You read this post’s title and thought, “My god, Daven must be joking. How could he even suggest such a thing? Even the most die-hard paper book lovers can’t dispute that e-books are the main-volume product of the future.”
A “future” that is already slipping out of Barnes & Noble’s grasp:
Nook Media sales declined 12.6% versus a year ago.
– Nook is losing money
– Nook isn’t growing
– Nook is sinking when a rising tide is lifting all other boats
“You say you are closing a third of your physical bookstores over the next decade, all while admitting they are not unprofitable?” Petri writes. “Please listen to yourself.” Petri says she’s afraid Barnes & Noble will give up brick and mortar bookstore in the name of chasing e-book profits.
Chasing e-book profits would make much more sense if they were making e-book profits. 😈
Barnes & Noble’s retail stores do sell the Nook, but that’s not what Klipper points to as setting the chain apart. He told the Wall Street Journal that less than 3% of the company’s stores lose money — because they’re a destination for people in a way other retailers aren’t. “You go to Barnes & Noble to forget about your everyday issues, to stay awhile and relax,” he says.
So Barnes & Noble is closing profitable bookstore locations to divert the funds to the money-pit Edsel of e-readers? Not a good business model. We all know what happened when Borders outsourced their .com to Amazon. 😈
The strength of Barnes & Noble is that they are a brick and mortar retailer. Period.
The Atlantic: The Endangered Fate of Barnes & Noble
The same newsletter quotes Daniel Raff, a Wharton management professor, suggesting that the pessimism toward the bookseller may be overstated:
[He says that] Barnes & Noble was resourceful in devoting store space to the Nook and has assets that could be utilized. “When you talk ecosystems, it’s not just the digital stuff. . . . The comfortable majority of publisher profits are physical books, and they need distribution.” Indeed, Barnes & Noble’s biggest asset may be the reality that publishers need shelf space to sell books.” Ultimately, he and other observers have concluded that bundling print books with digital versions may be the next phase of bookselling and that would be a plus for Barnes & Noble.
When it comes to e-readers and digital content, Amazon has eaten B&N’s breakfast, lunch, dinner and they are now licking the last few crumbs of apple pie crust off of B&N’s dessert plate. The problem here is B&N’s myopic view from within:
Internally, Barnes & Noble leadership is still optimistic about Nook’s long-term prospects.
“The Nook business will scale in 2013,” said Lynch on the call. Helping it scale will be its partnership with Microsoft, which will pay Nook $50 million a year for the next three years as an advance on profits (read: unless there are profits, it’s financing for Nook).
“We expect our two highly acclaimed new NOOK products, and our Microsoft partnership on Windows 8 to further fuel the growth of our digital business…”
If Windows 8 wasn’t laying a Vista-size turd in the marketplace and handing the tablet market to Apple on a silver platter, I might share a bit of their optimism. Having Microsoft throw money into your money-pit does nothing to solve the fundamental problem, indeed the only real guarantee B&N gets here is “three years of life support” for the Nook.
The most important sentence quoted above: Barnes & Noble’s biggest asset may be the reality that publishers need shelf space to sell books.
A considerable percentage of B&N physical shelf space is being occupied by Nooks.
Did the Kindle win the market via physical shelf space allocation?
In fact, Kindle has much less shelf space now that Target and Wal-Mart have decided to stop selling it, but does anyone think this will be a major factor in Kindle’s future?
Barnes & Noble is a brick & mortar retailer. It’s time for them to act like one. People go to B&N to browse printed books, not Nooks.
The root of the Kindle’s success is its online content environment.
Even if B&N wishes to
burn through tons of money trying in vain to compete with Kindle continue to sell Nooks, the Nook belongs online.
For the stores, it’s time to replace the Nook space with book space.
Update 25 February 2013:
Barnes & Noble Chair wants to buy retail business
Barnes & Noble’s founder Leonard Riggio disclosed in a regulatory filing Monday that he wants to acquire the company’s stores and website, but not the business that makes the Nook e-reader or the company’s college bookstores.
Update May 2013: Yahoo Finance: Ten Brands That Will Disappear In 2014
(note what brand #2 is) 😈
Update June 2013: Forbes: Barnes & Noble Bows To Apple And Amazon; Exits Tablet Business