History
Barnes & Noble’s started in 1873, when Charles M. Barnes started a book business from his home in
Wheaton, IL. In 1917, his son, William, went to New York to join G. Clifford Noble in establishing
Barnes & Noble. During the height of the Great Depression, what later became the Barnes & Noble
flagship store was opened on Fifth Avenue at 18th Street in New York City, where it still resides
today. This store developed a worldwide reputation for excellence by serving millions of customers
with its comprehensive selection of general trade books, academic titles and textbooks, and medical
books.
Leonard Riggio, the company's current chairman, began his bookselling career while attending New
York University in the early 1960s. Working as a clerk in the university bookstore, he became
convinced that he could do a better job serving students, and he opened a competing store of his
own. With a small investment, Mr. Riggio established the Student Book Exchange (SBX) in
Manhattan's Greenwich Village in 1965. The store quickly became one of New York's finest
bookstores, known for its knowledgeable staff, wide selection and great service.
By the 1970s, Mr. Riggio's thriving business, which included six other college bookstores, acquired
the flagship Barnes & Noble trade name and flagship bookstore in Manhattan, which had fallen into
decline. Within a few years, Mr. Riggio transformed the Fifth Avenue store into "The World's Largest
Bookstore," with 150,000 textbook and trade titles. Mr. Riggio's commitment to students continues
today through Barnes & Noble College Booksellers, a privately held company that operates more
than 500 stores on college and university campuses across the United States and in Canada.
The company went on to acquire the B. Dalton and Bookstop chains. In the 1990s, the company
refined its strategy and developed the superstore concept which makes up 96% of company sales
today. The company launched its own Internet site in 1997 and now has one million books for sale
online.
Barnes and Noble’s current offerings.
Barnes and noble currently have vast storehouses throughout the US stocking more than 1 million
titles.
It has more than 60000+ titles in DVDs and Blu-ray over 1 million audio samples and 40000 artist
biographies.
It also sells magazines with around 5500 titles in its portfolio.
It has more than 723 bookstores in all 50 states; the average size of super stores is more than 25000
sq feet. It also offers 623 college bookstores serving more than 4 million college students.
Problems
Since the last 4-5 years the company has been facing problems on many fronts.
The company has had to close most of its stores inside the malls and has suffered a 13% decrease in
sales last year. As a result the company’s stock has fallen from 24$ to 12$ in the past one year.
The cash on the balance sheet has fallen from 361 Mn in 2008 $ to 60 Mn $ in 2010.
The New York Times reported this morning that Barnes & Noble announced that its board was
putting the company up for sale. In other words: B&N, the world's largest bookseller, is struggling.
Reason for the problems.
The company finds itself in a difficult situation due to the fact that it did not change the way it does
its business in spite of the book business changing. The traditional book market was one where
customers used to visit the bookstores to buy books, an ideal situation for Barnes and Noble’s. In
those days Barnes and Noble’s was the leader in the book market. Since the advent of the internet
the book retailing market has changed with customers preferring to order book online, this
particular change has made the 723 large stores of Barnes and Noble’s a liability, Barnes and Noble’s
did start its online retailing facility but it was a late attempt, by that time retailers like Amazon.com
had already captured the Online book market and it is currently the leader in the online book market
segment.
The other change that has revolutionized the book market is the advent of the ebook reader devices
like Kindle where customers prefer to download the books and magazines onto Kindle and read
them instead of buying hardcopies. In this segment as well Amazon has captured the market by
launching its eBook device Kindle and currently has the largest market share. The sale of hardcopies
is declining rapidly with estimates being that the rate of decline could be around 60% and the
growth of eBooks format is around 30-35%.
Barnes and Noble failed to get the first mover advantage in this segment and was late in launching
its eBook device called NOOK.
Faced by such strong set of problems the company board has decided to put up the company up for
sales. The present decline in company’s profit was due to failure to anticipate the change in the way
the business is conducted. The company also failed to change and respond quickly to the changes
once they were identified. The company was late to capture the online retail market as well as it was
late in introducing its eBook device NOOK and hence lost out to AMAZON. The extent of the
problems has precipitated in company being put up for sale.
