A book lover revives Barnes & Noble

Back in April, 2019, the Barnes & Noble bookstore chain was on the verge of failure.  Sales of both books and non-book products were down.  It had lost $18 million in 2018 and fired 1,800 employees.  Its stock price was down 80 percent from its previous high.

But now it is profitable and growing again, and has plans to open 30 new stores.  Ted Gioia, writing on his blog, The Honest Broker, credits the new CEO, James Daunt.

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 mostvisible parts of the store, and sell them like they’re the holy script of some new cure-all creed.  [snip]

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.  But could he really bring that dinosaur, on the brink of extinction, back to life?

The timing was awful. The COVID pandemic hurt all retailing, especially for discretionary items like books.  Even worse, the Barnes & Noble stores were, in Daunt’s own words,“crucifyingly boring.”

But Daunt used the pandemic as an opportunity to “weed out the rubbish” in the stores.  He asked employees in the outlets to take every book off the shelf, and re-evaluate whether it should stay.  Every section of the store needed to be refreshed and made appealing. 

As this example makes clear, Daunt started giving more power to the stores. But publishers complained bitterly.  They now had to make more sales calls, and convince local bookbuyers—and that’s hard work.  Even worse, when a new book doesn’t live up to expectations, the local workers see this immediately.  Books are expected to appeal to readers—and just convincing a head buyer at headquarters was no longer enough. 

Daunt also refused to dumb-down the store offerings. The key challenge, he claimed was to “create an environment that’s intellectually satisfying—and not in a snobbish way, but in the sense of feeding your mind.”  [snip]

Then it started to happen—book sales at Barnes & Noble began rising again. Sales in 2021 quickly got back to pre-pandemic levels, and then kept growing. Readers regained trust in the company. The workers at the stores were more motivated and started genuinely acting like booksellers.

I recently visited a Barnes & Noble store, for the first time since the pandemic. I 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.  [snip]

I could draw many other lessons from the Barnes & Noble turnaround. I praise its decentralization, and its willingness to empower booksellers at the local stores. I like the way the stores look nowadays, and the improved selection on the shelves. But the key element uniting all of this is putting books and readers first, and everything else second.

That’s a strategy that others could learn from. Although I’m not sure you can teach it.

Many companies and industries follow a cycle.  They’re started by visionaries, or at least by people who love what they’re doing.  The personal computer industry was started by people who loved computers.  The movie industry was started by people who loved movies.  The aviation industry was started by people who loved flying.

Then, as the generation of the founders dies out, they’re taken over by professional administrators and accountants.  To an extent, this is inevitable.  The founders and visionaries don’t always have the organizational skills to run vast organizations.  But professional managers don’t always know what made the visionaries and founders successful.

The result is financialization, a search for gimmicks, a decline in innovation, a decline in quality, a decline in morale.  Ted Gioia’s report on Barnes & Noble shows this is not inevitable.

LINKS 

How to Revive Barnes & Noble: Get a CEO Who Loves Books by Jason Kottke for kottke.org.

What Can We Learn from Barnes & Noble’s Surprising Turnaround? by Ted Gioia for The Honest Broker.

Tags: Barnes & Noble, James Daunt