Barnes & Noble loves its stores, but can’t turn the page on the omni-shambles


Barnes & Noble has never lost its love for its stores, but the problems for new CEO Demos Parneros remain the same omni-shambles that we’ve seen for the past few years.

Stores are an integral component of our value proposition.

At a time when many in the retail sector are rediscovering that there’s nothing to be ashamed of in ‘loving the store’, it can be said to bookseller Barnes & Noble’s (B&N) credit that it has never lost sight of the importance of its offline real estate, despite the devastating disruption caused to its market by Amazon.

Now that Amazon is itself dabbling in opening stores, B&N’s new CEO Demos Parneros might well feel entitled to be smug about. Unfortunately there’s not much else to be pleased about at B&N, whose travails we’ve tracked closely over the past few years.

Suffice to say, there’s not much good news on the horizon. The company just turned in another set of dismal quarterly numbers. Consolidated first quarter sales decreased $61 million or 6.6% to %853 million. Retail sales decreased $52 million or 5.9% to $830 million for the quarter. while online sales decreased $7 million. About the only good news is that the firm isn’t losing money any more on its NOOK device, although sales of the e-reader were down 28% year-on-year.

But back to the stores and Parneros retains his enthusiasm for these as a competitive differentiator:

Our value proposition is comprised of membership, convenience, digital offerings and most importantly our stores where customers come to browse, discover, and interact with 26,000 knowledgeable booksellers. We are reviewing our entire portfolio in identifying opportunities to open new stores in new markets as well as opportunities to relocate stores as their leases expire instead of simply vacating markets. Our goal is to position the company for net store expansion.

Those Amazon incursions into running book stores don’t concern him – at least for now:

Our stores are really much more about discovery and spending time walking through stores and examining different categories. I think their stores are much smaller and they have a different purpose. We’re focused on re-inventing our new prototype store which will be bigger than those stores but smaller than our existing average store. But I’d say, it’s too soon to see any impact from the stores they’ve opened.


On the membership aspect of the B&N business model, this is seen as a way to get closer to that browsing customer and to understand his or her needs and desires. To that end, there’s a greater focus on “a robust data analytics program” to understand customer behavior better and to be be able to offer more personalized services. Parneros says:

The membership program is very important to us and the base of customers, the base of members, [are] just incredibly loyal customers. They shop more frequently, they are much more engaged with the brand overall, they shop multiple channels. So obviously our objectives are to grow membership, have better attention, but we also need to keep the program interesting.

I’d say that at the moment we’re not very far-reaching. We are more testing different value offers. We’re looking at different components from pricing, structures within the program. We’re taking a look at special timing for certain offers. I’d say that we’re in the early stages of enhancing the program.

I would not look at this as a total redesign of the program at this point. We like the program and customers like the program.Wwe’re actually learning quite a bit from the couple of months that we’ve been doing these tests. There’s also more to come on this one because it’s a high priority for us.

Online, as sales continue to decline, there’s been work done to improve the customer experience:

Our goals for this business are centered on improving performance and enhancements to our omni-channel capabilities. Beginning in June, we launched a phased implementation of our Web site redesign, which improves the shopping experience and provides a solid foundation for features to come. Some of the recent advancements include a new product page design which features a simpler layout and improved navigation to increase conversion and discovery.

To improve discovery, we launched an exciting new book graph feature. It combines our deep institutional knowledge by displaying a visually engaging relationship between books. It’s similar to engaging with a bookseller for a great recommendation.

But it’s a sign of the huge ‘catch-up’ that B&N still needs to make that the CEO feels the need to announce that in 2017 it’s now testing a ship-from-store initiative. This, he says:

benefits customers and the company by leveraging our existing store base. Through this initiative, our customers benefit from quicker delivery times and the ability to shop our vast bookstore inventory through The company benefits when we do shipping costs as we ship closer to the customer and improve inventory turns. This is an example of one of our tests which was recently rolled from a four-store test to 60 stores.

My take

I’m all for ‘loving the store’ and the Saturday afternoon browsing a book with a coffee in the shop experience. So to that end, I applaud B&N. But the problem is that it’s not executing that in-store experience appropriately. Last time I was in one of their outlets, I was astonished at the continued presence of things like toys and CDs. This doesn’t say to me, ‘We’re the destination of choice for the dedicated book lover’. It’s an omni-mess.

And seriously -just nuke the NOOK once and for all. It’s game over.


Image credit - B&N