It’s become almost too common to dissect the downfalls of digital media giants. Lately, the narrative surrounding platforms like Facebook, Spotify, and Netflix has been dominated by stories of declining stocks and questionable strategic choices. While accurate predictions of their struggles might offer a sense of foresight, the larger picture is less encouraging. When these digital behemoths stumble, the ripples are felt across the entire media landscape, impacting creators and consumers alike. Their missteps, often stemming from dominance-induced arrogance and user-unfriendly policies, serve as cautionary tales. However, amidst this digital gloom, there shines a beacon of hope, a positive case study from which We Learn valuable lessons about resilience and the enduring power of traditional approaches in a rapidly changing world.
This surprising success story comes from an unlikely source: a company that was once considered a digital media failure, now thriving by embracing the decidedly un-modern technology of printed books. Barnes & Noble, a name synonymous with physical bookstores, has orchestrated a remarkable turnaround. Let’s delve into the resurgence of Barnes & Noble and explore what we learn from their unexpected triumph.
Against the Digital Tide: Barnes & Noble’s Brick-and-Mortar Bloom
In an era where tech giants often dictate market trends, the struggles of digital darlings are increasingly apparent. Tesla’s share price volatility, the crypto market’s instability, Netflix’s subscriber woes, and Facebook’s ongoing challenges paint a picture of uncertainty in the digital realm. Even TikTok, once seemingly invincible, faces questions about its long-term trajectory.
Yet, against this backdrop of digital flux, Barnes & Noble is experiencing a renaissance. After years of decline, the bookstore chain has returned to profitability and growth. Recently, they announced ambitious plans to open 30 new stores, even taking over locations previously occupied by Amazon’s failed bookstore ventures. This reversal of fortune begs the question: what can we learn from Barnes & Noble’s success in a market seemingly dominated by digital forces?
Image alt text: Barnes & Noble bookstore exterior, showcasing its revived brick-and-mortar presence and contrasting with the digital dominance of Amazon.
The notion that Barnes & Noble could succeed where Amazon faltered in physical bookstores seems improbable. Amazon’s seemingly limitless resources and digital prowess made them appear invincible. However, Barnes & Noble’s resurgence is undeniable. They are not only reopening stores in locations they previously abandoned but are also thriving in a retail landscape many considered hostile to physical bookstores. From this, we learn that even in the digital age, there’s a persistent value in tangible experiences and well-executed traditional business models.
Founded in 1886, Barnes & Noble thrived throughout the 20th century, becoming a cultural touchstone for book lovers. However, the digital revolution caught the company off guard. Their initial attempts to compete with Amazon by bolstering online sales and introducing the Nook e-reader proved largely unsuccessful. Even the closure of their main brick-and-mortar competitor, Borders, in 2011, failed to provide Barnes & Noble with a clear path to sustained success.
By 2018, the company was in dire straits, facing an $18 million loss and widespread layoffs. Adding to their woes, the CEO was dismissed amidst sexual harassment allegations. Key performance indicators painted a bleak picture: declining same-store sales, dwindling online revenue, and an 80% plunge in share price. The Nook e-reader, Barnes & Noble’s foray into the digital book market, experienced a catastrophic 90% decline. These figures challenge the narrative of an ever-expanding ebook market and highlight what we learn about the difficulties of transitioning from physical to digital in certain industries.
Image alt text: Statista chart illustrating the dramatic decline in Barnes & Noble Nook sales, emphasizing the challenges faced in the ebook market and the lessons we learn about digital transitions.
Source: Statista
With Amazon’s dominance in book retailing and the demise of Borders, Barnes & Noble seemed destined for extinction. Their attempts to mirror Amazon’s strategies had backfired, leaving them weaker than ever. Returning to their roots as a bookstore was their only option, but even then, Barnes & Noble had become a shadow of its former self. Stock issues, neglected book sections in favor of toys and trinkets, and unappealing in-store cafes had alienated core book lovers. This period serves as a crucial lesson in what we learn about losing sight of core business values and customer needs in pursuit of fleeting trends.
The CEO himself described Barnes & Noble stores as ‘crucifyingly boring,’ highlighting the depth of the problem and what we learn about self-assessment in business.
The in-store cafes, intended as an added draw, were equally underwhelming. And in a baffling move, Barnes & Noble launched freestanding restaurants, “Barnes & Noble Kitchen,” completely detached from books. This venture proved to be another costly failure. Chairman Leonard Riggio’s candid admission that running a restaurant is “a lot harder than you think it is…The bottom line is awful” underscored the company’s strategic missteps and the valuable lesson we learn about straying too far from core competencies. The brand, once synonymous with books, was losing its identity and appeal.
The Daunt Turnaround: Lessons in Leadership and Book Love
The transformation of Barnes & Noble is a powerful testament to the impact of effective leadership. The arrival of James Daunt as CEO marked a turning point. Daunt’s prior success in revitalizing Waterstones, a struggling British bookstore chain, hinted at his potential to rescue Barnes & Noble. His approach, rooted in a deep love for books and a contrarian business philosophy, provides valuable insights into what we learn about effective leadership and industry passion.
Daunt’s journey began with a single, beautifully curated bookstore in London. Despite intense market competition, he defied conventional wisdom by refusing to discount books, arguing that they were not overpriced. This early venture demonstrated his commitment to value over price wars, a lesson we learn about brand positioning and perceived value.
Image alt text: James Daunt’s first bookstore in London, showcasing its aesthetically pleasing design and curated book selection, highlighting the importance of store ambiance and specialized offerings, and what we learn about retail aesthetics.
