Barnes and Noble Business Analysis

Barnes and Noble- Final

Group 10:

Introduction

Our Team performed an analysis on Barnes & Noble, a well-recognized bookstore, which has been around for over 100 years, with the first store opened in 1917.

We would like to support the evolution from the current stage of bookstores industry, to catch up with the current trends and expectations. We propose a strategy for Barnes & Noble that can allow for healthy growth in the future by relying on partnerships, evolving internal capabilities, and adapting to the evolving environment and customers’ needs. In this project our team utilized the following analysis to elucidate key issues for Barnes & Noble:  SWOT analysis, RBV, and Porters Five Forces Model.  

We conclude that Barnes & Noble is currently well positioned in some areas and that it obtains valuable synergies from its diversified focus, but we also note areas where intense competition is negatively impacting the company.  We recommend that the company revise some of their current strategies, such as the Nook, but also continue an aggressive campaign through various strategies in order to become and stay competitive.

Mission and Vision

The mission of Barnes and Noble is to operate the best specialty retail business in America.

‘As booksellers, we are determined to be the very best in our business, regardless of size, pedigree or inclinations of our competitors. We will continue to bring our industry nuances of style and approaches to bookselling with are consistent with our evolving aspirations.  Above all, we expect to be a credit to the communities we serve, a valuable resource to our customers, and a place where our dedicated booksellers can grow and prosper. Toward this end we will not only listen to our customers and booksellers but embrace the idea that the Company is at their service.’

Company Overview

Barnes & Noble, one of the nation’s largest booksellers, is a leading content, commerce and technology company providing customers easy and convenient access to books, magazines, newspapers and other content across its multichannel distribution platform. As of April 27, 2013, the Company operated 1,361 bookstores in 50 states, including 686 bookstores on college campuses, and operates one of the Web’s largest eCommerce sites and develops digital reading products and operates one of the largest digital bookstores. Given the dynamic nature of the book industry, the challenges faced by traditional booksellers, and the robust innovation pipeline fueling new opportunities in hardware, software and content creation and delivery.

Of the 1,361 bookstores, 675 operate primarily under the Barnes & Noble Booksellers trade name. Barnes & Noble College Booksellers, LLC (B&N College) operates 686 college bookstores at colleges and universities across the United States. Barnes & Noble Retail (B&N Retail) operates the 675 retail bookstores and includes the Company’s eCommerce site. B&N Retail also includes Sterling Publishing Co., Inc. (Sterling or Sterling Publishing), a leader in general trade book publishing. The NOOK segment represents the Company’s digital business, offering digital books and magazines for sale and consumption through the web, NOOK® reading devices digital books and magazines for sale and consumption through the web, NOOK® reading devices and reading software for iOS, Android and Windows. The Company employed approximately 34,000 full and part-time employees as of April 27, 2013.

Overall, Barnes & Noble generated $6.84 billion in total sales for the year. Despite NOOK losses, we generated positive earnings before interest, taxes, depreciation, and amortization and  for the year. Their balance sheet remains strong, as they continue to reduce debt and increase cash. NOOK Media, the subsidiary formed through strategic partnerships with Microsoft and Pearson, remains financially sound.

Strategic Objective

Barnes & Noble’s strategy is to:

• Utilize the strong Barnes & Noble brand and retail footprint to attract customers to its multi-channel platform
• Expand its distribution channels through strategic partnerships with world-class hardware and software companies and retail partners
• Drive content sales through the web, NOOK® Readers and 3rd party devices
• Use its infrastructure to deliver digital content to customers
• Continue to grow campus partnerships including store locations and students served while continuing its investment in the digital higher education business

The Company has a multi-channel marketing strategy that deploys various merchandising programs and promotional activities to drive traffic to both its stores and Company’s website, barnesandnoble.com.

Barnes & Noble is utilizing the strength of its retail footprint to bolster its leadership in selling content to drive sales across its multiple channels. To address dynamic changes in the book selling industry, Barnes & Noble has been transforming its business from a store-based model to a multi-channel model centered on its retail stores, Internet and digital commerce. The Company offers readers the option of store visits, eCommerce, and digital delivery of books to devices of their choosing, including the NOOK® eReaders. Currently Barnes and Noble is working to refocus their digital strategy; to offer customers great content on any device they choose.

Company Analysis

Retail

Barnes & Noble stores range in size from 3,000 to 60,000 square feet depending upon market size, with an overall average store size of 26,000 square feet. In fiscal 2013, the Company reduced the Barnes & Noble store base by 0.3 million square feet, bringing the total square footage to 17.7 million square feet, a 1.7% decrease from fiscal 2012. The Company opened two new Barnes & Noble stores in fiscal 2013, which total 49,000 square feet in size. Each Barnes & Noble store features an authoritative selection of books, ranging from 21,000 to 170,000 titles. The comprehensive title selection is diverse and reflects local interests. Bestsellers typically represent between 2% and 5% of Barnes & Noble store sales. BookMaster, the Company’s proprietary inventory management database, has more than 14 million titles. By enhancing the Company’s existing merchandise replenishment systems, BookMaster allows the Company to achieve high in-stock positions and productivity at the store level through efficiencies in receiving, cashiering and returns processing. Complementing this extensive on-site selection, all Barnes & Noble stores provide customers with access to the millions of books available to online shoppers at barnesandnoble.com while offering an option to have the book sent to the store or shipped directly to the customer. At the center of this eCommerce program is the Company’s website, barnesandnoble.com.