Barnes and Noble, the Long Goodbye?

There's been a lot of fervor over the last couple weeks regarding Barnes & Noble's demise... or, more optimistically, its transformation.  Sales for the last quarter, including Holiday sales, appear to have been a bit lack luster for the book giant. This, combined with the larger numbers of B&N store closings, has more than a few people worried.

 Barnes and Noble has repeatedly stated that they're downsizing their physical presence. (that was pretty clear back in 2010 when they closed 71 stores, most of which were B. Dalton). According to the B&N Corporate Website, they "operate nearly 700 Barnes & Noble bookstores in 50 states."  (In fact, they currently operate around 673/4). This is down from 723 stores as of April 30, 2011.

 A Wall Street Journal article, published January 28, 2013, quotes Mitchell Klipper, CEO of B&N Retail Group, as stating that B&N will shutter 1/3 of its stores over the next 10 years (or 20 stores a year). The interesting thing is, 400 of the 670+ store leases are expiring over the next three years, making it more than possible that the brunt of the closings will occur during that period, rather than being spread out over the full 10 years (complete conjecture here since I don't have any insight into the lease agreements or negotiations).

 This is unfortunate, since the strength of Barnes & Noble has never been its online presence (sorry B&N, but when I'm researching a book, I go to Amazon). It's the atmosphere created at the physical store that rocks the Barnes & Noble... the cafe, the music, the big cushy seats, book signings, and frantic (or frenetic) book sellers who (you can tell) would much rather be reading (but, at least they know their stuff). This is a far cry from the structure Jeff Bezos creates in his Amazon empire. The interesting part is that they're both customer-centric, it's just that Bezos has created a shopping experience that is stripped down. It takes a little less effort on the customer's behalf (but also offers less in the way of emotional reward).

 It's interesting to note that Barnes & Noble in an effort to compete with Amazon, has unintentionally (one assumes) begun competing with itself. Employees and customers discovered that over the holiday season, prices at BN.com were undercutting the prices for products at their retail stores, without giving the retail stores the ability to match those prices.  Additionally, the end of year sales report states that foot traffic was down in the stores this year... something that Mike Shatzkin suggests could be blamed on Nook sales.

 The B&N employee forums are full of rumors, questions, and predictions. The favorites seem to be scenarios in which all of the bricks & mortar stores are closed and smaller "Nook Cafes" are reopened with a smattering of actual books; or as one employee suggested, more localized shops with a smaller footprint. Something, I think, Starbucks was attempting back in 2008/09 (and has had success with... in China).

Store Closings:

 According to the Barnes & Noble 2011 Annual Report, 16 stores were closed in 2011. The number of locations dwindled from 726 (in 2009) to 705 (in 2011). At the end of the fiscal year 2012 the stores numbered 689 - a drop of 16. That number includes stores that closed prior to July of 2012, but in the last few months we've seen an additional 16 locations shuttered (or soon-to-be-shuttered):

2012

 California - Campbell (December 2012)
California - San Jose, Westgate (December 2012)
California - Woodland Hills, Westfield Promenade (December 2012)
Colorado - Denver, Greenwood Village (December 2012)
Florida - Aventura (December 2012)
Georgia - Duluth (June 2012)
Illinois - Plainfield (December 2012)
New York - Greenburgh (May 2012)
New York - NYC, 8th Street, Greenwich Village (December 2012)
Pennsylvania - Philadelphia, Jenkintown (December 2012)
Texas - Irving, Las Colinas (December 2012)
Texas - Irving, Irving Mall (December 2012)
Texas - Westlake (December 2012)
Washington D.C. - Union Station (December 2012) They extended the lease on this store for one more year.

 2013

Illionois - Plainfield (January 2013)
Texas - Amarillo (January 2013)
Virginia - Reston (February 2013)
The Take Away:

Clearly, B&N is attempting to become leaner and meaner. We'll probably end up with one bookstore per metropolitan area, as they refocus on the future of digital books/entertainment/education. I doubt we'll see the bricks & mortar stores go by way of Borders, at least, not in the next 10 years.

Further reading:

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