At Waterstones, Daunt implemented similar strategies, eliminating “buy-two-get-one-free” promotions, believing that such tactics devalue books. Perhaps his most radical move was refusing promotional funding from publishers. This seemingly counterintuitive decision reveals a crucial lesson we learn about business ethics and prioritizing genuine recommendations over financial incentives.
Publisher promotional money, while tempting, often comes with strings attached. It dictates book placement and purchase commitments, often prioritizing heavily marketed titles over potentially more deserving but less-pushed works. Daunt recognized that this system, driven by publisher marketing budgets, could compromise the bookstore’s ability to curate truly valuable and interesting selections for readers. Leaked emails have even exposed the extent of these deals, revealing how marketing muscle can overshadow book quality in driving sales. While publishers and booksellers may benefit from these arrangements, the reader’s experience can suffer. From this, we learn about the potential downsides of promotional strategies that prioritize profit over product integrity.
Daunt’s refusal to participate in this system allowed him to prioritize book quality and reader interest. He empowered store staff to make purchasing and display decisions, trusting their expertise and passion. This decentralization, a key element of his strategy, demonstrates what we learn about the value of employee empowerment and localized decision-making.
This is James Daunt’s super power: He loves books. This passion is infectious and underlines what we learn about the importance of genuine enthusiasm in leading a company, especially in creative industries.
“Staff are now in control of their own shops,” Daunt explained. “Hopefully they’re enjoying their work more. They’re creating something very different in each store.” This approach proved remarkably successful at Waterstones. Book returns plummeted to an astonishingly low rate, indicating that the vast majority of books placed on shelves were actually purchased by customers. This success story provided the foundation for Daunt’s appointment as CEO of Barnes & Noble in August 2019 and what we learn about transferable business strategies.
His timing, however, was challenging. The COVID-19 pandemic devastated retail, particularly discretionary purchases like books. Adding to the difficulty, Barnes & Noble stores were, in Daunt’s own words, “crucifyingly boring.” Yet, Daunt used the pandemic-induced closures as an opportunity to overhaul the stores. He initiated a store-wide “weeding out” process, tasking employees with re-evaluating every book on the shelves and refreshing every section to enhance appeal. This proactive approach during a crisis illustrates what we learn about turning adversity into opportunity and the importance of continuous improvement.
Daunt’s decentralization strategy extended to publisher relationships. Publishers, accustomed to dealing with centralized head buyers, now had to engage with individual store managers, requiring more effort to promote their books. This shift, while initially challenging for publishers, ultimately fostered a more direct connection between books and local readers. It also meant that books had to genuinely appeal to readers, not just corporate buyers, highlighting what we learn about the ultimate importance of customer-centricity.
Daunt also resisted the temptation to simplify or dumb down Barnes & Noble’s offerings. He emphasized creating an “intellectually satisfying environment” that “feeds your mind,” a remarkable statement from a corporate CEO. His vision for Barnes & Noble as a place of intellectual enrichment resonated with readers and demonstrates what we learn about the power of aligning business goals with higher purpose.
The results speak for themselves. Barnes & Noble’s book sales rebounded, surpassing pre-pandemic levels and continuing to grow. Readers rediscovered their trust in the brand, and store employees became engaged and passionate booksellers. This turnaround reinforces what we learn about the enduring appeal of quality products, genuine customer service, and a clear brand identity.
Having recently revisited a Barnes & Noble store, the positive changes are palpable. The selection is more engaging, and the overall atmosphere is more inviting. And it’s not just anecdotal evidence; Barnes & Noble opened 16 new bookstores in 2022 and plans to double that number in 2023. In a year of digital platform turmoil, this 136-year-old print media institution is thriving, offering a compelling lesson in what we learn about resilience, adaptation, and the enduring power of traditional media in the digital age.
Lessons Beyond the Bookstore: What We Learn for All Media
The Barnes & Noble turnaround offers valuable lessons applicable far beyond the book industry. The principles of passion, product focus, and employee empowerment can be applied to music, journalism, film, and numerous other creative sectors. The core message is simple yet profound: we learn that genuine love for the product is fundamental to success in creative fields.
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 thrive in movies, you must love cinema. This passion, however, seems increasingly rare. Even established record labels sometimes appear to prioritize gimmicks and financial projections over genuine artistic merit. This raises questions about whether those in charge truly love the music they are promoting. From this, we learn that a disconnect between leadership and the core product can lead to misguided strategies and ultimately, failure.
The allure of brand licensing deals, fashion tie-ins, or human interest stories can overshadow the intrinsic value of the creative work itself. When financial projections and discounted cash flow analyses become the primary drivers of creative decisions, the essence of the art form can be lost. We learn that in creative fields, financial success is often a byproduct of creative excellence, not the other way around.
While decentralization and employee empowerment, as implemented by Daunt, are valuable strategies, the underlying principle is a deep, genuine love for the product. This kind of passion is not easily taught or quantified. It’s about finding individuals who are genuinely passionate about their field, who believe in its value, and who can infuse that passion into their work. We learn that hiring passionate people and placing them in leadership positions is crucial for success in creative industries.
The Barnes & Noble story is a reminder that even in the face of digital disruption, core values and genuine passion can lead to unexpected triumphs. While logical arguments and strategic frameworks are important, they are secondary to the intangible but powerful force of love for the craft. The success of Barnes & Noble, against all odds, proves that this kind of passion is not only valuable but essential. And from their remarkable turnaround, we learn that even in the digital age, the human element—passion, expertise, and genuine care—remains the most powerful differentiator.
