After years of decline, Barnes & Noble’s sales have risen, costs have fallen — and the same people who saw the superchain as a supervillain for decades are celebrating its success.
In the past, the book-selling empire, with 600 outposts in all 50 states, was viewed by many readers, writers, and book lovers as highly armed publishers gobbling up independent stores in their quest for market share.
Today, virtually the entire publishing world relies on Barnes & Noble, including most independent booksellers. Its unique role in the book ecosystem, where it helps readers discover new titles and publishers continue to invest in brick-and-mortar stores, makes it an essential anchor in a world shaken by online sales and a much bigger player: Amazon.
“It would be a disaster if they went out of business,” said Jane Dystel, a literary agent with clients like Colleen Hoover, who has four books on the DailyExpertNews bestseller list this week. “There is a real fear that without this book chain the printing company would be completely off.”
The pandemic threw significant roadblocks on Barnes & Noble’s road. For nearly two years, there were no readings or author signatures in most stores. The cafe business is still a long way off. And in December, just as the Christmas shopping season arrived, Omicron came in. Many of the chain’s downtown stores in urban areas are still underperforming due to a lack of tourists and office workers.
Despite all this, sales at Barnes & Noble stores were up 3 percent last year from their prepandemic performance in 2019. Growth came the old-fashioned way, said James Daunt, the company’s CEO: By selling books, which rose 14 percent.
“I would never have predicted it at the beginning of the year,” Mr. Daunt said, “but it’s been great.”
The enemy of my enemy is my friend
For years, the animosity towards Barnes & Noble from independent bookstores was so strong that it made even Tom Hanks a believable, if charming, villain.
The feeling was captured in the 1998 film ‘You’ve Got Mail’. The film, co-written and directed by Nora Ephron, centers on the owner of a major bookstore chain, played by Mr. Hanks, who bankrupted the character of Meg Ryan, a beloved independent bookseller in Manhattan. (They were also both cute and fell in love.)
Back in the world of nonfiction, the American Booksellers Association, which represents independent stores, filed an antitrust lawsuit against Barnes & Noble in the 1990s. A few years earlier, the group had sued several publishers for falsely charging large chains lower prices.
“There was a period when the competition was pretty ugly,” said Oren J. Teicher, former director of the American Booksellers Association. “Barnes & Noble was seen not just as the enemy, but as everything that was wrong with selling corporate books.”
Over time, however, bookstores developed “a common enemy,” Teicher said: Amazon.
Barnes & Noble grew from a lone bookstore in Manhattan in 1917 to become a dominant player by offering big discounts on best sellers to attract customers. Once in a store, readers were presented with a huge selection, sometimes over 100,000 titles, most of which sold for full price.
When Amazon came along, it took the game from Barnes & Noble and played it better, with bigger discounts and a seemingly never-ending selection of books.
Today, despite the rise of other formats, the industry still relies on physical books — in 2021 they brought in 76 percent of publishers’ revenue, according to the Association of American Publishers. And more than half of the physical books in the United States are sold by Amazon.
Buying a book you are looking for online is easy. You search. You click. You buy. What is lost are the accidental finds, the book you pick up in a store because of its cover, a paperback that you come across while walking through the thriller part.
No one has quite figured out how to replicate that kind of incidental discovery online. It makes bookstores immensely important not only to readers, but to all writers except the greatest writers, as well as to agents and publishers of all sizes.
Independent stores play an important role in those kinds of discoveries, but because Barnes & Noble stores are so large, they can usually keep more titles on hand. And in many parts of the country there are no independents: Barnes & Noble is the only bookstore in town.
“Discovery is so important,” said Daniel Simon, founder of Seven Stories Press, an independent publishing house. “The more Amazon’s market share grows, the fewer discoveries there will be overall and the fewer new voices will be heard.”
For well-known authors, Barnes & Noble is important for another reason: size. The chain’s 600 stores are a major stop on any major book tour and can place huge orders and move many copies.
“It’s funny how the industry has evolved so they’re a good guy now,” said Ellen Adler, the publisher of the independent New Press. “I would say their rehab was total.”
The chain also ensures that publishers continue to invest in the distribution of physical books nationwide, said Kristen McLean, executive director of business development at NPD Books, which is tracking the market.
That’s good for booksellers of all sizes.
Michael Barnard, the owner and manager of Rakestraw Books in Danville, California, said that about 20 years ago, Barnes & Noble opened a grocery store about 5 miles from its store. A Super Crown bookstore, a Borders, and a Costco with a sizable book department were also nearby—all just as Amazon was on the rise.
