Barnes & Noble Looking Like Latest Victim of Retail Maelstrom
Barnes & Noble (B&N), one of the last national bookstore chains standing, is fighting for its life as the latest victim of retail maelstrom.
Experts from Wharton School of Business at University of Pennsylvania note that the chain comprised of 633 stores, continues to incur losses because it “failed to make good use of its stores to endear itself to book lovers.” According to a June 7, 2018, article to its weekly, Knowledge @ Wharton, B&N has been unable to cash in on a revival in the fortunes of physical bookstores, yielding ground for smaller, local independent brick-and-motor book sellers. In the digital area, B&N’s Nook e-reader has taken a bad beating from Amazon’s Kindle.
B&N’s deathwatch can trace itself back to the 2017/18 Christmas season. Overall sales dropped 6%; same-store sales were down 6.4% and online sales dropped 4.5%. Some 26,000 employees were laid off after last year’s Christmas disaster. In its March 2018, earnings statement, B&N showed a 5.3% revenue loss and net loss of $63.2 million.
According to academicians, B&N’s talk of a “strategic turnaround plan” has produced “pretty grim” results. According to Wharton Marketing Prof. Peter Fader, ”They’ve tried lots of different things from devices to experiences to broadening the merchandise. Nothing’s working. At this point, they haven’t found the hook to save the business nor have they found the vision or leadership to give people any confidence at all.”
Mark Cohen, director of retail studies at Columbia University, also believes the end of B&N is inevitable. “This is late stage demise,” said Cohen. “They were the last man standing in a sense in the traditional brick-and-mortar space, but hey just haven’t figured out how to become relevant. Too little. Too late.”
Wharton marking prof. Barbara Kahn analyzes B&N’s demise through her Kahn Retailing Success Matrix, an analytical tool she developed to determine what qualities certain businesses possess and the fundamentals of her success formula. She looks at B&N through her four success quadrants: (1) product benefits or value for customers; (2) increased pleasure when visiting the retailer; (3) take away pain for customers, and (4) easy and frictionless experience for customers.
To be successful, according to Kahn, a retailer must show strength in every one of the four quadrants and be the best in the business in any one of the four. “Barnes & Noble has been playing catch up in all of these dimensions,” she said. She explained that although B&N might have attractive prices, a good product selection, stores that offer a satisfying customer experience and a strong on-line presence, “the problem is they’re not the best at anything,” according to Kahn.
“The industry is so competitive now that they’re doing things that could work,” she said, not seeing a definite comeback in the B&N future.
Also checking in is Syracuse University’s Ray Wilmer, a retail practices professor at the Martin J. Whitman School of Management. He said the problem with B&N is that “with consumers changing their shopping habits, it (B&N) hasn’t found a strategy that can connect with those customers.”
“The fact is they don’t have any point of relevance,” according to Columbia’s Cohen. “It’s a pleasant place to browse the latest magazines and new releases. But as you would note if you visited any of their stores, most of the people visiting Barnes& Noble don’t buy anything at Barnes & Noble other than a cup of coffee.”
Kahn said that Apple and Amazon are retailers that have evolved much further in what it takes to endear a company to customers. “Why would you want to buy from a store when it’s easier to buy on Amazon? Why would you want to buy there when you can get a better price somewhere else?”