How Barnes & Noble has focused on CX to turn around its fortunesby
Amazon and the digital revolution nearly killed book retailer Barnes & Noble. Yet five years after posting a loss of $18 million, it's opening 30+ new stores - while Amazon is shedding jobs. Customer experience management holds the secret to its success.
If there's one area of retail that was particuarly disrupted by the digital revolution 20 years ago, it was bookselling. Given the ecommerce behemoth that it has become, it's easy to forget that Amazon was first-and-foremost an online bookseller when it emerged. And it forever changed book retailing.
But in a fascinating about-turn, as 2023 begins we are seeing many digital platforms struggling - while a 137-year-old book retailer is flourishing once more.
Indeed, while the likes of Facebook, Netflix and Twitter are in turmoil, and even Amazon itself is shedding jobs, Barnes & Noble is profitable and growing - recently announcing plans to open 30 new stores. So what's going on?
The Barnes & Noble horror story
A brilliant article by critic and historian Ted Gioia has examined how Barnes & Noble has turned around its fortunes, concluding that a renewed focus on the customer and the products have been the reinvigorating factors.
And it really has been a spectacular turnaround in fortunes. The company was paralysed by the digital age, and even as fellow bricks-and-mortar rivals such as Borders collapsed, Barnes & Noble was still unable to regain momentum and find a strategy that could keep it competitive as ecommerce asserted its dominance.
Amongst its many attempts to revive its fortunes was the introduction of areas in-store dedicated to selling toys, cards and calendars. ("Do people really go toy shopping at a bookstore?" ponders Gioia. "Toys R Us also filed for bankruptcy in 2018, and if they couldn’t compete with Amazon, how could B&N hope to do any better?")
B&N also started installing cafes inside stores and then, in a particularly desperate roll of the dice, decided to launch freestanding restaurants, branded as Barnes & Noble Kitchen. This, too, failed to gain any traction amongst consumers, with company chairman Leonard Riggio conceding: “I have no experience in the hospitality area... Things like controlling food costs and payroll costs are not in our DNA. So [it’s] a lot harder than you think it is."
Even its apparently sensible attempts to capitalise on digital consumer preferences were caught in the company's downward spiral - with its Nook ebook reader seeing a 90% decline in sales.
In 2018, Barnes & Noble made a loss of $18 million, resulting in a drop in share price of over 80% and around 1,800 redundancies.
Breaking the rules of book retailing
At this point, if Barnes & Noble was a book, it would be a horror story. But incredibly, there is a twist in the tale. And it is heralded by the hiring of a new boss - John Daunt.
Daunt had successfully turned around the fortunes of British book retail chain Waterstones, and had garnered reputation for breaking the rules of bookselling.
For a start, he refused to discount his books, despite the fierce price competition in the market. As Gioia notes: "If you asked him why, he had a simple answer: 'I don’t think books are overpriced.'"
But the most revolutionary thing that Daunt did at Waterstones was to refuse to take promotional money from publishers. For those unacquainted with the dark arts of the publishing / book retail game, publishers give retailers promotional money in exchange for purchase commitments and prominent placement in stores and shop windows. Often books will be aggressively pushed in a bid to drive a book onto the best-seller lists, regardless of its quality.
"Everybody wins. Except maybe the reader," says Gioia. But Daunt refused to play this game.
"He wanted to put the best books in the window. He wanted to display the most exciting books by the front door. Even more amazing, he let the people working in the stores make these decisions."
As Daunt told the Evening Standard in 2014: “Staff are now in control of their own shops. Hopefully they’re enjoying their work more. They’re creating something very different in each store.”
This strategy proved enormously successful. Returns fell to almost zero and 97% of the books placed on the shelves were purchased by customers - a remakable statistic for a book retail chain.
How Barnes & Noble put customers first
Hired by Barnes & Noble in August 2019, Daunt used the pandemic as an opportunity to overhaul its stores.
Gioia explains: "He asked employees in the outlets to take every book off the shelf, and re-evaluate whether it should stay. Every section of the store needed to be refreshed and made appealing."
In short, Daunt was "giving more power to the stores" - even if it did infuriate the publishers.
Gioia continues: "Daunt also refused to dumb-down the store offerings. The key challenge, he claimed was to 'create an environment that’s intellectually satisfying - and not in a snobbish way, but in the sense of feeding your mind.'"
Remarkably, book sales at Barnes & Noble began to rise once more. Sales quickly rebounded after the pandemic, and soon B&N was announcing the opening of new stores - 16 in 2022, and double that planned for 2023. Not bad for print media in the digital age.
"Readers regained trust in the company," says Gioia. "The workers at the stores were more motivated and started genuinely acting like booksellers."
Gioia believes there is a lesson here - and it's a lesson that could be applied to music, films, newspapers... and beyond. And it's a simple lesson.
"If you want to sell music, you must love those songs. If you want to succeed in journalism, you must love those newspapers. If you want to succeed in movies, you must love the cinema," he notes.
"Frankly, I could draw many other lessons from the Barnes & Noble turnaround. I praise its decentralisation, and its willingness to empower booksellers at the local stores. I like the way the stores look nowadays, and the improved selection on the shelves. But the key element uniting all of this is putting books and readers first, and everything else second. That’s a strategy that others could learn from."
I encourage you to read Ted's full article, as this summary doesn't do justice to his thoughtful and insightful piece.
Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 20 years, including Internet Works, CXO magazine and Business Management. He joined MyCustomer in 2007.