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.