Time to Change
Last week, a number of companies released their financial reports for the last quarter of 2016. Among those doing so was Barnes & Noble. The bookseller, that has seen a revolving door in the CEO’s office over the last few years. Leonard Riggio is now back in charge, at least temporarily, and he addressed his stockholders after the release of the figures.
The good news is that B&N did post a profit of 96 cents (per share, I assume). The bad news is that the forecast profit was $1.13. The worse news was that same store sales fell 8.3% (as compared to the same period the previous year). This was the worst performance for the chain in the “holiday quarter” since 2005. The result saw stock dropping 9.1% (intraday drop). That comes on the heels of an 11% drop for the year.
The Nook and its related products, including content, completely failed to deliver. According to Bloomberg, linked above, sales “of Nook content, devices and accessories fell 26 percent.”
Another indicator that the publishing/book industry has become one that relies too much on “trend” buying and not in building a solid customer core by expanding their mid-list offerings, etc., is that BN knew the quarter would be weak “in part because sales of coloring books and other art supplies have slumped. That category had helped prop up results the previous year.” We’ve seen this sort of thing in YA sales when the Twilight series ended. In adult fiction sales when the 50 Shades trilogy ended and now, this past year, with coloring books no longer being the rage. Were publishers ready with something to take their places? No. Because they were still trying to push the trend with pale versions of what had been “hot”. Again, when publishers pared out most of their mid-list, those authors whose books they could always count on selling, they hurt themselves as well as bookstores.
Several things hit me as I read various articles about the earnings report. The first was that BN has been rudderless for so long, because of the turnover in the CEO’s office but also in its failure to adapt to the changing demands of its customers, that it might not be long for the retail world. If written before about how it needs to lessen its retail footprint. The overhead of running the hugs “superstores” is no longer justified in most instances. Before leases are up, it needs to be making the hard decisions about what stores should be closed due to under-performance and what stores should be moved to smaller real estate footprints. Doing this would serve several purposes, all of which are positive. First, it would lessen the financial hit the company takes in leases and related expenses. Second, with less space to fill, it could then sit down and do a serious look at what BN is going to be going forward.
It is easier to be a bookseller if you aren’t trying to pay the rent, utilities, etc., for a building you can no longer afford to stock with just books. We see this with the resurgence of indie bookstores. They are moving into small storefronts — sort of like what they did before they were driven out of business by the big box bookstores like BN and Borders. If BN truly wants to continue being a bookseller, it needs to take a hard look at where its money is going and how wisely — or foolishly — it is being spent.
It also needs to understand that e-book fans are not the enemy. We buy books too. But we also, or at least a lot of us, buy print books and magazines. Give us a reason to come into your stores again. Let us actually see books when we walk in instead of non-book related items. Give us employees who are knowledgeable about your stock and enthused about books. I miss the days when I could walk into a BN, be greeted by name and have someone take me over to the shelves and shown a new book they think I might like.
Put comfortable chairs back into the stores and even the small reading areas. Sure, some folks came in and spent hours reading without ever buying anything. Guess what? That’s okay. It builds up goodwill with them as customers and they will come in later to buy something. Even if they aren’t buying a book, they are buying coffee and food at the cafe. They are talking to their friends and families about what they read, how nicely they were treated, etc.
Now, the problem doesn’t just rest with BN. What is happening with BN is indicative of what is happening with the publishing industry. Major publishers are still trying to convince themselves that the reading public wants things they way they did 20 years ago. Publishers price e-books so high, their sales suffer. Then they point out how their digital sales dropped. You can see the glee in their eyes because, to them, it means people really want print books.
Sorry, but no. It means people are finding other ways to get that e-book they want to read. They check it out from the library. Don’t ever forget that most libraries have the capability of checking out e-books and audio books. It also means people are turning to smaller presses and indie authors to feed their reading habit. E-books, like it or not, are here to stay and readers are smart enough to know that an e-book, especially when publishers say you don’t actually own it, should not cost the same as a print version.
Then there is the attempt to survive by going from trend to trend. There aren’t enough words to explain how foolish this is. Yes, publishing has always been an industry where editors have been in competition to try to figure out what will be the next best seller. However, in the past, they also knew they needed a backbone of mid-listers who basically supported the publishing house. These mid-listers might never sell as many books per title as a best seller. However, those mid-listers had a fan group that could be counted on buy pretty much anything and everything their favorite authors put out. That, my friends, was guaranteed income and it was what the publishers used to keep their houses profitable and successful over the years.
Unfortunately, a few years ago, publishers decided they needed to clean house to decrease their expenses. Not only did we see a number of editors and other employees being let go – resulting in more work being outsourced – we saw a number of mid-listers being cut loose. When that happened, guaranteed income was lost. Now publishers and, because they are tied to closely to publishers, bookstores, rely upon trends to keep them afloat. Because of this, we see things like entire lines of books being recalled or delayed so the publisher can “rebrand” them to look like 50 Shade of Grey. Go talk to some of the authors involved in that debacle. How many saw sales go down the tubes because their books were delayed or because their book looked like every other one on the shelf and readers couldn’t tell if they’d read it or not.
Because there was nothing on the cover or in the blurb that made it stand out from every other book.
This lack of foresight, this lack of originality, is what is hurting the industry. Add in the fact that, for whatever reason, publishing doesn’t seem able to adapt to changing customer demands, and I find myself wondering how long it will be before we see the major publishers shrinking in number again. They can continue to blame Amazon for their problems but the real problem is they refuse to take an honest, deep look into their own practices. They need to allow store managers to order stock — and arrange displays — to appeal to local customers.
A store in El Paso, TX shouldn’t look like the store in Times Square or Seattle. Employees should be required to know the stock. Hell, if you work in a bookstore, you should be able to talk books with the customer.
Right now, BN is suffering from an identity crisis. Partly because of its leadership failing to adapt to changing times and partly because of problems in the publishing industry. Mr. Riggio and others need to understand that people aren’t staying home because they are watching TV. We are staying home because you aren’t offering us the shopping experience we used to get when we went to your stores. We want bookstores to be, well, bookstores. We want to be able to browse and sit and read and have a cup of coffee. We want to see books when we enter and not Nooks and toys and who knows what else. We want books.