Friday, February 15, 2013

Some Thoughts About Barnes & Nobel Falls

I have always loved Barnes & Nobel store concepts. When I go to the US, I love to go to one of its shops, and to hang around, to see what kind of books I can find interesting. I have never been really a big book reader (even though I recently own a Kindle Fire, which I count on to really boost my reading habits), but there is something about its concept that gives you the will to sit down and read. 

Barnes & Nobel is about customer experience, to provide you a large choice of cultural products and, a top of the line shopping experience. But with the rise of online competition, Barnes & Nobel results have not stopped to fall.

There are several reasons for Barnes &Noblel's problems:
  • Dematerialization: : Cultural goods tends to dematerialize more than other products. Now music can be downloaded, same thing for movies, video games, or even books.
  • Retailing costs are very high compared to E commerce website. Therefore it is almost impossible to be aligned with online competition and keep being profitable.
To me, Barnes & Nobel has always been a great example on how shopping experience and customer relationship could create value for a retailer. But unfortunately, due to the fast changes of the competition landscape, Barnes and Nobel were not able to keep up. 

So what should have they done? Of course, it is easier to say than to do, but there were other strategies to take into consideration:
  • Find new correlated products with high mergins to be able to compensate with the decrease of its traditionnal goods. We can think of electronic goods, even though this market is also tough, or maybe premium grocery products, to match with its positionning.
  • They could have sold some part of its real estate: Not to shut down stores, but to limit the square meters of each stores to lower the cost of production.
  • They probably should have found a way to create added value, in order to set apart from the basic price comparison.
Virgin, a cultural goods retailer in France, is also shutting down its activities. It is sad to see that we are in an era where we never consumed more cultural goods and services, but with a very poor health of the business.

I really hope Barnes & Nobel's will be able to find a solution.