Quote:
Originally Posted by dakini
I would have assumed B&N would be in a pretty good place ... aren't they the only big box bookstore in the US nowdays? Since Borders closed, is there another brick and mortar bookstore that covers all of the US?
|
Barnes and Noble *is* the only B&M chain that covers the entire country but that isn't much of an advantage.
http://en.wikipedia.org/wiki/Barnes_%26_Noble
Besides Amazon and Buy.com online book-selling operations, there is Books-a-million, with 200 stores:
http://en.wikipedia.org/wiki/Books-A-Million
and there is also Half-price books, with 100 stores in 15 states:
http://en.wikipedia.org/wiki/Half_Price_Books
Then there are the 1000-plus independent bookstores scattered all over.
The first problem is that books are readily available all over the US in as many as 30,000 locations:
http://www.sbdcnet.org/small-busines...bookstore-2012
This includes department store chains like Walmart, Target, and K-Mart.
It includes drugstore chains like Walgreens, CVS, and others.
It includes supermarket chains.
It also includes a declining but still substantial number of newsstands (1400 in 2008--http://business.highbeam.com/industry-reports/retail/news-dealers-newsstands).
And it includes a lot of used-book stores where users can swap used books for credit; usually on a two-for-one basis. Or buy used books at *big* discounts. Many of those operations also handle used CDs, DVDs, and video games. In some regions there's a least one per suburb.
In other words, it is far from hard for people to find books. More, it is far from hard to find cheap books. And that is without factoring in the internet.
The second problem for B&N is that there are now three book markets in the US:
- high-volume "best sellers" and high profile new releases that are available literally *everywhere*, often heavily discounted beyond what any bookstore can match. High volume, low margin.
- low-volume mid-list/back-list titles (high-margin, low volume) available only in *some* bookstores but readily available everywhere by special order and online. *Especially* online.
- ebooks. Don't need to discuss that here, do we?
Look at B&N's report today and you'll find that their storefront sales declined (bad!), their *online* pbook sales declined (very bad), and their Nook hardware sales disappointed, and declined (in dollar value) leaving them with a lot of unsold hardware (very, very bad). The latter is doubly problematic because they now have a lot of money tied up in unsold hardware they can't return (unlike unsold pbooks) and because that hardware was supposed to increase the market for the ebook sales. (The one part of their business that did well, albeit not great--not by previous years' standards.)
Declining hardware sales can thus be seen as a leading indicator for declining future US ebook market share if something isn't done *fast*.
And since US ebook market share is Nook's primary asset, Nook Media's estimated market value of $1.8 billion (from the Microsoft and Pearson equity sales) is at risk.
B&N was already under shareholder pressure to spin off Nook Media and monetize that paper valuation innto actual sharehholder value. I expect the pressure to go up and the paper valuation to go down unless and until B&N IPO's Nook Media as a wholly independent entity or sells a controlling interest to somebody with deep pockets willing and able to take Nook Media blobal before it is too late.
The alternative is more of the same and after two full years of the same "disappointing sales" a death spiral is not out of the question.