I apologize for the click-bait title. I only used it because I’m fed up with that claim, especially now that Barnes & Noble were sold on June 7 to a hedge fund after years of trouble. Everyone seems to be blaming Amazon for that, instead of placing the blame squarely where it belongs: the disastrous decisions of Barnes & Noble’s management.
But let’s take things from the start.
Barnes & Noble Troubles Ran Deeper Than the Amazon
After years of trouble, Barnes & Noble were sold to Elliot Advisors, a hedge fund. I’m mentioning the name because it matters. A lot. (more on that later).
According to the New York Times:
Barnes & Noble has been decimated by the strength of online booksellers like Amazon and struggled to make a profit. The company has closed more than 150 stores in the last decade or so, leaving it with 627.
Oh, really? Amazon is responsible? As Kristen Lamb points out in her excellent post, Goliath has Fallen & What This Means for Writers, this is:
- A company which started out as a bookstore and ended up selling anything, from records, movies, toys, stationery, gifts, knick-knacks, coffee, candles, essential oils and everything else… except for books!
- The company which managed to squander Nook’s valuation of $1.7 billion.
- The same company which has had five C.E.O.s in the past four years.
- The one which almost obliterated Indie bookstores.
- And the company which permanently laid off 1,800 full-time employees in 2018, essentially firing their entire full-time staff at all their stores. These people, who would be making an average of $22,000 per year (~$11 per hour), were replaced by minimum-wage, part-time workers. While doing so, B&N was closing an average of twenty-one stores a year as of 2017.
As even Bloomberg acknowledges, Barnes & Noble has missed too many opportunities by now:
The company had understood the power of retail-store-as-hangout-spot at least two decades ago. And then it squandered it by not continuing to evolve how the concept was executed and by failing to marry it with a more compelling online shopping experience and e-reader.
Now, the company which had a $1.7 bn product, was sold for $683 million including debt.
So, what comes next?
Clearly, the brick-and-mortar bookstore is a valuable concept, or Amazon wouldn’t have gone through the trouble of opening stores of its own.
Thankfully, Elliot Advisors seems to realize this. Its C.E.O., James Daunt, possesses a solid reputation for rescuing completely incompetent book chains.
As The New York Times reports,
The acquisition follows Elliott’s purchase of the British bookstore chain Waterstones in June 2018. James Daunt, the chief executive of Waterstones, will also act as Barnes & Noble’s C.E.O. and will be based in New York.
As young students in Edinburgh, the missus and I went to Waterstones—the U.K. version of the bookstore big-box—for most of our academic needs. So, it came as a shock to find out that the company flirted with bankruptcy a few years later. The chain was saved at the last minute by Daunt, who has a stellar reputation in publishing and ran his own chain of bookstores—Daunt Books—before he went on to acquire Waterstones. Using creativity, vision, and common sense, he rescued Waterstones from bankruptcy and made the stores profitable again.
He hopes to do the same with Barnes & Noble. So, the good news is that Barnes & Noble finally has:
- someone who knows the book business in charge and
- a leader with an actual success record.
In my next post, I will explain how Amazon destroyed publishing. And yes, that’s another clickbait title!