org/articles/10.3389/fpsyg.2019.0003...
I went in to purchase it, and the price in store was a couple bucks higher than the listed price online. I asked the clerk about it, and he kind of shrugged and said he couldn't do anything about it.
I walked out without the book and ordered it from Amazon on my phone in the parking lot.
I still can't fathom the decision-making that led to that pricing strategy.
It works out great (usually) for the impatient, but terribly for the patient that are aware of their options.
It's not like you're going to die if you don't get the book you want in 2 days, or even 3-7 business days. (Not that I buy physical books anymore typically, but it applies to other items)
People have just grown very impatient over time. I found myself getting annoyed that I wasn't receiving some items in 1 day (in Korea), until I reflected on what I actually was getting annoyed over.
Personally I find myself buying things on amazon or gmarket simply to avoid having to drive to the store.
Immediacy has value, so if you need something _now_ you will be willing to pay for that.
Also, you have to pay in time and money to go to the store, so you _may_ be willing to pay more to have the book delivered.
In both situations, the way the book gets to you changes the price you're willing to pay.
You aren’t likely to talk to a knowledgeable salesperson at a chain bookseller, as generally they are not big book fans. They just needed a job, and these chains will hire just about anyone who can competently work their POS systems.
I can understand certain independent bookshops having great additional value to customers because their proprietors and the other clerks were voracious readers. However, for Borders/Barnes & Noble/Waldenbooks, and various other US chains, their staff has been generally unable to talk in any depth on books since at least the 1990s when I first visited them.
As somebody who spends a ridiculous amount of time at my local Barnes & Noble store (I work from their cafe a lot, but also come here to buy books a lot), and who has gotten to know most of the staff here pretty well, I would say that this does not jibe with my (n=1) experience. It doesn't prove anything, but the people who work here (the New Hope Commons store, in Durham, NC) are quite often bibliophiles, and/or are very knowledgeable about books and/or quite a few other things. One of the baristas is a masters student in Data Science and always points out to me if some new techie book has shown up on the shelves that he thinks I might be interested in. Several of the employees are also authors in their own right, and I just finished one of their books which was, if not exactly great, definitely at least worth reading. Another lady ran one of the first ISP's somewhere in the midwest back in the day, and knows all sorts of interesting stuff. Amazingly she didn't know about the show Halt & Catch Fire until I mentioned it to her the other day.
Anyway, I digress... the point is just that at this one store, at least, there is a staff of people who are quite knowledgeable/interesting and make it worth coming in, in order to interact with them.
That really changed after a disappointing 2017 holiday season when they laid off close to 2000 mostly long term employees in February 2018. They basically dumped a lot of long-term employees and hired much less experienced basic retail workers if they hired anyone at all. There was actually a fair amount of angst about it at the time particularly among bibliophiles.
A trenchant but insightful review of events from the time: https://audreyii-fic.tumblr.com/post/170886347853/the-entire...
There's really not a good reason for their in-store price to be higher than their online price in 2019.
This is of course a very stylized/idealized argument, but I think it's a good point to consider.
Think of the price match as a coupon that you have/know about but others don't. The store is content to sell you the item at a discount (they likely still make money and they keep you coming to them) but they'd still prefer to sell to you at the higher price.
Over the past few years, products at my local Best Buy are regularly 20-40% more than on their site. (Unless you order through the site for local pickup... then you can get the online price.)
Walgreens is the same. Might be $12 online but $18 in my local store.
Barnes and Noble is pretty par for the course in this.
I'm surprised by the experience related here - I'd absolutely expect the store to price match online when asked about it even though I believe they were separate divisions.
If you have accepted location permissions for the Target app, the app will show the in-store price when it can tell you're in a store.
The only way of knowing this is that in smaller/lighter print under the price, it'll either say "Online" or whatever store location.
The most egregious example was an item I bought that cost 40% more in-store versus online, and you'd never know had you looked at the app.
i don't shop there much anymore, but i've done bopus (buy online, pick up in store) before to get the online price directly.
The average customer gettibg the book themselves rather than ordering it and picking up at the counter is imposing more cost (and that's even more true of the average in-store customer, who probably hasn't searched online for a particular title and checked inventory and then decided not to do online purchase and pickup; by doing that you are making yourself indistinguishable, from a pricing policy perspective, from a much more expensive to serve class of customer.)
I don’t like a company that sometimes squeezes and sometimes caresses.
https://help.barnesandnoble.com/app/answers/detail/a_id/3265...
Beyond that, the in-store price is considered to be the “normal” pricing. You are getting a discount on the website.
Make a decision as if you are betting all of your money on your choice. Don't take shortcuts based on your inborn biases and seek contrarian opinions and experienced counsel. Don't blame bad luck on bad outcomes; figure out how you could have made a better informed decision. Oh, and surprise, surprise, join groups with participants who have had similar experiences and expertise who can critique your choices and illuminate your blindspots. There you go.
Was he wrong?
Taught me to never look at B&N for a book I wanted again. I only ever go in there now when I happen to pass one with time to kill and just want to browse.
> I went in to purchase it, and the price in store was a couple bucks higher than the listed price online.
