2013/07/03

Will Barnes & Noble Be Around In Five Years?

Barnes and nobleIs there a future for a Nook-nicked Barnes & Noble? The retailer’s planto stop making its Nook color tablets revived questions about the long-term viability of the last remaining national bookseller that’s been feverishly trying to reinvent itself amid game changingAmazon.com AMZN -0.04%.
Yes, the news that Barnes & Noble will turn over the production of its color — versus its black-and-white — Nook to a yet-to-be-named third party player signals that the chain has lost the tablet wars to Amazon’s Kindle and the Apple AAPL +0.06% iPad.
But the more troubling news is that the Nook division  — which was supposed to be the retailer’s saving grace and ticket to sustainability in the age of digital media – has been its worst performing business: Nook revenues sank 34% for the fourth quarter ended April 27 from the year-ago period.
What’s more, a cloud of uncertainty hovers over the chain.
During its fourth-quarter conference call last month, the retailer said it would not comment about talks with Leonard S. Riggio, Barnes & Noble’s chairman, who has sought to buy its 675 stores.
Meanwhile, beyond  poor Nook sales, the bookseller’s stores aren’t setting the world on fire either.
Revenues from the retail division, which includes BN.com, fell 10% in the quarter.
The news comes as digital book sales overall grew 43% last year, yet Barnes & Noble has been unable to capitalize on that trend as its stores lose foot traffic.
So where does that leave the chain?
360 Declines: Nook, Online and Store Biz Slump
“The last two nails in this coffin will come when B&N’s two major competitors [Amazon and Apple] match them title for title,” Ken Lonyai, digital innovation strategist andd co-founder of ScreenPlay InterActive, said in the online discussion on RetailWire, “Is Barnes & Noble Wise to 86 Nook Tablets?”
The retailer is now banking on the slowing growth of electronic books to keep its retail stores afloat.
“While e-books will continue to drive growth in the book category in the future, physical book sales will have a longer tail than previously anticipated,” William Lynch, CEO of the chain, said during the retailer’s fourth-quarter conference call.
“As the country’s only remaining national bookseller, our retail stores will benefit from this flattening of the slope of the physical book decline.”
Still, the company expects retail comparable bookstore sales to decline in the low to mid single digits for fiscal 2013.
What a difference a year makes.
Late last summer, Mitchell Klipper, CEO of Barnes & Noble retail, told me that the chain held a clear advantage in the e-reader market over Amazon, for one,  as Nook owners could go to a physical place to ask questions about their device or have them serviced in a Barnes & Noble’s store.
The Nook sections in its stores, which the retailer has devoted ample space to in recent years, also serve as a community hub of sorts, offering events like Nook Nights book discussion groups, he said.
A year later, both its Nook and store sales are down.
Still, Klipper said during the conference call last month: “Let’s make no mistake about it, folks. Our Barnes & Noble stores will be here to serve our customers and communities throughout the country for a long, long time to come.”
The retailer’s lackluster performance and macro trends suggest otherwise.
“Real books haven’t paid off for them like they did in the pre e- book era,” Robert Passikoff, president of brand consultancy Brand Keys, said in his post, “Barnes & Noble: Getting Out In The Nook Of Time.”
A Bookless Mall?
Barnes & Noble, the last national retail chain, could go the way of other defunct retail formats, such as the regional discount chain – (remember Ames, Bradlees and Caldor?)  — Or the catalog showroom (remember Best and Service Merchandise?)
But unlike those other retail formats, Barnes & Noble holds a distinct cultural value: Selling all manner of books, they are stores devoted to the life of the mind.
The stores serve as nationwide venues of intellectual, emotional — even spiritual – stimulation — readily accessible in countless malls and strip centers, where Americans spend much of their lives.
The demise of stores packed with floor-to-ceiling shelves of books and display tables spotlighting new reads and classics would be a loss indeed.
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