What 5 Lessons Can Retailers Learn From Barnes & Noble’s Recent Nook Decision?

We don't know what goes on in the boardrooms when discussions take place over what to do about the future of the business… but yesterday's article in the New York Times on Barnes & Noble's latest efforts to set their ship aright (Barnes & Noble Rethinks Its Strategy for the Nook By Leslie Kaufman), brought some interesting observations in the comments section re merchandising, competitive pricing, marketing and positioning.     

To summarize, Barnes & Noble, reporting a sharp drop in sales of its Nook tablets, said on Thursday that it would pull back on its ambitions for its device business, shrinking it in size while focusing more on digital content… The Nook, while drawing favorable reviews, failed to gain traction against more popular tablets like Amazon’s Kindle Fire and Apple's iPad, and its performance over the 2012 holiday season was tepid...

According to Barnes & Noble, the losses were largely because of lower-than-anticipated sales, inventory charges and higher operating expenses because of advertising costs, the company spokesperson said, adding that a reformulated Nook strategy would focus more on digital content like e-books and magazines, sales of which increased by 6.8 percent in the quarter.

Despite the shift in digital strategy, Barnes & Noble emphasized that the company was not abandoning the Nook division, adding that the Nook segment and the physical stores drove traffic to each other and needed to remain in partnership. 

But analysts weren't convinced, saying: “Barnes & Noble stands at a fork in the road and rather than choose one path, it will likely need to split into two companies and let the retail business go down one path while freeing the Nook division to go down another.”

The company also promoted prototypes for new stores to be opened in malls and the growth of the college bookstore business. (mentioned by our Guest Blogger, Barry Berman, in his recent post, 3 Cogent Competitive Strategies For Retailers Based On Barnes & Noble’s Recent Quickstep.  

Here are some of the observations and ideas from some of the readers who commented on the NYT article:

1. B&N Should Join forces with Amazon. They should really just sell the business to Amazon and partner with Amazon to support Amazon services at B&N book stores… 

(After all), Amazon has no intention of building stores. B&N has no future as a provider of digital content—they simply can’t compete… 

Then B&N can forget trying to be a big player on the web and on devices and concentrate on what it does extremely well—running stores.

B&N Could Cooperate With Amazon On Same-Day Delivery: 

Partnership (with Amazon) might actually save some marginal B&N locations. Amazon could do things like—if you need this book today, you can pick it up at this B&N location. They could even use some of surplus space at B&N stores to carry a limited selection of high-volume non-book merchandise. Maybe you need a computer mouse in a hurry—Amazon sends you to B&N to pick it up. 

2. Poor Synergy Between B&N's Bricks & Mortar & Digital. B&N have (sic) done a poor job developing the hoped-for synergy between bricks & mortar and digital… Plopping a glitzy Nook display in the middle of their stores is decidedly not the way to create synergy… Walking into my local B&N and immediately being confronted by Nooks was always disappointing. 

3. B&N Made The Nook Too Proprietary. If they would have opened up their app store to all the android apps that are available, this would have been a wildly popular device… 

Instead, as sold, it was not as versatile a device as it could have been.

4. B&N Is A Content Provider And Strayed Into The Delivery Mechanism Business.

5. B&N Could Have Competed More On Price. "I wrote to B&N to point out that Amazon had an electronic book for $10 less than B&N, and pointed out that Amazon was almost always a few dollars less for the same items…"

Bottom Line For B&N's Bottom Line:

Obviously, we don't know what Barnes & Noble thinks or strategizes, but we thought there were some creative, perceptive thoughts in the comments. 


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Gilon Miller, CMO

About Author

Gilon is a seasoned marketing, sales and business development executive with over 15 years of experience in the software and Internet business. He is the Founder and CEO of GuruShots. Previously, Gilon was the CMO of Upstream Commerce, VP of Marketing at iMDsoft and Director of Global Marketing at SAP. He earned an MBA at the MIT Sloan School of Management and a BS in Electrical Engineering from Tufts University.
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