brand challenges

B&N Sale: Closing the Book on an Era

Posted by Sheila Shayon on August 4, 2010 11:00 AM

Shareholder activism, a significantly undervalued stock, and the massive consumer shift to e-books have put America’s largest book chain (with 720 stores) on the block. The digital book tsunami cannot be won, it seems, by bricks-and-mortar.

Despite an aggressive move to compete with Amazon’s Kindle by launching its own e-book reader, the Nook, with branded e-boutiques in every Barnes & Noble store, the news that B&N is itself for sale may sound the death knell for physical bookstores of any size. Bittersweet, ironic revenge for Meg Ryan's You've Got Mail character?

"Barnes & Noble has an iconic brand and unique competitive advantages we believe will position the company to succeed over time in a rapidly changing market," reads the official announcement. "The board is confident in Barnes & Noble’s strategy and fully supportive of the senior management team, which is delivering explosive growth in our fast-developing digital business." If that's the case, why put the brand on the block?

While claiming to be bullish on B&N's future, the company's board, much like Hugh Hefner's appraisal of Playboy, believes the company's stock is "significantly undervalued."

According to the New York Times, the decision to explore a sale "surprised analysts and alarmed publishers," who have seen their business migrate to online retailers and e-book sales, leaving both chains and independent sellers struggling.

Among the bidders is B&N founder, Leonard Riggio, the largest stockholder with 30% ownership of the company.

"Regardless of whether I participate in an investment group that buys the company, I, as well as the entire senior management team, am willing and eager to remain with the company and see it through the challenging years ahead," Riggio told the New York Times.

In addition to the steady growth of digital books overtaking physical books, brands like Barnes & Noble have suffered as shifts in publishing and retail lured customers into ‘big-box’ stores like Target, Wal-Mart, and Costco.

The bottom line, according to Mike Shatzkin, CEO, Idea Logical, digital book publishing futurists: "Starting with the iPad, everything that is moving things to e-books faster is bad news for bookstores."

Hand-in-hand, or mouse-to-mouse, the overall decline in book-reading by Americans over the last two decades is also key to the shifting tides of the book business, tides even Joe Fox can’t turn back.

Indeed, the very definition of what constitutes a "book" is redefining business models — and eliminating some businesses altogether — as a cultural and technological shift occurs right in front of our eyes.

Comments

Stewart Locke Canada says:

Books aren't going away! But yes, businesses must adapt and evolve to the new technologies.

August 4, 2010 04:33 PM #

cosplay People's Republic of China says:

Books aren't going away! But yes, businesses must adapt and evolve to the new technologies.

August 5, 2010 05:02 AM #

BNBookseller United States says:

I work in a fairly new store (open only & months) and we have had a steady stream of customers and even those that use our e-reader still come in to the stores to browse. We have customers that drive over 45 minutes to go to our store because there isn’t one closer and some come in almost every week. Trust me books aren’t going anywhere. And yes you can get books at stores like wall mart but true book enthusiasts will always need a place like Barnes & Noble.

August 5, 2010 09:34 AM #

art mugalian United States says:

You're all wrong. Books will be totally gone in 10 to 20 years. Everything will be electronic. The only book sales will be used books. Barnes and Noble is fighting a desperate rearguard battle that has no prospects for victory. It's their only option, but it is futile. The future of reading is digital. Barnes and Noble understood this but reacted too late. Nook was rolled out too late (but prematurely) and with poor tech support and no marketing. The company is caught in a bind. They can't plough all their money into digital and continue to shore up their bricks-and-mortar business without hurting somewhere. In this case, it's bricks-and-mortar. Eventually, customers notice the neglect. They're already abandoning the physical books and B&N is just reinforcing the notion that the place to buy books is online (or digitally) and not in person. If the company has any chance of surviving-- and it's doubtful-- it has to compete with Amazon, and maybe even Apple, in the digital marketplace.

August 8, 2010 09:59 PM #

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