Monday, January 28, 2013

Barnes and Noble to Downsize

Megan McArdle wrote about this a few weeks back, "Is Barnes and Noble Next?"

And now here's this, at the Wall Street Journal, "B&N Aims To Whittle Its Stores For Years":
Barnes & Noble Inc. expects to close as many as a third of its retail stores over the next decade, the bookseller's top store executive said, offering the most detailed picture yet of the company's plans for the outlets.

"In 10 years we'll have 450 to 500 stores," said Mitchell Klipper, chief executive of Barnes & Noble's retail group, in an interview last week. The company operated 689 retail stores as of Jan. 23, along with a separate chain of 674 college stores.

Mr. Klipper said his forecast assumes that the company will close about 20 stores a year over the period.

The chain shut an average of about 15 stores a year in the past decade, but until 2009 it also was opening 30 or more a year. Its store openings have largely dried up as consumers' shift toward digital books has upended the market and developers have stopped opening new malls; this fiscal year it has opened only two stores.

The company's consumer bookstores peaked at 726 in 2008, excluding the B. Dalton chain, which is now defunct.

Even with 450 to 500 stores, "it's a good business model," says Mr. Klipper. "You have to adjust your overhead, and get smart with smart systems. Is it what it used to be when you were opening 80 stores a year and dropping stores everywhere? Probably not. It's different. But every business evolves."

Mr. Klipper's comments come amid growing questions about Barnes & Noble's future. This month the company reported an unexpectedly weak holiday selling season, with store revenue declining nearly 11% from a year earlier. Book sales at stores open at least a year, a key barometer in the industry, fell 3.1%.

After years of losing market share for print books to discounting by Inc., Barnes & Noble is grappling with the print market's shrinkage, thanks to the growing popularity of cheap e-books, also championed by Amazon. Unit sales of print books dropped 9% in the U.S. last year, according to market researcher Nielsen BookScan, and they are off 22% from 2007, when digital books started gaining traction.

At the same time, Barnes & Noble's efforts to build support for its two new Nook tablets have stalled. Amid competition from Amazon, Apple Inc., Google Inc. and electronics companies like Samsung Electronics Co.,    sales of Nook products in stores and online during the holiday season fell from a year earlier.

Plenty of retailers have been felled by digital competition in the past decade, including Tower Records, Circuit City Stores and Barnes & Noble's former rival, Borders Group Inc. Retail consultant Doug Stephens, whose book, "The Retail Revival," is being published in the U.S. in March, predicts that mainstream booksellers eventually will "become a thing of the past."
As long as there's some brick and mortar bookstores. The browsing experience can't be matched digitally, or at least not yet.