October 28, 2011
Is the end of Barnes & Noble nigh?
by Dennis Johnson
We’ve written before — and before that — that Barnes & Noble seems to us to be enacting some kind of end-game, at least as far as books are concerned. Our thinking has been that the company is making moves that are geared toward becoming some other kind of retailer, where books play a minimal role, and there are no brick and mortar stores at all.
But in a commentary for the Motley Fool, Rick Aristotle Munarriz predicts something worse: bankruptcy.
Mynarriz starts with an observation we’ve made here before: “Watching its rival Borders liquidate this summer should have been its opportunity to grab market share, just as the cavernous book-selling superstore has benefited when smaller bookstores have had to board up and move on.” But as he observes, they didn’t go after that market share.
And now, says Munarriz, it’s too late. Soon, he says, “the demand for gargantuan dedicated bookstores will dry up.” Meanwhile, the successful launch of the Nook tablet “only had a quarter of the market before the Kindle dropped its price into the single digits and the Kindle Fire raised the bar on what a sub-$200 tablet can do. ” Now, he says, “Barnes & Noble is in a lose-lose situation. If it slashes its prices to remain competitive, margins will get even worse. If it doesn’t respond, it’s back to relying on its fading superstores for a slower death.”
Nor is Munarriz the only one thinking this. Another article, from the LAist, takes a local angle, asking in its headline, “Is Your Local Barnes and Noble Going to Close Down?”
Even a report in Time magazine, while taking a more cautious approach, hovers around the obvious — and makes the following well-we-don’t-think-it’s-so-ironic observation:
… there’s some pretty rich irony in all this for those who have been watching B&N take over the book industry in the past two decades. When B&N and Borders began gaining popularity in the 1990s, their efficiencies of scale seemed likely to drive the small, local bookseller right out of business. And indeed countless such shops are now gone.
But it turned out the economics didn’t quite work for the big guys either. Borders is now gone, and B&N stores are struggling, but the independent bookstores that survived have for the most part stablized … Scale, it turns out, wasn’t the crucial factor; knowing exactly what your customers like to read, and what they don’t, is.
Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House.
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11 Comments
haha! this is funny. Motley Fool has been allowing non-analyst bloggers to bash Barnes and Noble for the last 2 months. They said that GameStop is soon to come out with the new tablet to compete with Nook, not realizing that GameStop and Barnes and Noble and Liberty Media (QVC, Home Shopping Network etc) are now under the SAME OWNERSHIP about to explode into a major battle for the title of the largest online retailer. BKS now sells twice as much per share as Office Max (http://www.zacks.com/research/get_news.php?id=300l2120) and unlike Amazon’s fire Nook 2 will most likely have something that it simply did not think about and I am pretty sure we will hear about the GameStop connection shortly
Nooks are currently sold in 700 BN stores, 600 college stores, 210 Books-A-Million stores throughout the country, plus all Staples, all RadioShacks, all OfficeMax, and thousands of Walmart and Target stores! Even if every store sells 3/day, how many nooks is it per day? What about per month? Per Quarter? Oh, and have you gone to borders.com recently? What happened to all of the borders customers?
Oh, and now Barnes and Noble is not just about books anymore… http://www.barnesandnoble.com/u/Kitchen-Housewares-Appliances/379003107 It now sells over 1,000,000 new non-book products!
Motley Fools are exactly what they claim to be… Fools.
Dennis, it has been interesting that, aside from B-A-M, the only players we’ve seen stepping in to fill the gaps around the country that Borders’ implosion created have been new indie booksellers.
That’s true, and interestingly this includes booksellers taking over some abandoned Borders stores. And then there’s the fact that, according to one NYT report Icite in the second link above, many indies located near closed Borders stores are seeing a marked increase in business. The point would seem to be that the demand for stores — the fundamental desire to see an object before you buy it, perhaps — is still there, and the machinations of the giants don’t really reflect anything that organic to the process.
And yes, interesting that BAM is taking over so many Borders stores. I’ll add they seem to be changing the kind of inventory the favor, too, or at least modulating it a bit (this is purely anecdotal: they’re ordering more of our books is my basis for that). Could the be interested in being something more than a kind of dollar-store for books?
Interesting, but I hope it’s not so. The indies have all tanked in Orlando, and B&N is it. (I don’t count BAM). But they do seem to be eating their young. Books in store are discounted 20 percent, but online often 40-45per cent w/free shipping for members.
I have a Nook, too, and it’s great for reading any e-books that aren’t Amazon, so I get from indies, library, NetGalley as well as B&N.
I liked Barnes & Noble when they sold books. Now it’s all toys and Nook space, very little left for us bookworms. I am going indie.
I don’t think it’s good news if Barnes and Noble disappears. I would hate to think about *only* Amazon left making affordable e-readers. I live less than thirty minutes from New York City and there is exactly *ONE* independent bookstore, and while I love it to death, it’s kind of a mess. I love buying certain kinds of books in electronic form (including some of Melville’s!) for my Nook so I can have them with me all the time, and stop filling up our small apartment with books anymore than it is. Reading Infinite Jest — slowly, cautiously, occasionally desperately — on the Nook touch is fascinating, if for no other reason than touch access to footnotes.
