Barnes & Noble, Inc. Team 3
Barnes & Noble faces the challenge of competing in a declining industry. The core of Barnes & Noble isits brick-and-mortar retail stores. This channel is declining within the retail bookselling industry due tothe increasing popularity of online purchasing and new digital technologies. Online retailers offer a widerselection and lower prices while digital technology, in the form of eBooks, has begun to replace the needfor physical books. These changes offer greater convenience, thus shifting consumer preferences.Consumers now find in-store purchasing less attractive, causing traditional Barnes & Noble brick-and-mortar stores to become increasingly obsolete.As a complacent firm, Barnes & Noble has high organizational health but low external performance. Thesuccessful acquisitions of B&N College and Fictionwise in addition to the development of award-winning
digital technology all show Barnes & Noble’s ability to achieve
its goals. However, significantinvestments in new technologies have resulted in poor external performance. While overall sales revenueis increasing for the firm, profits are negative. Comparable in-store sales have declined but are offset bygrowing online and college textbook revenues.As previously mentioned, Barnes & Noble operates in the retail bookselling industry. This industry isunfavorable for incumbents. Most significant in this overall ½ star industry is the high rivalry, caused bylow growth and increased competition. Additionally, the high availability of substitutes and demand forconvenience gives buyers significant power.The retail bookselling industry appeals to a wide range of customers. This forces Barnes & Noble toconstantly compete to retain current and gain new customers. The most frequent purchasers are thoseabove 55 years old, with incomes over $75k. However, technological developments are causing anoticeable shift in purchasing behaviors among younger generations. Customers value convenience andare extremely price sensitive due to low product differentiation. Therefore, a broad line product selectionand superior customer service are necessary to create a brand with strong recognition and loyalty.Amazon, Borders, Books-A-
Million, and Follett Higher Education Group are Barnes & Noble’s main
competitors. Each of these competitors is trying to reach a similar customer base with a slightly differentapproach. Business lines, distribution channels, product offerings, and reach are the most critical areas of overlap. Low cost operations, broad product line, internal efficiencies, adaptability, and technologicalinnovation are among the key factors of success.Barnes & Noble is not a first mover, nor highly recognizable in the new technologies of this industry. Asa result, Barnes & Noble finds itself in a position where it has to catch up to competitors within the newdigital channel or opt out entirely. Although the new technology shows signs of growth, it has forcedBar
nes & Noble to investment heavily and negatively affected the firm’s bottom line. Currently, Barnes
& Noble is considering the possible sale of the NOOK business or partnering with publishers, retailers, ortechnology providers in order to effectively compete. Meanwhile, the firm also struggles to maintain itsstronghold in the traditional brick-and-mortar model while trying to optimize its multi-channel strategy.