If you looked at in on the web and saw that it was in stock, it also had a “buy online and pick up at X store” button on the results page online, which is both more convenient and avoids the problem you relate (they've had that feature for years, and I just tested and it's still there now.)
The in store price is probably higher because people coming in, going through the stacks and de-merchandising books, asking questions, etc., cost more to service, and would be even more unsustainably unprofitable if online prices, which are for sales that don't have those costs associated were charged (meanwhile, online sales would be uncompetitive if in-store prices were charged.)
Just the other week I went into Barnes & Noble to purchase a book and they had two different trim sizes of the same exact book right next to each other. Both paperback but one was large-and-thin while the other was small-and-thick. The former was about $4 more than the latter.
If you're ever wondering why the online price differs from the in-store price by a significant amount, usually it's not because the retailer is trying to gouge you. It's because they would have to pay to have the shelves re-tagged. Retailers don't use the regular store associates to re-tag shelves. Instead they usually have roving teams of contractors who go around retagging everything on the store shelves periodically.
The only way to really eliminate this is using electronic shelf labels, and that's quite impossible in a bookstore. Much of their inventory is thinner than the tags themselves.
Borders did put a sticker on every book. 2nd & Charles does too.
It makes sese to me since i dont have to pay for shipping.
And while they sometimes have some fantastic initiatives, they really struggle with execution, such as the launch of their self-serve ad platform in February (http://leanmedia.org/bn-botches-ad-platform-rollout-can-it-r...). The print-on-demand launch (http://www.barnesandnobleinc.com/press-release/6_28_16_nook_...) was also a miss, which I think relates to its siloed and bureaucratic nature.
They used to, but Barnes and Noble (ticket: BKS) (the firm being discussed here) does not, AFAIK, any more, because Barnes and Noble Education (ticker: BNED) was spun off in 2015, and is a separate public company.
Book value on the balance sheet is ~$474 million, but that doesn't seem particularly meaningful in a valuation context for the business (especially considering the ~$1,123 million they are carrying for treasury stock).
As for inventory, they have that carried on their books for ~$1,000 million, which also means very little without a broader context on the state of the business.
Hardcovers are generally returned intact. Paperbacks and magazines often just require that the retailer tear off the cover and return that, while destroying (at least in theory) the rest of the book. That's why you sometimes see that warning in the front of paperback books and magazines about not buying it if its cover has been removed... unscrupulous retailers will sometimes strip the cover, return it for credit, then sell the stripped book on the black market.
Last week I had a gift card for BN that I needed to use, and tried to buy an audiobook on bn.com from my iPhone. It was damn near impossible to find anything and I still don’t know how to search for an audiobook.
Such a shame, as I used to love their physical stores.
Hopefully these folks will do a much better job.
Now here’s the kicker - it’s out of stock. WTF !?!
[1] - https://www.barnesandnoble.com/w/the-alchemy-of-finance-geor...
Maybe some online publishing license has to be renewed?
I always want to buy something, but living in small little tiny apartments all my life and finally selling off the last of my video game collection (31 large moving boxes filled) I want less physical items and buy all my books digitally. I like physical more, but with iBooks and keeping it always available at my finger tips on all my devices, it's way to convenient. I realize I might be part of the problem. There is always the downtown library.
There is a local store near me and probably once a month I want a new book. I want the new book that day so I look online (Amazon, Barnes and Nobel, borders, etc) and determine Barnes and Noble is only a dollar or two more than Amazon. Fine because I want to read now.
Turns out, that was their online only price. If you want the book in their store it costs more.
I’ve avoided buying at least 12 books from them in the last 2-3 months because of it and went with Amazon.
They've been experts at killing a business slowly. Maybe only Sears has done a better job of extracting value from a death spiral.
Would be a shame to see them go.
Could explain why they aren't very profitable and why they might be going by the wayside.
They are pretty big stores, on par with anchor department stores.
I bought a lot of books from fictonwise because it was only store that sold them to Brazilians. BN then bought them and put a rule where you can only download those books, even though you bought them, of you are physically inside USA
I miss bookstores.
$680M is in the realm of a cash transaction for a hedge fund, and indeed, if you look at their SEC filing (below), this is an all-cash transaction. Expect aggressive cost-cutting from Elliot (BNs around me seem to be well staffed with lots of people standing around with little to do - so layoffs likely in the future) but the store itself should be able to survive.
http://investors.barnesandnobleinc.com/static-files/e605e233...
The cost cutting has happened in many places and if it continues, sadly, even a hedge fund won't be able to save it. Sure, lots of room to improve, and a mix of cut the bad and add the good will help. But don't fool yourself, retail is hard and B&N, the good ones, is real work. I wish them the best but it's a hard road.
A physical presence would be great for inspecting and purchasing hardcover if quality matters. Amazon doesn't seem to care much what condition they arrive at your house in.
it gives people fond of memories, unlike amazon while you can get something cheaper, amazon has nothing else
Source: My wife worked at Half-Price Books (Which is doing a bit better than B&N atm) for a few years. It also had multiple shelves of disposable crap, that made them a lot of money.