“Barnes & Noble is the last bookstore chain standing,” says Wharton management professor Steve Kobrin, who is also publisher and executive director of Wharton Digital Press. “There’s still a niche there, but it may go to small independent bookstores.” Barbara Kahn, Barnes & Noble’s merchandising isn’t giving consumers much of a reason to visit stores. “The best retailers are experiential,” she says. “Online retailers can provide big assortments and better prices. If a retailer focuses on price and category, online [retailers] will always win. Barnes & Noble has to … do what online can’t do – social interaction, physical presence and experience.”
Destination or death?
Would consumers miss Barnes & Noble if it disappeared?
To create a book-to-digital bridge with its customers and to drive total sales, Barnes & Noble needs to become more of a destination for consumers, experts at Wharton suggest. Kahn points to Urban Outfitters, J. Crew, Apple and select grocery stores like Whole Foods as examples of chains that provide experiences beyond simply showcasing rows of products. “Merchandising is the most important thing in retailing,” she adds.
Another example of a destination retailer is Starbucks, which sells coffee, offers digital content and provides free internet access. Starbucks’ advantage, however, is that hot coffee is tough to sell online, quips Hoch. But Knowledge@Wharton technology and media editor Kendall Whitehouse notes that Barnes & Noble has launched store-within-a-store concepts, such as its Nook area, children’s section and special promotional areas tied to films like The Hobbit. Yet, while the bookstore chain offers Starbucks coffee, free wi-fi and areas for children’s books and toys, the company generally hasn’t translated “hanging out” to increased sales.
Barnes & Noble has devoted much of its merchandising focus to the Nook. According to its regulatory filings, the chain has more than 1,300 stores and views them as “a major competitive asset…. The company will continue to integrate its traditional retail, trade book and college bookstore businesses with its electronic and Internet offerings, using retail stores in attractive geographic markets to promote and sell digital devices and content. Customers can see, feel and experiment with the Nook in stores,” Barnes & Noble said in the filings.
However, it also disclosed in the filing that the company plans to reduce the total number of retail stores it operates. Hoch agrees that Barnes & Noble will have to shrink its store footprint in order to remain competitive. The problem with physical retail chains is that it’s hard to retool store formats quickly, Hoch says, noting that Best Buy faces a similar challenge.
