Ed here: This appeared in The Wall Street Journal this morning. James B. Stewart is a very heavy duty financial reporter so this is well worth reading not only for what it says about B&N but the entire publishing world facing the e book age.
Clearance Sale: Barnes & Noble Didn't Evolve Enough
by James B. Stewart
Wednesday, August 18, 2010
How did Barnes & Noble (NYSE: BKS - News) fall so far so fast?
The giant bookstore chain, whose superstores once struck fear into the hearts of independent booksellers everywhere, put itself up for sale this month, rendering it the corporate equivalent of the remaindered books it sells at a discount.
The company said it made the move because its shares are undervalued, but to me there was an air of desperation about it.
The simple explanation for Barnes & Noble's decline is the Internet, which spawned Amazon.com (Nasdaq: AMZN - News), e-readers and digital books. But that didn't have to be the end for B&N, which had a dominant market position and should have out-Amazoned Amazon, leveraging its brand and innovating when it began marketing and selling books online.
I know exactly when B&N lost me as a customer. Some years ago, to compete with Amazon, B&N began offering free same-day delivery in Manhattan if you placed your order over the Internet by 11 a.m. I did so several times -- and not once did the books arrive when promised. Everything I have ordered from Amazon has arrived on time or earlier. Then came Amazon's game-changing Kindle, and instant delivery. Nothing I've read about B&N's belated rival Nook has tempted me to try it.
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Ed, I don't know about Cedar Rapids, but I can cruise around the D.C. area and see retail property formerly occupied by Tower, Linens & Things, Circuit City, and other chains, and now forlornly vacant for at least two years. I fear B&N and Borders will be next, but I have to admit that in the decline of brick and mortar bookstores, I'm part of the problem. I sometimes buy on impulse at B&N or Borders, but I usually do my shopping at Amazon. Interesting bit in the article about the B&N promise of same-day delivery in Manhattan. Short of having a matter transporter, and even guessing that there must have been caveats about what could be retrieved from the warehouse so quickly short of the Bestseller titles, that kind of promise sounds like an invitation for catastrophe.
After having seen one indie bookstore after another close because of Barnes & Nobles' (and Borders') predatory policies and strategies, I can't say this makes me sad. They are all getting a taste of their own medicine.
The ordering policies of the chains have been no help to the diversion of book titles either. It's been a blockbuster mentality run by a law-of-diminishing-returns policy out of their computers that has practically wiped out the mid-list. Let's face it, the quicker these giants are out of business, the better.
Name withheld in case I ever want to walk into one of them again
Anon--B&N and Borders and Books-A-Million don't care about you as a critic. They have other problems somewhat more immediate. And they won't refuse your purchases even if you out yourself.
One really bad thing about the utter collapse of the big boxes will be the end of some of the few surviving newsstands, those that sell a fair amount of the fiction magazines I buy, particularly with my 10% discount at B&N.
Of course, indy bookstores were upset with Crown Books and Waldenbooks and B. Dalton before Borders and B&N spread out beyond Ann Arbor and Boston, and they frankly weren't the only or primary reason that they went under, when they have. Borders in its early years had a policy of recommending local indies to customers...and as I've noted ad nauseum here and elsewhere, there were stupid decisions made throughout the national phase of both chains' existence, which have smacked Borders down even harder. B&N is trying to become a toy store, now (as well as being the largest record store chain in the country due to competitors' collapse), even as Borders ineffectualy tried to become a stationery chain (that merch was very stationary, indeed).
Ah, well. B&N and Borders are both trying to hawk Kindle competitors, too. Speed that plow...or gravedigging backhoe...
And, yes, their increasingly foolish inventory shrinkage was one of the stupid policy choices. Borders in the mid '90s was the better-selection big box, while B&N emphasized more comfortable stores...but other really foolish decisions at Borders helped making the inventory less rich more attractive.
Crown probably had the most pathetic end, bled dry by its owners in an ugly family battle.
Whether or not you like B&N or Borders, etc. we must look at the bigger picture.
