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Industry News: The latest bad news for B&N

August 24, 2013

It turns out Len Riggio is not the great savior many people thought he would be for Barnes & Noble. This week, Riggio dropped his attempt to buy the retail portion of the company. And the company has decided against spinning off its Nook division into a separate company. Instead the company will “focus on managing its current businesses” (quote from The Wall Street Journal).

Against this backdrop comes news of a horrible earnings period for Barnes and Noble. For the last quarter, the chain lost $87 million–more than twice its loss during the same quarter last year. Year-over-year sales fell more than 8.5%, and Nook revenue fell by more than 20% (hardly surprising, as the company had announced it was essentially abandoning the line).

For the record, Riggio says he isn’t abandoning his bid forever. He says it’s “it is in the company’s best interests to focus on the business at hand” and he reserves the right to make an offer in the future. Current B&N President Michael Huseby says that the company is working to improve its performance for both the retail and Nook divisions and the head of the Nook division has said that Barnes and Noble would “continue to design and develop cutting-edge Nook” products, apparently including a new hardware product for this Christmas season.

Is Barnes & Noble circling the drain at this point? No. The fact that it’s announcing Nook plans for this holiday season means you don’t need to worry about using your B&N gift cards just yet. Riggio says he’s still considering a potential purchase at some point in the future. Barnes & Noble isn’t on deathwatch at this point, but it’s not an active vigorous company.

What about the Nook line? B&N is continuing with the line, at least through the end of the calendar year. It’s announced that it will have a new product for the holidays. But the price of fully featured tablets continues to drop, whether you want Apple, Android, or Windows. And the Nook line is a proprietary version of Android, meaning apps have to be specifically developed for Nook (a horrible business decision). You can get a Nook app for free for Android, iPad, and WIndows. In short, unless the hardware is significantly less expensive than its competitors, there’s no compelling reason to buy it. If I were in the market for an e-reader or tablet, I wouldn’t buy a Nook at this point. (Chris’s opinion only.)

So how can B&N turn things around? If I knew that, I’s be a corporate genius. That’s what it’ll take to change thing. But B&N does have some strengths. Some of its product line does relatively well, and it could capitalize on children’s books and use innovative marketing approaches, such as bundling e-books with hard covers. It could also become more active in hosting events for authors, including local authors, which may draw people into individual stores.

Is my B&N going to close? Maybe. The chain has already announced plans to close poorer performing stores. There are two stores within ten miles of my house, and it’s hard to imagine that both will still operate five years from now. But that’s a decision the chain has to make based on internal data as it seeks to determine how to move forward.

What does this mean to me as a writer? It depends. If you’re still kicking around a work-in-progress, it doesn’t mean anything. If you’re looking for places to set events for the next six months, it probably doesn’t mean anything. But longer term, you should start to consider what a post-Barnes & Noble world looks like. Even if the entire chain doesn’t close, you could lose your Barnes & Noble. But with change comes opportunity, and perhaps this is a chance to consider partnering with a different type of place for your event. Libraries always appreciate foot traffic, and there are wonderful places of all types almost anywhere. For her book launch, Julie Compton chose a wonderfully eclectic furniture-store-by-day/bar-by-night in Sanford, Florida. As a writer, any thing you can do to create a distinctive (good) experience around your book is to your advantage.

What would the world look like without Barnes & Noble? Although there will always be a market for places where people can go browse through books and buy them in person, Amazon’s not going away. The pre-mega store era featured independent book stores, along with mall chains B. Dalton and Waldenbooks. It’s hard to imagine that world returning. What you might see is smaller businesses dabbling in book sales. Barnes & Noble and Borders both allowed people to graze by picking a book and staying in their cafe. It’s possible you’ll start to see places with much smaller footprints pursuing a similar model. You won’t get to graze on your entire author’s entire backlist, but you might get to checkout the current best sellers and maybe some local authors while you pay to drink coffee and eat bagels.

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