Barclay’s estimates that Barnes & Noble will have a cumulative three year loss of around $700 million.  While Barnes & Noble has been aggressive in pursuing growth strategies like partnerships with Microsoft and Pearson, the company still experienced a decrease in 2012 holiday sales (10.9% from the previous year) and a decrease in the sale of Nook (12.6% from the year before).  This indicates that maybe Barnes & Noble is losing the battle to online rival, Amazon.com. Even though competitor book store Borders closed in 2011, Barnes & Noble has been unable to increase sales.  The Nook, Barnes & Noble’s promising e-reader, has been overshadowed by the iPad, the iPad Mini, and of course, Kindle.

Barnes & Noble, like Best Buy and Target, is a frequent victim of showrooming.  Customers also claim that these big box retailers have unhelpful employees with little product knowledge.  Barnes & Noble has struggled to keep traffic in its stores, but is now focusing a heavier investment in online sales and sales of the Nook.

Although Barnes & Noble is the last “bookstore chain standing,” analysts suggest that maybe it wouldn’t be missed if it were gone and that the company is not giving customers very good reasons to visit.  Retail analysts advise that for Barnes & Noble to stand a chance of recovery it should become more of a destination store.  Barnes & Noble’s strategy is to capitalize on its large geographic presence (1,300 stores) and integrate its traditional retail, trade book, and college bookstore businesses with electronic offerings.  It is time for Barnes & Noble to get more creative with its marketing and merchandising strategy and to make the experience more seamless for the consumer.  For example, Barnes & Noble could use its size with publishers to leverage deals for the rights to both paper and digital versions of the same book.

Another way that Barnes & Noble could win back customers is by providing a winning service experience.  According to Wharton professor, Barbara Kahn, merchandising and informed and helpful staff are critical factors for a retailer’s rebound success.  Borders, for example, used to give its employees knowledge tests to ensure they had a thorough understanding of the available books.

Discussion Questions:

1. Perform a SWOT analysis on Barnes and Noble?

2. Based on the SWOT, what if your prognosis of Barnes & Noble?

 

SOURCE: Knowledge@Wharton, January 16, 2013