As a mother of two young children in the early 2000s who worked from a home office, occasionally I would need a break.
A few hours out of the house on my own to remember who I was without any obligation to feed, clothe, wash, educate, entertain, or otherwise support someone else.
When possible, I’d go while the kids were at school. Most often my husband would take care of the kids for a few weekend hours so I could wander, shop, or just be.
During that me-time, I often found myself gravitating to a cavernous Barnes & Noble store in Framingham, Massachusetts.
I meandered the aisles. New Best Sellers! Staff Picks! Travel! Biographies! Historical Fiction! I picked up books or magazines that looked interesting, and nestled into one of their oversized armchairs to read.
Being among all those books buoyed my soul. My book and journal purchases were gifts to myself.
Somewhere around 2009, the store began to lose its allure.
First the toy section swallowed most of the front of the store.
Then the toys were displaced by two massive Nook e-reader kiosks. To get to the books you had to navigate around them.
I no longer exhaled in book zen upon entering nor felt the joy of discovering a book I wanted to read.
It made me sad.
How Barnes & Noble Lost Their Way
Barnes & Noble went public in 1993 and launched their superstore concept. Their strategy involved besting competitors with their immense inventory and steep book discounts.
The strategy fueled the brand’s growth, from 520 superstores in 1999 to 726 in 2008.
More than 1,000 book shops closed between 2000 and 2008, though independent bookstores did not vanish.
And before long, the independents and Barnes & Noble shared a common enemy: Amazon.
In 1998, Amazon was 4 years old, and not yet profitable. Barnes & Noble did not see Amazon as a serious threat.
But Amazon proved better at the volume-and-discount strategy than Barnes & Noble were.
The Great Recession and Amazon’s rise forced a reckoning.
Borders bookstore chain succumbed in 2011, filing for bankruptcy and leaving Barnes & Noble as the sole brick-and-mortar counterweight to Amazon’s onslaught.
Barnes & Noble’s leadership made the mistake of trying to compete with Amazon where Amazon had decided advantages.
They launched the e-reader Nook in 2009 to compete with Amazon’s Kindle which came out in 2007.
They redid their website to stoke online sales.
A good website and an e-reader would be good for the brand, but these were catch-up moves required to compete in the industry, not pivotal forces that would turn the brand’s fortunes.
Barnes & Noble added toys, games, and other non-book related merchandise to stores.
They even tried opening restaurants adjacent to the stores to drive traffic.
To no avail.
Barnes & Noble began closing stores in 2010 and were down to 627 by 2019. Five CEOs cycled in and out between 2013 and 2018.
In 2018 the company lost $18 million and fired 1,800 full-time employees.
Enter James Daunt
In 2019, the hedge fund Elliot Advisors acquired Barnes & Noble for $683 million. Elliot had purchased the British bookstore chain Waterstones the year before.
Waterstones’ CEO James Daunt had rescued that brand years earlier.
Daunt was a bookseller himself, having opened his own independent store in London in 2005, specializing in books for travelers. Daunt Books is still in business and has six stores.
Elliot named Daunt Barnes & Noble CEO as well. Daunt relocated to New York and got to work.
Daunt’s audit of Barnes & Noble yielded his assessment that the stores were “crucifyingly boring.”
In a 2020 keynote address to the Book Industry Study Group, Daunt said bookstores justify themselves in the age of Amazon:
“by being places in which you discover books with an enjoyment, with a pleasure, with a serendipity that is simply impossible to replicate online. And to do that, you have to have a good bookstore.”
For Barnes & Noble, Daunt sought to “create an environment that’s intellectually satisfying—and not in a snobbish way, but in the sense of feeding your mind.”
I felt seen when I read that.
Six months into Daunt’s tenure, the pandemic struck. All 600 Barnes & Noble stores had to close. Instead of panicking, Daunt initiated a transformation.
Stores were redesigned and refreshed.
Daunt asked employees to scrutinize each book in their store and decide if it belonged there.
He decentralized book buying and empowered local store managers to craft their offering mix. He encouraged managers to curate selections based on their interests.
More shocking, Daunt ceased taking publishers’ promotional money. This amounted to millions of dollars, but obligated stores to push publishers’ favored books via displays and discounts instead of promoting what interested customers.
Daunt’s approach is working.
Sales in 2021 exceeded pre-pandemic levels and have continued to grow. Barnes & Noble opened 16 new stores in 2022, and expects to open 30 in 2023. Some new stores occupy locations where Amazon’s brick-and-mortar bookstores failed.
