3 Cogent Competitive Strategies For Retailers Based On Barnes & Noble’s Recent Quickstep – Backwards

Over the next ten years, Barnes & Noble Booksellers anticipates closing as many as one-third of its retail stores, according to a January 28 article in the Wall Street Journal. (As of January 2013, Barnes & Noble operated 689 retail stores as well as a separate chain of 674 college stores. The firm's chief executive stated that the bookseller would have between 450 and 500 stores ten years from now).  These are some of the effects of the digital revolution on competitive pricing and marketing in retail.   

The 450 to 500 store number may not be (low) enough. Barnes & Noble's most current 10-K reported that most of its locations are leased and that the firm has 442 leases up for renewal as of March 30, 2016.

Why is Barnes & Noble Doing The Competitive Backstroke? 

* Barnes & Noble needed to adapt to the digital revolution affecting the retail book business much earlier.

* They should have foreseen the digital revolution and the impact of the Web on their sales much earlier. It needed to reflect on the demise of such established retailers as Virgin Records, Blockbuster, and Borders.

* An article in the Harvard Business Review by Darrell Rigby ("The Future of Shopping," December 2011) foresaw that books would move online quickly due to such factors as lower prices, the value of broad assortments, ease of delivery and returns, and the reliability of product descriptions.

* Mainstream bookstores will "become a thing of the past states retail consultant, "Doug Stephens, in his new book, "The Retail Revival".

* At Random House, the world's largest publisher of consumer books, digital books now comprise 22 percent of the firm's total global sales. A major competitor of Random House estimates that electronic books will make up as much as one-half its total book sales by the end of 2014.

Three-Part Strategic Plan

Strategy 1: How Barnes & Noble (And Other Retailers) Can Compete In The New Digital Environment:

* Barnes & Noble needs to have its Nook tablets effectively compete with tablet units from Amazon, Apple, Google, and Samsung.

* Barnes & Noble's Website needs to better compete with the Amazon website that typically includes book reviews, a section about the author(s), sample pages, a description of suggested books, a selection of used books in many titles, and two-day shipping for Amazon Prime members.

Strategy 2: How Barnes & Noble Can Reenergize Its Retail Locations:

* Changing the selections at each retail location to better match the demographics and lifestyles of its surrounding populations is the key. A store with a large tourist population should have a large selection of sightseeing books. In contrast, a store with a large population of families should have a large children's section.

* Rethinking Barnes & Noble's multichannel strategy. Through using a loyalty card that should be available to all consumers, Barnes & Noble could to track a reader's purchases and recommend appropriate books. Web surfers also need to determine which local stores stock a given title. Web users could also be given coupons to attract them to visit a local Barnes & Noble store.

* Conducting book signings at local stores, book readings for children, and book clubs where local residents can critique important new books as well as classics. These activities generate fun and excitement.

Strategy 3: What Barnes & Noble Can Do To Revitalize Its College Store Market:

* Barnes & Noble needs to rethink its college store-based locations in light of Amazon's free shipping of textbooks to college students, the increased number of publishers that now sell books directly to students, and print-on-demand options available to faculty.

* Barnes & Noble college stores need to become more of a destination store for the local community -- for computer software, computer sales, and computer servicing.

What can other retailers facing new disruptive technologies and new forms of competition learn from Barnes & Noble's experience?

Thanks. Barry

Editor's Note: Be sure to get a hold of Barry R. Berman and Joel R. Evans' latest book, Retail Management: A Strategic Approach, Published by Prentice Hall.  

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Barry Berman, Guest Contributor

About Author

Barry Berman, Ph.D is the Walter H. ‘Bud’ Miller Distinguished Professor of Business at Hofstra University’s Zarb School of Business. Barry's authored or co-authored books on Retail Management: A Strategic Approach; Competing in Tough Times; Marketing in the 21st Century; and Marketing Channels. Barry has published in the Journal of Marketing Education, the International Journal of Retail and Distribution Management, and Industrial Marketing Management, on subjects that include customer loyalty programs, product proliferation, customer delight, mass customization, yield management pricing, and data mining. Barry is President of the American Collegiate Retailing Association. Follow Barry on Twitter and www.BermanEvansRetail.com>
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