Barnes and Noble, Inc. is the world’s largest retail bookseller and the highest rated brand in the United States with more than 1300 bookstores and 650 campus stores (Barnes & Noble, 2014). Due to the influx of technology in business operations and the subsequent shifts in the ways of conducting business, Barnes and Noble is trying to reposition itself in the digital future (Wunker, 2011). This paper attempts to shed light on the important characteristics, strategies, resources and systems of the Barnes and Noble, Inc. It finally assesses the performance of the firm in a competitive landscape.
Barnes and Noble, Inc. is the market leader in the physical bookselling facilities. Its website boasts of around three million products in its lap (Barnes & Noble, 2014). Interestingly, the Barnes and Noble (B&N), in an attempt to fulfill the entertainment need of its customers, added Starbucks Cafe, DVD and music selection. It is also selling successfully the toys and games to children (Prati, 2010). It is the only company among the booksellers that adopt multi-channel strategy of physical retail concept and online shop including B. Dalton bookstores. The company has its own publishing facilities which allow it to publish books not found elsewhere at the reasonable prices. The company is competing in the market with its legacy business and has framed its own eReader device unlike other competitors (Frasca, Genszler and Mackintosh, 2010).
Due to the influx of digital technology in reading and learning, the B&N has been forced to revise its strategic objectives and the underlying tactics. The detailed appraisal is as under:
: Expansion into the eBook and eReader market
The B&N strives to invest more in the digital business to promote Nook and capture the maximum market share. It is increasingly popular device, and Amazon, Sony and others have framed a device like this. Nook allows downloading the books from available stock of B&N. Since its introduction, there has been an increase in sales by 20% and is set to gain more in digital reading (Prati, 2010).
: Management of B&N College bookstores
In 2009, B&N set up more than 650 college bookstores which not only supplied the textbooks, study material but also gifts, dorm supplies and café items to the students at their convenience. They can buy new and used books and also digital textbooks through Nook Study application. The B&N is currently working on providing textbooks to the student on cheap rental price. This will increase the profits of the B&N (Prati, 2010).
: Impressive environment for customers
The B&N strives to provide a comfortable and home-like ambience to its customers. To pursue this, the B&N has added café services to its retail stores. Comfortable couches and chairs have been placed to facilitate the book and magazine reading before choosing that to buy. The company also offers free Wi-Fi service to its customers (Prati, 2010).
: Multi-channel distribution
With the development of innovative technological features, the B&N is arranging for strategic partnerships with hardware and software companies and other retail stores to expand the customer base (Frasca, Genszler and Mackintosh, 2010).
The B&N is a successful and well-established name in the market with a presence in various channels of distribution including physical retail, online and other strategic partners. This can yield a competitive advantage to the company. The B&N is also capable of coping up with the shifting trends in the market and the impacts of technology and globalization. To withstand the negative effects, the B&N has transitioned into the use of digital technology to match up with the consumer preferences. The discounting price policy of the B&N is attracting the price conscious customers. The management of the company is shrewd and experienced in e-commerce. In addition, the company needs to hire better legal advisors to cope up with legal proceeding that impacts the financial bottom line. It should venture into more investment opportunities once the profit margins have stopped falling. The business intelligence of the B&N needs revamp (Prati, 2010).
The performance of the firm is broken into the external performance and the organizational health. To begin with the external performance first, the Barnes and Noble has the significant market share. In the college bookstores, B&N has the second highest market share after the Follet Higher Education Group in 2011. In the retail trade, Barnes and Noble’s share reached 19% as opposed to the 13% of Amazon, 10 % of Borders and 2% of Books-a-Million. But in the digital book market, Amazon is the market leader with 60-70% share and B&N is the follower with 25% share (Barnes & Noble, Inc, 2012).
The sales revenue of B&N is also increasing since 2006 mainly due to the online bookselling business and college side business. The compound annual growth rate (CAGR) for overall revenue is 6.36% in which online sales have 14.46% CAGR, but retail trade has decreased by 1.48%. Despite increasing sales revenue, the profits of B&N are experiencing a decline. This is mainly due to the increasing competition and decreasing retail trade activity. The company was not profitable in a period of 2005-2010 with -24.23% CAGR for net income. Due to this the shareholder equity has also decreased by -6.7% while Amazon had 78.2% shareholder equity.
Coming to the internal performance, organizational health is satisfactory. With changing trends in readership, the B&N has developed an award winning technology in the last five years. It introduced e-reader device namely Nook in 2009 with resounding success. Due to this the online sales increased 64.7% in 2011. The management is also responsive to the market changes. With the successful acquisition of B&N College, the company reached four million students across nation. Satisfactory progress has been made in achieving the management goals. Ebook business has 27% of the market as it was set in 2009. However, there is decrease in comparable store sales with the annual rate of 3.2%. The return on invested capital (ROIC) has also decreased in the past by 3.2%, far below the industry average of 12.8%. The conclusion is that with low external performance and high internal health, the company is complacent (Barnes & Noble, Inc, 2012).
With shifting trends in the market and technology, the businesses need to mold their strategies accordingly. It is evidenced that B&N is more reactive than proactive in the past. To deal with this, it is advisable to revamp the business intelligence department to unravel the competitor strategies well before it has hurt the business of the B&N.
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