Dorchester is no longer going to be printing books, they will offer electronic books only. B&N is for sale. It feels like a sudden downward spiral. I know that what I should do is buy an e-reader but I don't want to yet. I love to hold books, smell them, browse bookshops, big or small. This is really bad news for book lovers. Any way you look at it. Period.
I would hardly gauge the health of the publishing industry by the condition of one publisher, Dorchester, a small fry.
E-books represent, at most, 5% of the market and their market penetration may max out well before they supplant print books. I don't understand all the panic.
First anon popping in again.
Todd, I know the Big Box Corporations aren't worried about my criticism. They are never worried about anything other than their bottom line. But I have a few friends that still work there. That's why I'm reticent to sign my name. Friends or no friends, Barnes & Noble doesn't have to even consider whether to take my money or not. I haven't spent any in their stores in years and don't plan to in the future. I shop the indies and if they don't have what I want I take the deep discount at Amazon.
And if you really love newsstands so much, you should be holding a grudge against the chains as well. They put the jobbers out of business in the late 80s and early 90s which led to the shutdown of thousands of retail outlets throughout the country, from newsstands to drugstores to bus stations. This also led to the eventual downfall of much of the mid-list. The last thing I want to do is walk into a store and see stacks and stacks of THE DA VINCI CODE when I can't find the latest book from my favorite author. Really, I won't miss these behemoths. (And my friends are smart people. They will find other work if it comes down to this.)
I love the touch and feel of books as much as the next person, but we have to admit that there IS a digital revolution happening. And like every other advance in technology there are going to be bad things about it as well as good. I don't like the thought of books going completely digital. I hope they will still print them. But it will be in lesser numbers and the digital versions will eat more of the marketplace. In some ways this will be a good thing. The wasteful return policies instituted by the chains was quite outrageous and was part of their downfall, as well as the shrinking profit margins of publishers and writers.
I've been seeing some digital magazines online lately and they look quite good. There may be more hope for diversity in the Webisphere for magazines as well as a possible return of the mid-list writer who doesn't want to just write high concept schlock for the masses.
Let's face it. The bigger the corporation, the less good it is for the consumer. Monopolies have never helped the little guy.
I won't miss the chains. I just wish this had happened before two of them deliberately moved in across the street from my favorite bookstore and wiped it out five years ago.
Yeah. I'm holding some grudges.
I fear that the real underlying malady goes back to the Great Depression, when publishers began offering books on consignment, fully returnable. From then on, booksellers and mass-market distributors could order recklessly, knowing they could get credit by shipping titles back (or their covers). It's been a bad business model for retailers, and just as bad for publishers. Maybe the current collapse will put the book business on a more solid footing.
Don't count on it, Richard.
Anon, your friends aren't going to be too offended, I suspect, either. Yes, the aggressive placement of big boxes, usually next to each other as well as close to some indies, did little for the health of the industry. And the jobbers weren't killed by the big boxes so much as by the long history of rapacious acitivity on the part of magazine distribution coming home to roost. The little distributors didn't have their own jobbers (or much else aside from mounting debt), and he big ones were perfectly content to eat each other and cut staff.
Fred, much of the problem with Crown was that Baby Smurf, Robert Haft, was even more inept than the management of the national Borders, much less B&N...it was to be the training ground for RH to take over the entirety of the Haft empire from Papa Smurf Herbert. Then the family feud broke out, but Bobby had already proven to be inept as a manager, calling into radio programs in DC to while away hours that he presumably could be working. (I am a veteran of Tower [records and books], Crown, Borders and a B&N campus bookstore at various times over the years.)
I do count on it, and you will see it happening over the next few years, as POD publishing and electronic downloads make the old regime obsolete. If B & N collapses, so will returnable books.
They should have changed the return/remainder policies years ago. The books were sent back (usually before the first billing period would become due and payable) and forth between printers-stores-warehouses-remainder houses-and right back to the same stores a year down the road in a cycle that only benefited the shipping companies involved. What a stupid way to run a business. (Or businesses.)
UPS will be very unhappy to see this practice become obsolete. Although I don't think the parties involved will.
This assumes a non-boutique business in paper books in the future. That's what I suspect ain't going to be that common. But what books are printed probably will follow, say, Dover Books into direct sales.
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