What I’m listening to: “Windmills of Your Mind” by Sting
By now, you will no doubt be aware that Barnes & Noble Booksellers (for whom I work part time) has been sold to Elliot Advisors, a Private Equity/Hedge Fund that had already bought out the U.K.’s Waterstone’s. Here is the New York Times article.
There is no question that a private equity company snapping up a retail chain usually involves the sale and liquidation within 5 years. It’s almost a given. See stores like Toys R Us for a cautionary tale. And that may be the case here. Time will tell.
James Daunt, who has run the Waterstone’s since 2011, will be the CEO of Barnes & Noble, as well. He bought the failing Waterstone’s (about the size of Walden Books before it went down) in 2011, and has since returned it to profitability. Daunt is apparently a physical book zealot who involves himself in every aspect of bookselling. Here’s a glowing Guardian piece about that.
The hallmark of his turnaround method? Something American indie booksellers figured out 10 years ago: your bookstore’s community is what’s important. Focus on what your area wants in a bookstore and do that. Specialty scones and math books in one town? Do that. Harry Potter nights and kids books in another? Do that. Which makes buckets of sense.
So, the model is a collection of independent bookstores run overall as a chain.
The B&N store in which I work is the most profitable in the district. Yes, I know, you’re thinking, “Reno reads?” Yeah. Madly and passionately. And they drag their kids out to every event we can manage. The store is fairly crowded from open to close, and we usually have to throw people out at closing. Friday and Saturday nights it’s a popular date spot. And yes, I have found couples, um… But there are also refugee Moms and Dads in the café. Other things the store has:
- ~It’s 2 stories (aka: it’s BIG)
- ~There are 250,000 titles in stock
- ~There are 3000 different magazine titles
- ~It has a nice café
- ~It has a huge Children’s department
- ~It has thousands of DVDs and CDs with a 50′ wall of vinyl records
- ~It has an insane amount of Funko Pops
- ~It has hundreds and hundreds of bargain books covering pretty much every topic
- ~Besides WalMart & Target, it has the largest toy selection in the valley
- ~It has a diverse gift section
You know what we don’t have? A decent “Nevada” or even “Reno” section. It’s tiny. We only get in 10 maps of the area per month. TEN. They are sold out in a week (yes, maps sell), and only restocked monthly. (I’ve got 50 copies of a Dallas map. Twenty-five of Athens.) We don’t have any books on local gardening. We hide the Nevada ghost town books in the Paranormal section. We only do 2 local author events a year, and have no local author section at all.
So, it would be terrific if we could be more “Reno-centric.”
A large problem that B&N has faced is the founding father of the company, Len Raggio. He was the retail book bombfather back in the 90s, but he has not worn well in the ebook/ecommerce age. I’m told he’s a wonderful individual, but he’s missing a few cogs in the old brainbox these days, as evidenced by the weird C-Suite antics in the last 2 years. Here are some of the problems I see as just a low-level retail grunt:
- ~B&N the store does not match prices with its own B&N website.
- ~The registers and computer system run off Windows XP, on ancient machines with cranky pin-pads, on an unreliable AT&T internet connection.
- ~There is no way they can track what is selling and what isn’t; they have a very antiquated inventory system with no depth or real search/data management tools.
- ~Has BOPIS, but makes you stand in line at register to pick up.
- ~The AC at our store is broken, so the upstairs can be up to 90 – 100 degrees. (Our store is 20 years old and the physical plant is suffering.) It took a total desperation move by an assistant manager to get it fixed after almost a year (now people are complaining it’s too cold).
- ~The company fired almost all the full-time employees when “Obamacare” was implemented. There are only 2 bookfloor positions that are full time with benefits, out of about 35 booksellers (not counting managers, of which there is a Manager, 2 Assistant Managers, and 2 Merchandising Managers).
- ~Management has no control over how much of any book/music/gift item is sent. That’s up to the folks in NYC, who have apparently never left their office to see a real bookstore, or checked to see the consequences of their merchandise decisions.
- ~Barely supports (or sells) its proprietary ereader, the Nook.
The closest the company has gotten to “innovation” recently is opening a few stores where they have a full restaurant (which serves wine and craft beer) attached to a very limited bookstore. I don’t hate the idea of bookstore restaurant, but it would be too sad if the restaurant was allowed to eat the bookstore. (I cannot tell you if those model stores are profitable. But I do know they have serious payroll overages.)
This Spring, there was the usual retail post-holiday draw-down of employees. Only it got worse and worse. Most employees (including me) were cut back to just 12 hours (or less) a week. It was system-wide. As we understood it, the corporation was trying to save $2 million in labor so it could make its promised profit. In retrospect, this was obviously related to the sale. But it was incredibly stupid, often leaving just 2 booksellers in a 27,000 sq ft building to “help” customers. We had many guests walk out, exclaiming they would never return.
Will Elliot/Daunt be better? Note that the Guardian article says Daunt fired 200 booksellers and closed many stores when he took over Watersone’s. I’m not holding my breath that things will get better for the booksellers. In fact, it would not surprise me if Daunt closed down about 50 stores right from the get-go (some aren’t worth saving, it’s true). When he took over Waterstone’s, he fired most of the C-Suite and those just below. That would be a good thing at B&N, as the Raggio crowd will probably try to fight any changes. It should also be noted that Daunt filled those slots with Waterstone’s employees, so that could be a good sign for B&N.
I’ve been a small press publisher and a book distributor for almost 2 decades, so when I put on that hat, I know losing Barnes & Noble could have been devastating to the small press and self-published community. Even the big publishers would have suffered. With Ingram gobbling up Baker & Taylor’s retail fulfillment, there would have been few places to sell that had as much reach as B&N. Amazon is increasingly hostile to publishers of any size. We all love indie bookstores, but they can’t buy in bulk the way B&N can.
While few small presses and even self-pubbers have made it with B&N, it has been a real breakthrough to those who have. Daunt encourages small press (see the Guardian article). It’s not clear what he thinks of self-publishers. But he is very pro-book. Hopefully, he will understand the two key elements that people who are in the store have come for (rather than shopping on-line):
1) the book/item they want right that moment, for a price as promised on the website. This takes a basic understanding of ecommerce and brick and mortar. Best Buy made this blend very well in the last 2 years.
2) a curated experience. That is, the customer wants to talk to knowledgeable staff who know the books, can help them pick out appropriate titles, and suggest books the customer hasn’t heard of before. Also, the customer should be able to find the books they want with a minimum of fuss. This will require more staff, not less, in each store.
It’s hard to say how this equity company acquisition of B&N will play out in America. I’m hoping it will be a net positive for everyone if Daunt does for B&N what he did for Waterstone’s.
But I’m also deeply suspicious of Equity Funds. Will this be the death of B&N soon? Possibly–but I think it was already heading there if things had stayed the same.
Your thoughts are welcome.