The Real Reason Daunt’s Approach Works
As I read several excellent articles on Barnes & Noble’s turnaround, I noticed writers dancing around the edge of the reason for Daunt’s success, but missing the bullseye.
Ezra Klein in The New York Times chalked Daunt’s success up to his focus on empowering local store managers.
Elizabeth Segran in Fast Company credited Daunt’s encouraging local managers to curate selection based on their own tastes as the definitive factor.
Ted Gioia got closest, saying “the key element uniting all of this is putting books and readers first, and everything else second.” He said the lesson here was if you want to sell books, you have to love them.
Loving books helps, but that isn’t the reason Daunt’s approach is working.
The real reason is common sense marketing: He focused on the target audience.
To do that, he had to know them.
He knew book buyers:
- are intellectually curious
- love to discover books
- seek environments that feed their curiosity and enable new book discovery
- consult bookstore employees with questions and for recommendations
- have interests that vary by community
Daunt also understood:
- Local bookstores’ inventories should reflect their community’s interests.
- Managers and employees would know their community’s interests better than a centralized office.
- Managers would choose books they knew they could sell.
- Managers who could curate selections based on their interests would have more enthusiasm to sell them.
- Employees involved in book selection would be more engaged and enjoy their work more.
- Happier managers and employees would translate to a better bookselling environment.
It was not Daunt’s love of books driving Barnes & Noble’s turnaround. It was his courage to prioritize and protect the target audience, readers.
I suspect Daunt knows most bookstore managers and employees are also readers, making them part of the target audience. Their passion for books motivates them to work there.
You knew that too, right? If not, go rewatch You’ve Got Mail.
Take a Page from James Daunt
If your brand is struggling or underperforming, pull from Daunt’s playbook.
Focus on your ideal customers. Daunt isn’t refashioning Barnes & Noble for the guy who needs a technical manual on how to wire your house and makes a one-time buy from Amazon. He’s building around book-buying enthusiasts.
Understand your ideal customers. Daunt loved books and was already a bookseller in touch with his market.
You don’t have to be a prime user of the product your brand sells, but you need to know who your ideal customers are and what they seek. Lego CEO Jørgen Vig Knudstorp consulted both child and adult Lego enthusiasts as he turned the company around in 2005 and kept in touch to fuel the brand’s growth.
Ditch the old customer segmentation framework of starting with demographics.
Seek deep understanding of customers’ mindset, the needs and problems they have, the experience they seek, and the emotions that accompany that experience.
Localize your marketing. Daunt knew that each bookstore’s community differs in profile and tastes, even within the same city, and enabled managers to cater to their specific market.
When you tailor your offerings to the local community, they feel recognized and understood, and respond with their business.
Engage employees. Daunt empowered managers and employees because he recognized them as Barnes & Noble’s face to customers. Their direct contact positioned them to know their customers best.
Your sales people, account managers, customer service representatives – any brand team member who interacts with your audience – are the face of your brand.
Tap their knowledge. Empower them. Motivate them. Customers’ experiences with them become your brand in their mind.
Deliver a unique experience. Emphasize what you can deliver that your competitors can’t.
Barnes & Noble’s customers come for the experience of exploring and lingering, finding books that interest them, and consulting employees they get to know.
Amazon can’t deliver any of that.
Resist bad influences. Forget Jerry Maguire. If someone shows you the money, but requires actions that are off-brand or inconsistent with delivering your best customer experience, pass.
Daunt’s prioritizing customer preferences over publishers demand-laden cash offers was another way he helped Barnes & Noble say to their audience we get you.
You don’t have to love the product your brand sells to be an effective CEO. You have to focus on your key customers, serve them, and protect their interests.
Barnes & Noble closed their Framingham store in January, but are opening a new one in my town this spring. I’m looking forward to checking it out!
Do you have any book recommendations?
Where do you go for me-time?
How does your brand demonstrate your understanding of your customers?
Please let me know in the comments below.
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Just for Fun
I may have had a little too much fun searching SNL for related skits.
See how hands-off Amazon’s retail service got. (2 minutes, 30 seconds)
Watch Looks at Books author interview with original cast members Gilda Radner and Jane Curtin. (2 minutes, 53 seconds)
Visit The Scorched Corset bookstore. (4 minutes, 6 seconds)
Hear RuPaul’s different definition of reading at The Library. (5 minutes, 20 seconds)
Enjoy!
Great newsletter as always.
Thanks Laura! Glad you enjoyed it.