CASE: II  Barnes & Noble 

IIBMS – Barnes & Noble

For decades, bookstores were simply that—places that sold books. The typical mom-and-pop bookstore on the corner was small, quaint, sometimes a little musty, and bursting at the seams with books. It was a wonderful place to visit now and then, look around for a bit, find a book you like, and go home. Today that old bookstore seems like a relic of a bygone era. Barnes & Noble’s approach to book selling has revolutionized the entire industry.

Barnes & Noble has risen from rather ordinary beginnings to become the largest bookstore chain in the world. Founder and CEO Leonard Riggio began his empire by purchasing a struggling Manhattan bookstore in 1971. Riggio opened his first superstore, with 100,000 square feet of selling space, in New York in 1975. That store was so successful that he quickly opened more superstores throughout Manhattan and downtown Boston. The formula worked and the number of stores multiplied. In the early 1990s, the company began spreading the superstore concept throughout the United States. Today Barnes & Noble operates around 950 bookstores and another 426 video game and entertainment software stores. The company boasted sales of nearly $3.5 billion and operating profit of $232 million in 1999.

            Riggio took a decidedly different approach to selling books. “Shopping is a form of entertainment,” he says. “To customers, shopping is a social activity. They do it to mingle with others in a prosperous-feeling crowd, to see what’s new, to enjoy the theatrical dazzle of the display, to treat themselves to something interesting or unexpected.” Riggio made sure both the layout and operation of his stores provide customers with what they want. Barnes & Noble superstores are huge, yet clubby and inviting. They typically cover about 25,000 square feet (some are much bigger) and offer a selection of up to 150,000 titles, compared to 10,000 to 20,000 at the typical independent book seller. Books usually are discounted 20-30 percent. But a Barnes & Noble superstore is not defined merely by size and volume. The atmosphere is friendly, even somewhat luxurious—almost a cross between a public library and a den. There are large, overstuffed chairs; reading tables; background music; a coffee bar; bright lighting; and even well-maintained public restrooms. Book-store used to discourage customers from reading in the store—spend more than a few minutes with a book and you would have expected an employee to tap you on the shoulder and suggest that you either buy the book or put it back. But Barnes & Noble actually wants you to pull a book or magazine off the shelf, grab a cup of coffee, flop down on a sofa, and make yourself at home. A company spokesperson explains, “The philosophy behind this is, the more customers we attract into the store and the longer they are encouraged to stay, the more books we sell.” Many Barnes & Noble locations also offer a music section where the same philosophy applies. Customers are welcome to sit down with a pair of headphones and listen to a CD before they buy it.

Barnes & Noble also works to ensure that its superstores evolve into community meeting places. Each store or region is staffed with a public relations coordinator who works to bring events to the store. Live performances, readings, and book signing are common. Classes of elementary school kinds are invited to come in and browse on a regular monthly basis. Stores even offer classes, book discussion groups, puppet shows, and story hours for children. The long store hours (9 AM to 11 PM) also provide a compelling lure. “For people who work all day, this is their leisure time,” explains Lisa Herling, vice president for corporate communications. “Whether it’s after a movie or after dinner, it’s a destination location.” Riggio puts it more succinctly: “If I get you for two hours, I’ve got you.”

            In 1995, a competitor with an entirely different value proposition emerged. Amazon.com began selling books over the Internet. Barnes & Noble countered two years later with BarnesandNoble.com, which tries to replicate the superstore experience on the Web. At the site you can participate in live chats with authors and listen to audio from one of the many archived book readings (featuring such renowned writers as Kurt Vonnegut, Susan Sontag, and Salmon Rushdie). Now the largest bookseller in the U.S., BarnesandNoble.com, also offers free online courses through “Barnes & Noble University,” where you can study subjects ranging from the humor of Shakespeare to overcoming shyness. You can even purchase a bag of Starbucks coffee and select the music you want to hear while you’re browsing the site. Oh, yes, they do sell books on the site, too—750,000 titles—along with music, software, and posters. BarnesandNoble.com has attracted more than 5 million customers since 1997 and has emerged as the fourth-largest e-commerce site on the Web. Sales were up 4.5% in 2002 as were expectations that the venture would turn a positive cash flow soon.

Barnes & Noble’s success comes not so much from what it is selling but how it is selling it. Both the brick-and-mortar stores and the online site provide customers with an atmosphere that turns book buying into a warm, friendly, inviting experience.

 

Question:

 

1. What affective responses do you think the Barnes & Noble environment creates? How might consumers’ cognitive systems interpret these responses? From a marketing perspective which is more important to Barnes & Noble—affect or cognition?
2. Rob goes to Barnes & Noble location to hang out and meet people. Lisa goes only when she wants to purchase a specific book or CD. Describe how their integration processes might convince them to choose Barnes & Noble over the myriad other options they have.
3. Many of the activities that take place at Barnes & Noble stores (or at BarnesandNoble.com) do not require a purchase. Participating in discussion groups and going to in-store performances are free. And obviously it doesn’t cost anything to simply go in, sit in a chair, and read a book. So why do people buy? How do these free activities (behaviors) influence consumers’ affect and cognition?

IIBMS – Barnes & Noble

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