WSJ: “B&N Aims To Whittle Its Stores For Years”
I saw this in my morning Flipboard read, and then several people alerted me through private e-mails.
You may not be able to read it by clicking or tapping on the above link, due to the WSJ’s paywall. If that’s the case, search for
B&N Aims To Whittle Its Stores For Years
through Google, and I think you’ll find the full article.
The article is by Jeffrey A. Trachtenberg, who, as I’ve said before, is my favorite mainstream writer on e-book issues (although this isn’t specifically e-book, it has an impact). Trachtenberg is accurate, insightful, and entertaining: a great combination. 
The basic point is that Mitchell Kipper, “chief executive of Barnes & Noble’s retail group”, has said that they will close something like 20 stores a year, getting down to 450 or 500 stores in ten years.
I strongly recommend that you read the article: your interpretation may be different from mine, and certainly, mine doesn’t match everybody else’s who is commenting on this.
First, I think that projecting a steady closure rate is…optimistic at best. Unless they significantly change their inventory (which they could do), I’m guessing that it will happen in lumps, and may certainly accelerate. Leases may be staggered somewhat, but I would think 100 closing in a single year is not unreasonable.
Second, Kipper says that most stores are making money, and why would you close a store when it’s making money? Well, the simple answer is, “Why would you keep a store open until it is losing money?” It makes more sense to close a store that is making a marginal profit, than to commit that store through another lease if it looks like it might be losing money in three months. Even if leases are month to month, it can still make sense. Let’s say a store is making a $100,000 profit in a year…and will start losing $250,000? in three months? You don’t want to wait until the losses start.
My last point before you take off to read is the one that seem the strangest to me.
“Mr. Klipper said that bookstores serve a different purpose than many other retail outlets. “You go to Barnes & Noble to forget about your everyday issues, to stay a while and relax,” he said. “When you go to Bed Bath & Beyond, you don’t sit down on the floor and curl up with your blender and your kid.”"
Certainly, people like going to a bookstore and relaxing. Is that a viable business model, though? As a former brick-and-mortar bookstore manager, I can tell you that you are always fighting rent. If you have taken up a couple of square feet for an easy chair, that’s space you don’t have for a popular book. The concept is that somebody browsing a book is more likely to buy it…but what are the odds now that they browse it, and then buy it online? Becoming a bit hyperbolic, wouldn’t more people hang out in your grocery store if you put a swimming pool in it? Sure, but that doesn’t make sense for a grocery store to do…it’s too expensive for the amount of return.
I have said that bookstores that changed to a luxury sales model could work, and that could certainly involve “reading rooms”. However, I don’t see your typical Barnes & Noble becoming that. That would be a lot fewer stores with a lot higher prices, and much more customer service.
Investors may like this in the short run, because I don’t think anybody is seeing having all those stores as a good investment. However, people may also see it a red flag indicator, which could create a spiral of sell-off.
It’s interesting to me that people have reacted so strongly to this story, since it isn’t really much of a surprise…and B&N isn’t exactly confirming all of this. It feels like it is because it has such cognitive resonance: it confirms for people what they already think is true (but hidden from them), and that feels good.
What do you think? Can Barnes & Noble close stores on a steady rate? Is this an overreaction? Do you think B&N will be here for ten years? Feel free to let me and my readers know by commenting on this post.
This post by Bufo Calvin originally appeared in the I Love My Kindle blog.
January 28, 2013 at 10:39 pm |
I find it interesting that the bookstores that closed down all the small private bookstores are closing now. AND that the small stores might be the ones that would survive if they hadn’t been pushed out by the big stores. Also in Chicago there is no longer a Rizzoli, which was a wonderful luxury book store, will stores like that appear again? Quite a twist!
January 29, 2013 at 12:02 am |
Thanks for writing, eeebailey!
There are a lot of small bookstores that survived the arrival of the “dinostores”. They had to stand out: they couldn’t just carry the popular titles, because the big chains could beat them on the prices (and often significantly discounted bestsellers). For a brick and mortar to make it, it has to be a better experience to shop there: people have to willingly pay more money for something, and that can certainly happen. There is a Rizzolli in New York, but I don’t know if they are related:
http://rizzolibookstore.com/
January 29, 2013 at 4:28 am
I don’t know whether the Rizzoli’s in NYC is still there or not. When I lived there, I would pass it by on 5th Avenue all the time. I would go in occasionally, but I never bought anything — it seemed to me to be heavy on Coffee Table and Art books.
Back in the day there used to be 4 bookstores in Manhattan specializing in mysteries, and two specializing in Science Fiction. All of the mystery-oriented bookstores are gone now. Of the two scifi shpos: one is gone the other has mostly shifted to scifi-oriented costumes and games, and comic books.
Most of the general purpose indie bookstores have also closed. At one point BN had 6 or 7 megastores in Manhattan — I know at least one of these has closed. There is in NYC an indie book store: Shakespeare & Co (no relation AFAIK to the famous one in Paris) that is still around, and has expanded a tiny bit (I think).
January 29, 2013 at 1:46 pm
Thanks for writing, Edward!
It appears to me, from the website, that Rizzoli’s is still where you knew it.
Here in the San Francisco Bay Area, we still have long-standing specialty bookstores, including Dark Carnival and The Other Change of Hobbit.
January 29, 2013 at 4:39 am
One thing I have noticed away from the big urban areas is a kind of bookstore that would have a periodicals section; maybe the top ten from the best seller lists, and the rest of the shelf space in these stores would be taken up with remainders.
I don’t know if this is a viable business model going forward (I tend to think not as if ebooks become the preponderant modality, then the supply of remainders might dry up. Back before BN started expanding outside of NYC, across the street,from their original store on lower fifth avenue, they had a large store that was just like that — mostly remainders, and current best sellers. I don’t know if it’s still there or not. My recollection was that the original store was mostly given over to college textbooks, medical books, and technical books with also the best sellers and some mass market paperbacks. Down in the basement, they had a buy/sell used college textbook business.
January 29, 2013 at 2:01 pm
Thanks for writing, Edward!
I do think that there will be a reduction in the availability of remainders. Remainders basically come about because the publisher overprinted (although there are other things called “remainders” that are created specifically for that purpose). They “remain” after the book stops selling well enough for bookstores to justify it taking up space in the store.
First, I think stores will get much more conservative about what they order, going more for sure sellers.
Second, if the publishers can store them cheaply enough, they can sell them online, rather than having them remaindered out to brick and mortar stores.
On the other hand, I do think some used bookstores (and that’s a very different thing) may do quite well. As the supply of used books diminishes (due to fewer being printed), I don’t think that the demand will necessarily reduce at a matching rate, which should drive up the prices…helping with the per square foot revenue.
January 30, 2013 at 12:46 am |
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