Think of Barnes and Noble bookstores like Starbucks coffee shops, not your local independent coffee place, but a reliable, ubiquitous, safety net of retailing. B&N is the dominant creative force in the printed book retailing. As an innovator B&N stands to continue to benefit from printed book sales. The American Booksellers Association reported earlier this year that sales at independent bookstores rose about 8 percent in 2012 over 2011. 90% of Americans who have bought eBooks continue to buy traditional books as well. (Bowker Market Research)
As
people move to tablets for reading e-books, the battle between e-readers is
becoming moot. In April, the Book
Industry Study Group announced that multi-function tablets were the preferred
e-reading devices, exceeding the use of dedicated e-readers.
Just as iTunes spread to every type of device, so e-book apps are now ubiquitous.
The use of an open source ebook publishing format does favor B&N over Amazon. (Not surprisingly, most of the growth of eBooks
has been in people reading novels)
Don’t
underestimate the ability of B&N retail stores to generate e-book sales for
B&N. The competition with Amazon is receding as Amazon has moved way beyond
books in their marketing. If you think Amazon is out to drive B&N out of
business remember 1997 when Microsoft (to keep Apple healthy and lessen the
risk of anti-trust charges) agreed to support Office for macs as well as invest
$150 million in AAPL.
Almost
all of BN's bookstores were profitable last year, and, leaving out the Nook, net
income per share was at least $2.50. With
Len Riggio back at the helm, expect to see some low-performing stores closed
and a series of new stores in underserved areas. There have been suggestions (similar
to Walmart’s announced strategy) of the development of satellite stores.
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