Executive Briefings

Why Barnes & Noble Wants Smaller Stores

Barnes & Noble is the latest retailer to discover that less is more sometimes.

Why Barnes & Noble Wants Smaller Stores

Coming off another awful quarter, the big-box retailer's executives said on Thursday that the path to better financial performance could lie in operating smaller stores more focused on books with a more limited selection of items like games and toys.

“Our goal is to get smaller,” Barnes & Noble Chief Executive Demos Parneros, who took the reins in April, told Wall Street analysts on a conference call. “We want to have smaller stores that are more efficient.”

It’s easy to see why one of the pioneers of big-box retailing would be interested in making a major change to its business model. Barnes & Noble said that comparable sales fell 6.3 percent in the quarter ended Oct. 28., the seventh straight three-month period to see sales decline. The company said half of that decline stemmed from big sales last year of a Harry Potter book and the absence in this year of a similar blockbuster. But the problems also stemmed from non-book products that aren’t catching on with customers. Comparable sales of those products were down even more sharply than the company average.

At the same time, book sales grew more promising as the quarter wore on, prompting Barnes & Noble, the nation’s largest bookstore chain, to double down on selling, well, books.

“Going forward, we will place a greater emphasis on books, while further narrowing our non-book assortment,” Parneros said, signaling a reversal of Barnes & Noble strategy to diversify its offerings and jump on hotter categories like games and toys. The company has nonetheless benefited in recent years from hot trends like coloring books and vinyl records to prop up sales. 

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Coming off another awful quarter, the big-box retailer's executives said on Thursday that the path to better financial performance could lie in operating smaller stores more focused on books with a more limited selection of items like games and toys.

“Our goal is to get smaller,” Barnes & Noble Chief Executive Demos Parneros, who took the reins in April, told Wall Street analysts on a conference call. “We want to have smaller stores that are more efficient.”

It’s easy to see why one of the pioneers of big-box retailing would be interested in making a major change to its business model. Barnes & Noble said that comparable sales fell 6.3 percent in the quarter ended Oct. 28., the seventh straight three-month period to see sales decline. The company said half of that decline stemmed from big sales last year of a Harry Potter book and the absence in this year of a similar blockbuster. But the problems also stemmed from non-book products that aren’t catching on with customers. Comparable sales of those products were down even more sharply than the company average.

At the same time, book sales grew more promising as the quarter wore on, prompting Barnes & Noble, the nation’s largest bookstore chain, to double down on selling, well, books.

“Going forward, we will place a greater emphasis on books, while further narrowing our non-book assortment,” Parneros said, signaling a reversal of Barnes & Noble strategy to diversify its offerings and jump on hotter categories like games and toys. The company has nonetheless benefited in recent years from hot trends like coloring books and vinyl records to prop up sales. 

Read Full Article

Why Barnes & Noble Wants Smaller Stores