Also to your point: Can’t find exactly which ones, but some few of the former-Borders-turned-into-new indies are being run by former Borders employees, even.
Remember that BAM has also owned the two Books & Company stores in Dayton OH for many years – they stock much more deeply and broadly than the average BAM store, though their books are sourced through the same warehouses as BAM stores, so it’s not a stretch for them to take some new stores a bit more upscale in terms of selection than their usual store might.
But my main thought from your original post was the lesson that the newcomers to the bookselling scene seem to have learned is that it’s not about carrying every book – you can’t compete like a big box store, and you can’t go head-to-head in that way with Amazon. You need to find your flavor, serve the community around you, and change as you go.
Munarriz couldn’t even get basic facts about B&N’s Nook pricing right in his “article,” among other things. Basic, the Motley Fool appears to have more long-term problems then B&N if the people they have contributing can’t even be arsed to do their homework.
1. Kindle Fire doesn’t have microSD slot that, for example, Nook Color has thus it is stuck with 6 GB usable internal storage unlike Nook Color that can get up to 32 GB card in. Kindles are made to be almost like a “dumb terminal” of the past to make sure you’re tied up to Amazon’s storage on the web (for which you need Wi-Fi connection to get to) and you can only store content you get from Amazon there, not other files. Quoting Amazon on Kindle Fire: “Free cloud storage for all Amazon content”. Get it, Amazon content?
2. The stats of how long the battery can last (Kindle Fire theory is 7.5 hours) are taken with Wi-Fi off. It will last only about 3 hours if you use it to access content from their Cloud storage over Wi-Fi.
3. Amazon can spy on your web activity through their new cloud-integrated web browser of Kindle Fire.
4. VERY IMPORTANT – lack of microSD slot means that if you decide to root your Kindle Fire, you’ll have to root the actual device thus there will be no coming back. On Nook Color, you can make it boot from a “rooted” microSD card and if you want to get back to the original Nook you can just take out the card and reboot.
5. Kindle Fire doesn’t have a camera.
6. Kindle Fire has about 70% less usable screen area than iPad 2.
7. Kindle doesn’t support eBooks in ePub format that is the most used format in the world.
8. Kindle app store contains only Amazon approved apps and it does not include (and will not include) Netflix app that iPad has and Nook Color is getting thus again you’re stuck with Amazon content only.
9. Amazon confirmed that you cannot download anything to Kindle Fire when traveling outside US.
10. Amazon says it will review every app in its Appstore for Fire compatibility, as part of an automated process. Rejected apps will include those that rely on a gyroscope, camera, WAN module, Bluetooth, microphone, GPS, or micro SD. Apps are also forbidden from using Google’s Mobile Services (and in-app billing), which, if included, will have to be “gracefully” removed. In terms of actual content, Amazon has outlawed all apps that change the tablet’s UI in any way (including theme- or wallpaper-based tools), as well as any that demand root access.
11. I’d recommend waiting for Nook Color 2 that is rumored to be released by Barnes & Noble shortly.
Simplistic observation is B&N is the last major book store standing but will book sales volume pay the bills, not likely in the long run. Selling the nook in stores is a stop gap, shoot self in foot move. Once you have bought a Nook, why do you need to shop in a B&N store is baffling to me. Best case is B&N gets a lot smaller and transforms itself into some other business.
As a former Barnes & Noble.com’er I do doubt the survivability of B&N. But it’s mainly because the company has gotten into a techno pissing match with Amazon over devices and content — and it’s hard to imagine B&N surviving that battle. I’m fairly sure both retailers have little or no margin on the devices they market — devices that are pretty damned expensive to develop, too — so all the money goes into securing content … then the eyeballs to discover it.
Amazon has a clear headstart on both and, despite B&N’s $200 million infusion from Liberty Media, I can’t imagine it catching up. Still, I admit that when B&N introduced the Nook back in 2009 I thought Amazon had the ereader market sewn up — and it proved not to be the case. On the other hand, I’m not inclined to bet against Jeff Bezos. If it’s possible to be more determined than William Lynch — and more tech savvy — he is.
None of this has anything to do with the stores, of course. On that side I foresee more closings, more Nook square footage, less shelfspace for books — all the things Mr. Johnson has discussed elsewhere in this space. Whether these changes include bankruptcy, I can’t say.
I do think B&N is maybe better run than Rick Aristotle Munarriz thinks. I used to read his opinions of the company when I still worked there and recall he never felt it was viable. His predictions of bankruptcy are just the latest pot shot. But will B&N still look like a big brick-and-mortar bookseller if it survives the decade? I think everyone who posts here knows the answer to that question. And it’s an answer one can arrive at without touching even briefly on how well or poorly managed the company may be right now.