The founder of Barnes & Noble started the business in 1971 by purchasing a bookstore on 5th Avenue in New York by the name of Barnes & Noble (B&N). He turned the brand into a retail juggernaut that steamrolled mom-and-pop bookstores in the 1980s and 1990s. Since that time the founder simply watched as Amazon squashed the business. The net result is that the company was bought by a private equity firm in June of 2019.
B&N’s core problem is best demonstrated by the following example. There is a B&N store in Idaho Falls, Idaho and up until June of 2019 when B&N was sold, the manager of that store had no say over what books to carry, or how the store was arranged, or how books were to be displayed. Executives in New York at headquarters would decide all those things. All of the retailer’s 600 plus stores were expected to follow the directions of those headquarter folks. The result was that the store manager there in Idaho Falls had no choice but to stock dozens of James Patterson and John Grisham books, only to return well over half of them after a few months since there was little interest by Idaho residents.
Over the six-year period leading up the B&N’s sale in 2019, the founder brought in 5 different CEO’s, each of which, when they attempted to develop turnaround plans, ran into the founder who made it clear that he knew the bookselling business well, given his vast experience over decades, and he protected the traditional B&N practices. During this six-year period, the stock dropped from $18/share to $6.
So, what has happened since the private equity firm took over in June 2019? That firm hired a guy to be B&N’s CEO who was and still, is the owner of a chain of very successful independent bookstores in the UK: a real “book guy.” Here is what he has been doing at B&N:
- Launching a new strategy to make each store a place where you discover books with an enjoyment, with a pleasure, and with a serendipity that is simply impossible to replicate online.
- Cutting the bloated staff, especially at headquarters, and closing hopeless stores.
- Eliminating the central planning and execution of a single approach to be followed by all stores, and empowering store managers to manage their stores and book selection to achieve the strategy.
- Replacing store managers with individuals who love books, are avid readers, and who have some experience in independent bookstores.
It’s all common sense. With Amazon and online ordering so pervasive today, B&N needs to have a special niche, and that is what the founder just could not imagine. He was convinced he knew bookselling and knew what worked.
In conclusion, beware of founders, and individuals, who have been highly successful, but now are hanging in there and refusing to accept that the world has passed them by!