But Rakestraw persisted and even prospered. Last year was the best year his store has ever had, Mr. Barnard said.
“They were extremely competitive at times and hard to have,” he said. But at the same time, “they’re the other big part of the industry dedicated to printing and selling books in person, and I think they share some of our challenges.”
“That said,” he added, “I’d rather not have one near me.”
A bookstore is not a battery store
In 2018, the company’s board of directors fired its CEO, the fourth in five years. People in the industry feared that the country’s largest bookstore chain would collapse.
The following summer, Elliott Advisors, a hedge fund, bought the chain for $638 million and put Mr. Daunt in charge.
Mr Daunt, a highly regarded bookseller who opened his first Daunt Books store in London in 1990, was brought in to solve a similar problem at Waterstones, Britain’s largest bookstore chain. The company was on the brink of bankruptcy when it took over in 2011. His theory was that retail chains should behave less like chain stores and more independently, with the same freedom to tailor their offerings to local tastes. It worked and he made Waterstones profitable again.
He repeated that approach at Barnes & Noble. While orders for locations across the country used to be placed by a central New York office, today a smaller central office places only a minimum order for new books, leaving store managers free to choose whether to bring in more copies based on local sales. .
“I get all the credit, but what I’m really doing is getting out of the way of people and letting them run decent bookstores,” said Mr. daunt. “All the work continues in the workplace.”
Barnes & Noble has also focused on selling books, rather than the vast array of items it once carried that were only indirectly — if at all — related to reading.
“We sold a lot of pretty irrelevant stuff to a bookstore,” Mr. Daunt said. “Nobody thinks, ‘I need a Duracell battery – I’m going to my bookstore.'”
The chain has strengthened its selection of manga and made sure it had enough inventory in recent years to fuel a boom in demand, said Shannon DeVito, director of books at the company. It has also put a lot of emphasis on books that have taken off on TikTok, where viral clips of readers crying over books they love pushed many titles onto the bestseller list.
Barnes & Noble has also stopped taking fees from publishers to place certain books in highly visible places, such as at the entrance or in the window. It seemed like free money, Mr. Daunt said, but it created a cascade of problems: books that no one wanted to buy were prominently displayed, and large orders that didn’t sell had to be returned. (A quirk of the bookstore is that unsold books can be returned to publishers for full credit, a practice that dates back to the Depression. Shipping and handling costs can be significant.)
Now store managers can choose which books to promote.
“Although it seems we have piously held up our hands and said, ‘I don’t want to take the money,'” said Mr. Daunt, “we basically said, ‘I don’t want all the expense that comes with taking that money,’ apart from the fact that it forced me to run really awful bookstores.
After enduring years of unloved shabbiness, Barnes & Noble has begun refurbishing its stores, many of which hadn’t seen a new carpet in about 15 years; shortly after he was named CEO, Mr. Daunt that Barnes & Noble stores were “a little ugly”. When the company closed all its stores in 2020 due to the pandemic, it used that time to freshen up. Walls were painted. Furniture was rearranged. Some bulky displays were replaced by smaller tables. And at the end of last year they started a more extensive refurbishment.
Barnes & Noble’s online business has also improved. That segment is up 35 percent from prepandemic levels, Mr. Daunt said, although it only accounts for about 10 percent of the chain’s total sales. After years of letting its Nook e-reader languish, the company has invested again. It recently redesigned the Nook app to integrate audiobooks and released a new version of the device for the holidays last year.
The reorganization of the company has not been painless. The headquarters staff is only half what it was, Mr. Daunt estimated. Much of that reduction came from layoffs, including many book buyers as their jobs shifted to local stores.
But thanks to a smaller central staff, the company has been able to give up expensive office space in New York City. The rest of the staff work on two floors in Barnes & Noble’s flagship building in Manhattan’s Union Square, which the company has already leased.
Many questions remain about the future of Barnes & Noble. Costs are rising in the book industry, which has low margins to begin with. And like all brick-and-mortar retailers, Barnes & Noble needs to convince more customers to stop buying everything on their phones.
However, there is a positive tailwind as sales have increased across the industry. With so many people sitting at home in 2020, many people bought a lot of books. As the country opened up, publishers have been waiting for sales to fall back to prepandemic levels. But so far they haven’t.
Usually, said Ms. McLean of NPD Books, strong sales are driven by blockbuster releases from well-known authors, and while some are coming this year — Marie Kondo will be releasing a book this fall on how to manifest your ideal life by organizing — there are there hasn’t been much lately. Right now, there’s something else behind all that buying.
“Right now,” said Mr. Daunt, “it’s driven by an enthusiasm for reading.”