Ted Gioia recently visited a Barnes & Noble store for the first time since the pandemic, saw a lot of interesting books, and bought a couple:
I plan to go back again.
But I’m not the only one.
The turnaround has delivered remarkable results. Barnes & Noble opened 16 new bookstores in 2022, and now will double that pace of openings in 2023. In a year of collapsing digital platforms, this 136-year-old purveyor of print media is enjoying boom times.
How did they fix things?
It’s amazing how much difference a new boss can make.
I’ve seen that firsthand so many times. I now have a rule of thumb: “There is no substitute for good decisions at the top—and no remedy for stupid ones.”
It’s really that simple. When the CEO makes foolish blunders, all the wisdom and hard work of everyone else in the company is insufficient to compensate. You only fix these problems by starting at the top.
In the case of Barnes & Noble, the new boss was named James Daunt. And he had already turned around Waterstones, a struggling book retailing chain in Britain.
Back when he was 26, Daunt had started out running a single bookstore in London—and it was a beautiful store. He had to borrow the money to do it, but he wanted a store that was a showplace for books. And he succeeded despite breaking all the rules.
For a start, he refused to discount his books, despite intense price competition in the market. If you asked him why, he had a simple answer: “I don’t think books are overpriced.”
After taking over Waterstones, he did something similar. He stopped all the “buy-two-books-and-get-one-free” promotions. He had a simple explanation for this too: When you give something away for free, it devalues it.
But the most amazing thing Daunt did at Waterstones was this: He refused to take any promotional money from publishers.
This seemed stark raving mad. But Daunt had a reason. Publishers give you promotional money in exchange for purchase commitments and prominent placement—but once you take the cash, you’ve made your deal with the devil. You now must put stacks of the promoted books in the most visible parts of the store, and sell them like they’re the holy script of some new cure-all creed.
Those promoted books are the first things you see when you walk by the window. They welcome you when you step inside the front door. They wink at you again next to the checkout counter.
Leaked emails show ridiculous deals. Publishers give discounts and thousands of dollars in marketing support, but the store must buy a boatload of copies—even if the book sucks and demand is weak—and push them as aggressively as possible.
Publishers do this in order to force-feed a book on to the bestseller list, using the brute force of marketing money to drive sales. If you flog that bad boy ruthlessly enough, it might compensate for the inferiority of the book itself. Booksellers, for their part, sweep up the promo cash, and maybe even get a discount that allows them to under-price Amazon.
Everybody wins. Except maybe the reader.
Daunt refused to play this game. He wanted to put the best books in the window. He wanted to display the most exciting books by the front door. Even more amazing, he let the people working in the stores make these decisions.
This is James Daunt’s super power: He loves books.
“Staff are now in control of their own shops,” he explained. “Hopefully they’re enjoying their work more. They’re creating something very different in each store.”
This crazy strategy proved so successful at Waterstones, that returns fell almost to zero—97% of the books placed on the shelves were purchased by customers. That’s an amazing figure in the book business.
On the basis of this success, Daunt was put in charge of Barnes & Noble in August 2019.
I almost never need a new book right now, so it feels wrong to pay full price, when I could so easily “get the second marshmallow” by waiting — but I must admit that I enjoy browsing physical books.
What always struck me about bookstores was how random the inventory seemed, especially in a section like Sci-Fi and Fantasy, where you’d find books two and five of a nine-part series and no guidance as to where to start in the genre.
Funny this: I have just returned from visiting a Waterstones and love the store. One thing to note is how they present books; it is a clean, welcoming environment with books treated properly. A rival book chain not only used to stack books on the floor, which made them look cheap, but also saved money by having half the lights in the place turned off. This made browsing near impossible, hence fewer sales.
There is also the theory, it should be said, that the lure of digital books is deceptive. I have heard of books being removed from people’s electronic devices after a time even though they have paid for them. It is almost as if they were merely borrowed, not bought. I accept this may not be entirely accurate. It could be people accidentally deleting them, though that is hard to do with a real, hold-it-in-your hand book which can be passed down.
A number of years ago, Amazon discovered it did not have the right to distribute electronic versions of “1984″ on Kindle. So it removed it from all Kindles, and gave refunds to the people affected.
In general, once you buy an electronic book, the vendor keeps a record of the purchase, so you can download if you get a new reader.
More importantly, any vendor of electronic books has a record of your reading habits and electronic library. That is why you can switch Kindles, and the second Kindle knows where you left off in the first.
PS. My favorite bookstore in recent years was Borders. The best academic bookstores I ever visited were at U. Michigan and UC Berkeley. I grew up in Boston in the 50′s and 60′s and there seemed to be an infinite number of good to great used book stores.
No more, sadly.
Some e-books are more equal than others.