Barnes & Noble to Whittle Stores for Years
Barnes & Noble Inc. expects to close as many as a third of its retail stores over the next decade, the bookseller's top store executive said, offering the most detailed picture yet of the company's plans for the outlets.
Context & Ripple Effects
The store-closure plan lands after a bruising stretch for Barnes & Noble's device ambitions: the company finalized the Nook Media joint venture with Microsoft in October 2012, cut the Nook Color to $139 and the Nook Tablet to $159 a month later, and industry forecasts published in December 2012 projected dedicated e-reader shipments like the Kindle and Nook falling 36% to 14.9 million units this year, on their way to just 7.1 million by 2016 as tablets displace them.
The WSJ report drew unusually wide syndication for a single executive interview — pickups at paidContent, CNET, GeekWire, BGR, Gawker and others within days — reflecting how closely the market reads any hard number out of the company's retail footprint, since the Nook business inside the Microsoft-backed subsidiary and the stores that sell it are now structurally linked.
First-order effects
- Barnes & Noble commits publicly to shrinking its retail base by up to a third over ten years, converting an open-ended question about store economics into a stated, decade-long contraction plan.
- Landlords and mall operators anchored by large B&N locations now face a known, multi-year runoff of some of the biggest footprints in their centers, forcing early renegotiation or backfill planning.
Second-order effects
- Publishers lose physical shelf space as doors close, pushing more title discovery onto Amazon's platform and strengthening the very competitor whose tablet success helped hollow out the e-reader market.
- The Nook Media joint venture with Microsoft comes under more pressure to carry digital revenue as the store network that showcases Nook devices thins out, raising the stakes on the subsidiary's standalone economics.
Third-order effects
- If a third of the largest bookstore chain's doors go, physical book retail consolidates around a much smaller set of outlets, and remaining stores shift from mass-market volume toward showroom and community roles.
- A decade-long, explicitly guided retail wind-down sets a template for other big-box chains managing digital disruption: announce the shrinkage early, ring-fence the digital assets with strategic investors, and let leases expire rather than fight the curve.
The trend: Tablets displacing dedicated e-readers are forcing bookstore chains to shrink physical footprints on a stated timeline while ring-fencing device businesses with outside capital.