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Industry news: Big changes at B&N; is it enough?

July 13, 2013

B&N’s CEO Resigns, Chairman Len Riggio Takes Over to Focus on Bricks-and-Mortar Stores

Barnes & Noble has effectively nuked the Nook and replaced CEO William Lynch with chairman and founder CEO Len Riggio. Although Riggio will not formally replace Lynch as CEO, he’s the company’s chairman and will now focus the company on its retails stores. The move is hardly a surprise given how B&N has sprinted away from its Nook e-reader platform over the past weeks. The bookseller’s Nook division lost $477 million dollars and Riggio, who was pushed aside in the chain’s rush to Nook, was there to pick up the pieces.

Analyst Brian Sozzi, quoted previously as saying he has “no confidence in this company surviving,” said of the changes that “Barnes & Noble as we know it no longer exists.” While that’s hyperbole–the decision to eliminate the Nook is hardly a surprise at this point–Riggio has been interested in the brick-and-mortar stores. In February, he announced his intention to make an offer for the retail portion of the company.

While some stores may have to close, according to the Yahoo article, “your local B&N is likely to exist a year from now.” A year’s not a long time.  (If you click through, listen to the video that comes with the story. There’s a lot of interesting back-and-forth there about whether Riggio is tilting windmills if he thinks a large bookstore chain can effectively compete with Amazon.)

Lynch’s Ouster Shows How B&N and Bookstores Will Survive

The question that comes from Lynch’s ouster is whether B&N has a future where Tower Records and Blockbuster didn’t. At least one analysis in The Washington Post says that book stores have an important advantage over record and video stores–people like to go there and hang out. My kids’ high school’s students view our local B&N as a giant study hall during exam time. And their business at the cafe doesn’t count the people who go to browse for books and magazines. In fact, the physical stores turned a $374 million profit in 2013. B&N also manages 700 university bookstores. And, if Riggio succeeds in his attempt to buy out the stores and take them private, he could operate without the burden of earnings statements.

According to the Post piece, the B&N model may still change. The analysis predicts smaller stores with a smaller offering (uhhh, Waldenbooks II?). It even predicts that Amazon might have interest as online tax legislation may level the playing field between it and B&N.

What this all means for you…

As a reader, it means that for the foreseeable future, you’ll still be able to go to a bookstore and graze on literature (or EL James). Riggio is likely to sink a fair amount of money into trying to save the chain. And, as listed in the Post article, B&N has some advantages Borders didn’t have–not the least of which is that it doesn’t have a competing national physical bookstore chain. But there are some additional things to consider. If you teleported back to 2006, the floorplan of your local B&N would look much different–there would be a lot more books. The physical stores are profitable, but with more emphasis on games, puzzles, and educational toys. Again, even the Post says that less floor space and fewer books are likely.

The days of your being able to go to a bookstore and purchase a physical copy of just about any backlist title from your favorite author on demand may waning. And that might hurt B&N. If I need to go to Amazon to buy Lee Child’s first Reacher book–because a smaller B&N doesn’t have it–why not just go there for the next Reacher, as well?

 

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