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.
This announcement follows a dive of the company's stock since April, when it was priced around $24 (yesterday the trade was closed at $12.84), as well as its last report on June that showed a fall of 4.8% in store sales in fiscal year 2010 compared to the previous year.
Barnes and Noble is still very financially stable, although it's worthwhile to mention the decline in its cash as can be seen on its balance sheet from $361 million in 2008 to $61 million in 2010. Nevertheless, B&N is struggling to find its competitive edge in a business that like the NYT explained "has increasingly shifted to online retailers and e-book sales, leaving both chains and independent sellers struggling."
The main problem of B&N is its 720 brick and mortar stores. In a market where physical books were almost 100% of the market and online sales were relatively marginal, they were a huge advantage. Now, when the market is changing and some experts, like Mike Shatzkin, estimate that brick-and-mortar decline from 72% of the market today to 25% in 5 years, these stores become a liability.
B&N still didn't present any clear strategy to deal with this change. It's true it has taken some steps like dedicating more in-store real estate to its Nook by creating Nook Boutiques, but that's not enough. And it's far from being a clear strategy.
B&N is in a unique position, competing with companies that has no brick and mortar store like Amazon or Apple (Apple stores don't really count) or big-box stores like Costco, and that aren't based on book selling. This situation is both a major risk and opportunity, but it demands leadership and vision. No matter who the new (or old, if it will be Chairman Leonard Riggio or the billionaire investor Ronald W. Burkle that already own a stake in the company) owners will be - if they won't deal with this question, B&N will continue to struggle and its battles will become harder and harder to fight.
Last but not least, here's what we think should become of of B&N brick and mortar bookstores to help them become again an asset for the company - http://ecolibris.blogspot.com/2010/05/is-there-future-for-barnes-noble-and.html
More articles on the future of bookstores can be found at http://www.ecolibris.net/bookstores_future.asp
Raz @ Eco-Libris
Eco-Libris: Promoting sustainable reading!
No post here today, but one on BookMachine
3 days ago