When U.K. bookseller James Daunt took over as CEO of Barnes & Noble a year ago, after a sale that landed it in private hands, he faced the formidable challenge of rescuing the chain from troubles largely of its own making, in the shadow of Amazon's prowess in the segment.
At the time of the sale, annual revenue at Barnes & Noble hadn't grown for seven years, declining, in fact, by some $700 million since 2015. As Amazon powered on as a top bookseller, Barnes & Noble cycled through a series of CEOs and strategies.
The COVID-19 pandemic has interfered with much of whatever Daunt's plan may have been. A year ago, new owner Elliott Advisors had said store closures weren't likely. But in June, the company closed an Upper East Side location in New York City, and laid off an unspecified number of employees in its corporate office.
In a recent interview, Daunt, a bookseller in his own right (he is the founder of Daunt Books, a small independent London chain, and managing director of Waterstones, another popular U.K. bookstore chain owned by Elliott) said that the disease outbreak has also provided some opportunity. Temporary closures have allowed the company to revamp stores: Daunt envisions Barnes & Noble as a chain of smaller locations — one reason for the New York closure is that it was too large, and the company says it's "actively looking" for a smaller store in that neighborhood.
Even more important than size, however, is that each store will be managed by people who love and know books, understand their local markets and view their role as important to their community. It's a strategy that has allowed local independent bookstores to survive against Amazon for years, a remarkable achievement considering that they sell items that are difficult if not impossible to differentiate.
Daunt acknowledges that, so far, Barnes & Noble has failed in that regard. "Barnes & Noble was an extraordinary and exciting bookseller," he said. "That's all positive and good, but I also think, as Amazon has stripped away market share, some decisions were made that were short term and maybe even short-sighted, and that's been reflected in a steady decline in sales."
The upside of closing in a pandemic
The temporary closure of nonessential businesses during the pandemic has panicked many a retailer, but Daunt's team has seized it as an opportunity to overhaul stores. He describes a process of tearing up the old playbook, from how books are categorized to where and how shelves are placed. Years of siloed book-buying and corporate-level planning meant some that should have been shelved together were scattered in various sections, making for an awkward flow — manga stuck behind history, for example. Above all, Daunt wants to create spaces where people can linger and discover, maybe for hours.
All books have come down from their shelves, in a process of undoing what had been centralized prescriptions from New York about organization and layout that ignored the idiosyncrasies of each physical store, while keeping the advantages of corporate resources. The Barnes & Noble employees are asked to treat their locations as though they owned them themselves.
"One of the things that I've done at Waterstones is loosen all of those strictures on the bookselling teams and give them their own autotomy, and give them the power of the home office in support, so they're able to do their own thing and do it more efficiently and better," he said. "It turns a chain bookseller from a rather large and impersonal one to suddenly a vibrant and quite exciting one. This obviously comes from my own background as an independent bookseller."
Is Amazon even a bookseller?
Daunt's approach to selling derives from his insistence that, for all its strengths, Amazon is merely a "seller of books," something well short of the mark.
"I only have ever been a bookseller," he said. "Retailers are specialists — the successful ones tend to be. Amazon is not a bookseller, it's a seller of books and there's a distinction between the two. If you know what you want, of course it's exponentially easy to get a book from Amazon. But that isn't what a bookstore does. The two of us, libraries and bookstores, you are completely able to go at your own pace to discover books, and the serendipity of that discovery is a very different experience. That comes naturally to independent bookstores and that's why the people who are there are of central and overriding importance."
Daunt is well aware that Amazon is a competitor. After all, the e-retailer 25 years ago launched through the category and remains a bookselling giant, in some months responsible for half the sales of new books in the U.S., according to book audience research firm Codex. Amazon itself, though, hasn't reported its book sales — print, e-book or self-published — in some time, and didn't respond to repeated requests for more information on those results. Some two-thirds of book sales are through e-commerce, and Amazon has the "lion's share" of the e-book market and of the online print market, according to Codex.
But Daunt believes that, despite its recent decline, Barnes & Noble maintains a special place in readers' hearts, and that if the chain can live up to such expectations, it will best Amazon in important ways.
"The irony is that we're much, much more difficult for Amazon to compete with than Amazon is for us because you can't, through an algorithm and a website, engineer the loyalty that we can."
CEO of Barnes & Noble
While Barnes & Noble must compete online, for example, it needn't necessarily compete with Amazon Prime or its one- to two-day fulfillment. Less focus on superspeed, and more on certainty, supports the trust the individual managers build through their stores, according to Daunt.
"For most of us three days is just fine, if the three days is reliable. If the three days is sometimes three days and sometimes a week, booksellers have in general allowed that kind of chaos," he said. "I personally think the irony is that we're much, much more difficult for Amazon to compete with than Amazon is for us because you can't, through an algorithm and a website, engineer the loyalty that we can. Because our skills and our experience are completely unbeatable."
If Barnes & Noble could put up a strong challenge against Amazon in the market, it would be good for the books business, according to Peter Hildick-Smith, Codex Group founder and president. "Hopefully Daunt will get it to work out," Hildick-Smith said. "Certainly the store-manager model makes sense conceptually. It's really needed for the industry to maintain some kind of balance — otherwise it's Amazon in totality."
What about Nook?
Daunt is unequivocal about his appreciation for how physical space, arranged, appointed and managed well, establishes the kind of atmosphere that lends itself to book browsing — and buying.
You would think, then, that Barnes & Noble's Nook e-reader would be destined to continue to languish on Daunt's watch. Indeed, Waterstone's, under Daunt's direction, gave up its e-book business in 2016, tying up with Rakuten's Kobo platform instead.
But Daunt sounds ready to give Nook the attention it has desperately needed, as Amazon's Kindle has run away with the space.
"I absolutely love Nook, and I think my predecessors had fallen out of love with it," he said. "It's under-promoted to our customers, it became the sort of wayward child that had become embarrassing. But if you want to read digitally, the app is fantastic. I'm a champion of digital books and digital book retailing, but above and beyond that I'm a champion of reading. There are many reasons why people want to read digitally, but Nook needs to be much better supported within the Barnes & Noble ecosystem."
The Barnes & Noble ecosystem
Barnes & Noble will include some food concessions and adjacent merchandising like stationary, gifts and games that Daunt says can enhance a bookstore's offering, provided it's done "with taste and discernment."
"Cafes and things can make bookstores a place of community," he said. "Bookstores are places that people enjoy meeting and discussing things — teenagers after they've come out of school, college students. Bookstores are somewhere you should feel comfortable, unthreatened, at ease. And it should be done to reflect the community you're within."
Daunt is a fan not only of the three chains he's personally tied to, but also other bookstores, like Books and Books in Miami and The Strand and McNally Jackson in New York, to name just a few.
"The independents are just really, really good in the United States, and that's where my heart lies," he said. "When you're trying to curate a relatively small space you have created something very magical. There's no one secret there. Each of them has their own secret sauce. I just have to come up with that for hundreds of stores."