As Barnes & Noble struggles to find footing, founder takes heat
NEW YORK: Leonard Riggio radically altered bookselling in the United States when he bought an ailing New York bookstore and turned it into a national chain of megastores.
Now, his company — Barnes & Noble — is floundering, the publishing industry that depends on it is worried, and Riggio has nobody to turn to but himself.
That much became starkly evident in July when Barnes & Noble abruptly fired its chief executive, Demos Parneros, with little explanation.
Parneros was the fourth noninterim CEO in five years, a remarkable amount of turnover at a large company.
The news left alarmed publishers and investors complaining that the chain is once again dealing with a management vacuum when it desperately needs to adapt and innovate.
Sales are falling. The Nook, Barnes & Noble’s attempt at selling electronic books, became a financial drain.
Critics say the company lacks direction, sometimes seeming to prioritise sales of gifts and tchotchkes over books. For investors, the effect is already evident: Barnes & Noble’s stock price is down 60% over the past three years.
Publishers are worried that a crucial pipeline for book sales could be crumbling.
“It would be disastrous if they go down,” said Dennis Johnson, a co-publisher of Melville House, an independent press. “If 600 bookstores disappear from the country, there will be that many fewer visible books, which seem to be receding from their place in the culture.”
Riggio, 77, the company’s chairman, disputed the notion that Barnes & Noble is mired in a leadership crisis. After all, he said during an interview at the company’s headquarters on New York’s Fifth Avenue, he has always been there.
And he has a plan to turn things around. “I have a big stake in the business, I founded it and I’ve been here forever, so I think there’s a lot of stability that comes with that,” Riggio said. “If we’re without a leader, I’m it.”
Riggio built Barnes & Noble from a single Manhattan bookstore into a national fleet of superstores, many with more than 100,000 titles, transforming the business of selling books from a genteel and fusty profession into a mass-market moneymaker. The company boasts that it has sold 6.7 billion books since going public 24 years ago.
The expansion was so successful that the company was frequently vilified as a corporate behemoth driving local bookstores out of business (see: Meg Ryan and Tom Hanks in You’ve Got Mail). Between 1995 and 2000, the number of independent bookstores fell 43%, according to the American Booksellers Association.
But the factors that buoyed the chain’s expansion — the growth of malls and shopping centres and big box stores that sell everything — have reversed, with the rise of Amazon and other online retail leading to dwindling foot traffic and sales.
At the same time, after decades of declines, independent bookstores have been resurgent, aided by an increased interest in localisation and curated experience. Even Amazon is expanding into brick-and-mortar bookstores, with more than a dozen stores across the country and more in the works.
The American Booksellers Association counted 2,470 independent store locations in 2018, up from 1,651 in 2009, and sales at its member stores were up 5% so far this year over last.
Sales of printed hardcover books grew nearly 11% from 2013 to 2017, while those of paperbacks rose 17%, according to the Association of American Publishers.
“The indies decided that rather than trying to compete on price and inventory, we’re going to provide our customers with a curated experience that’s hypersensitive to the customers in that community,” said Ryan Raffaelli, an assistant professor at Harvard Business School who has studied why independent bookstores are rebounding despite Amazon.
“Barnes & Noble has struggled to figure out where they fit in the larger ecosystem, given that that continuum continues to spread further and further apart.”
To adapt, Riggio said that Barnes & Noble would close big, underperforming stores and open smaller ones in more highly trafficked areas.
In the past decade, the chain has closed more than 150 stores and now operates 633.
“We have to move back to where the action is,” Riggio said. “We have to follow the population.”
But he disagrees with another diagnosis of the problem: that he is a micromanager who does not give his chief executives room to operate. People who have worked closely with him described him as self-assured to a fault.
“Anyone who joins there knows that the chairman is very hands on,” said John
Tinker, an analyst at Gabelli & Co.
Riggio had planned to retire in September 2016. But then the company fired Ronald Boire, who had served as CEO for less than a year, saying he was “not a good fit for the company.”
Riggio decided to step in as acting CEO. He declined to discuss Parneros’ firing, noting that the company has already said all it can on the matter — which is that he was terminated without severance for violating policies.