The Stock Popped at Over $30 in 2006 But Has Been on a Long Slide Ever Since.
Should They Embrace an Old Strategy For a Come-Back?
by Paul Hunt
Dateline: Los Angeles,
February 2, 2018
Barnes & Noble is in trouble. The stock price, as of today, has dropped below $5.00 to $4.65. Contrast this with their monopoly competitor amazon.com, which has topped to $1,429.95 per share. Some, maybe most would say that this is an unfair comparison, because we don’t know exactly what book sales at amazon really contribute to their overall well-being. There has always been a great suspicion over the years that book sales have lost a lot of money, even though the stock kept creeping up. Now that amazon sells everything on earth to everyone on earth, the money is pouring in to their coffers. They have also signed significant sweetheart deals with the C.I.A. and the U.S. Defense Department, worth potentially billions of dollars.
So the big question for Barnes & Noble is: What the heck to do? They need to do something, because their path at the moment is leading them into the swamp at the bottom of boot hill. Their position in the retail market is shrinking badly, not necessarily because of them doing bad things, but mostly because rents in the good markets are skyrocketing and pricing them out, forcing B & N to close their superstores in some of the most lucrative cities.
One crazy idea would be to go back to the malls. At one time they had hundreds of bookshops in the malls across America. Maybe it is time to rethink this. Many malls, even in great markets like Los Angeles, may now offer reasonable rents, because the malls themselves are having trouble keeping big chains, many of which were sucker-punched by the exploding on-line sales and slaughtered by the amazon colossus.
Barnes and Noble might be able to maintain a presence in the big cities where they have lost superstores, like Pasadena, Encino, and Santa Monica, California, by opening smaller stores in the area malls. The key to this strategy would be three-fold:
First, it would still give them a presence in the great retail book markets.
Second, by having lots of book signings and events, they could keep retail traffic flowing to their stores in the malls, where another benefit is usually abundant parking.
Third, they integrate their online efforts to be mutually supporting to both their online communities and retail stores, something they already do quite well, but when the superstore closes it kills the symbiotic relationship.
Is there still time? Their stock price has been falling fast. They are closing some great locations due to high rents, and thereby losing market share. Their efforts to put wine bars and restaurants inside some stores is misguided to say the least. Some would say just stupid. If you want to look for a business that is harder than selling books it has to be the restaurant business, where a 90% failure rate is a standard.
In the past, the used book stores were a great fit with the bookstores that sold new books, be they independent, the old Crown books, Pickwick, B. Dalton, Waldenbooks, Borders, or Barnes and Noble. With everyone now scrambling for the crumbs dropped by amazon, it’s time for some bold moves. Amazon is always engaged to pushing even its own vendors to the side, by their “Fulfillment by amazon.” program. They eventually want a monopoly on all book sales in the world, both new, used and remainders. It will take a mighty effort of thousands of independent bookselllers to fight this. Will the last national big chain of bookstores, Barnes and Noble be able to survive this onslaught? Or are we all doomed to live in the monopolistic fantasy of Bezos world? Amazon.com is now recognized by many business experts as the most ruthless business corporation that was ever in existence, surpassing the British East India Company.
Jeff Bezos, amazon’s “Oligarch”, is the richest person in history, his recent wealth estimated at over 118 billion dollars. That’s a pretty damned big deal, folks. The book business is only a small part of amazon, now being overshadowed by selling everything on earth at its online platform, Amazon now is in the grocery business, with Whole Foods Markets, has investments in google, air bnb, the Washington Post, movie and television studios, Audible, the largest producer and retailer of audio books, Twitch, online gaming, IMDB internet entertainment database, Kindle, Echo, Zappos (shoes), Abebooks.com (used books) and much, much more. If the independent booksellers can devise strategies to push back, it will give the rest of the world’s business community some hope that they too might be able to survive.