Barnes and Noble Business Model and Marketing Strategy

Barnes and Noble was initially just your average college/university bookstore. It stocked the books that a community needed, had an emphasis on local tastes, and provided consumers with some additional products like coffee, snacks, or small gifts. The Barnes and Noble business model in the 21st century is very different from what it used to be. Since 2009, the bookstore has seen many of its sales move to their e-commerce platform.

Because of this, Barnes and Noble sought out ways to reach out to tech savvy customers. The introduction of the Nook and ebooks was seen as a way to do so. In February 2015, however, the Barnes and Noble business model changed. The Nook division of the company has now been split from the legacy retail bookstores so that each entity can pursue its own unique identity.

Barnes and Noble Is Ultimately a Retail Business Model

Although there are specific niches that can be identified for Barnes and Noble, such as the ebooks or college textbooks, the bottom line is this: the company is still a store that sells books and associated items. In 2014, the total amount of fiscal sales for the company was $1.75 billion. Although they have a market share that is 23% within the demographic of US college students, sales are down within the brand. In 2014, same store sales were off by 2.7%.

By splitting the Nook business from its legacy business, there are three specific goals that are likely to be achieved.

1. The retail bookstores can focus on their core demographics instead of trying to be everything to everyone.
2. The shareholders in Barnes and Noble will be a tax-free move that shouldn’t cause an impact to individual finances.
3. It gives the Nook a chance to find a new voice that can compete with Apple and Amazon products that are both soundly defeating it in sales.

The message from these actions is clear. When a retail business model is being used, it is extremely important to know the needs and desires of each targeted customer segment. Assuming the needs and desires can be a financially deadly mistake, one that ultimately caused Barnes and Noble to split and retool their identity.

How Can the Barnes and Noble Business Model Succeed?

Even though the current business model is struggling, there is still a great chance that Barnes and Noble can succeed. The moment that a retail business stops becoming an all-in-one shop and focuses on core products, they can begin to rebuild the niche expertise that people see in them. The place to start is with the college demographic. Their market share there is still strong and the retooling messages will strike a chord. There’s a good chance that these actions will result in increased sales.

People are naturally attracted to expertise. Why shop with a business when they don’t really know what they are doing? Expertise holds value because it provides results. Not having expertise results in no value because it creates uncertainty. That’s ultimately why the Nook part of the Barnes and Noble business model has failed to take off as expected.

Barnes and Noble is a bookstore. They are not a technology manufacturer. By splitting the brand, Nook will be allowed to have its own identity and establish its own niche expertise. The only problem with this idea is that it could be happening much too late. As tablet computers, like the Microsoft Surface, continue to gain a foothold in the market, Nook may have to completely reinvent itself to stand a chance. Without the legacy bookstores dragging them down, at least they have a chance.

What Can Be Learned From This Experience?

If you’re in the retail business, it is important to go beyond securing suppliers that offer low wholesale prices. Retail business can’t survive unless they are able to meet specific consumer needs. Barnes and Noble isn’t Walmart. People go to Walmart to meet basic needs, from food to clothing to video games. People go to Barnes and Noble to meet specific needs for entertainment or learning.

If Nook can transform itself so that it is able to better support the US college/university student, then it will have the best chance to succeed. Whether that happens or it does it winds up in complete failure, there is one lesson to take from the Barnes and Noble business model that is more important than anything else: you must go where your customers want you to go. If you do not as a retail store, then you won’t have sales any more.

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