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B&N Expects Brick & Mortar Bookselling to Wither Over the Next Decade

But it hasn’t completely given up.

Borders Book StoreWhen B&N announced in January 2013 that they expected to shrink for the next decade, many pundits including this blogger started singing dirges for B&N’s imminent demise (my mp3 player is on a loop).

But it now looks like B&N’s plans aren’t as simple as shuttering hundreds of stores. Instead, a recent news article suggests that while B&N expects B&M bookselling to wither over the next decade, they’re not completely giving up on all of the marginal and unprofitable stores.

The DeKalb Daily Chronicle reported on Monday that B&N will be closing its store in that Illinois city by the end of the month. According to the landlord, B&N isn’t just walking away:

The national book retailer will close Dec. 31 because Barnes & Noble made an offer on a new lease and refused to negotiate with Mid-America, Staebler said.

Staebler said Barnes & Noble representatives have rejected lease offers his company made during the past year that would have reduced the store’s rent for the 21,000 square-foot space at 2439 Sycamore Road.

“People ask me why I’m evicting Barnes & Noble,” Staebler said. “But I’m not closing the store. I’m not laying people off their jobs. It’s[Barnes & Noble’s] decision.”

Commercial leases commonly run for a decade or more, and if a store is only marginally profitable it’s not unusual for a retailer to simply let a lease expire. But that’s not what B&N is doing here; rather than walk away they low-balled the landlord with a price which B&N thought they could afford but which the landlord could not accept.

7702106526_17db70fb80[1]That’s not quite the same thing as deciding to shutter the store, and it’s not even close to sacking and looting, as one commenter on The Passive Voice described it.

Instead B&N is expecting bookstore retail to wither over the next decade, Those larger locations just aren’t feasible (but the smaller 15,000 square foot stores B&N has been considering might be).

I found this story at The Passive Voice, but I don’t find myself in agreement with most of the commenters. I would not say that "these closings loudly communicate a disinclination to stay in the book business"; if that were the case then B&N would not even have made an offer.

While it can be fun to predict that the sky will fall, I think in the case of B&N a more conservative position is warranted.

Or am I putting too positive of a spin on this?

images by MikeKalasnikDave Dugdale

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Tyler December 10, 2014 um 11:36 am

As far as could tell, it was a similar situation in Reston, Virginia when that store closed a year and a half ago. Talking with employees at that store, the store was doing fine in sales but when the lease came up, Barnes and Noble didn’t want to pay for increased rent. That store was fairly busy most of the time and in a prime location.

Nate Hoffelder December 10, 2014 um 2:16 pm

That sounds like the DeKalb store, all right.

fjtorres December 10, 2014 um 12:08 pm

B&N has multiple stores in most of the areas they are closing, like DeKalb.
They expect the DeKalb customers to (literally) go the extra mile or ten and go to one of the other stores. They are trying to consolidate their customer base into fewer stores to increase the volume at the remaining stores.
Some customers will do that.
Many won’t.

At least that is how it played out after Borders closed: 75% of Borders stores were within a mile of a B&N store but after the dust settled B&N saw no significant net growth.

Triage has its uses but it’s no cure for a sick business model.

Nate Hoffelder December 10, 2014 um 12:10 pm

In my area the Borders was near a Books-a-Million. That company didn’t pick up an appreciable number of customers either.

neuse river sailor December 10, 2014 um 12:35 pm

I think they are looking several years out and getting the idea that, while the rent might be affordable now, it might not be in 5 years as turnover declines. That standard 10 year lease is scaring them off. The only way they would go into it was if the price was rock-bottom. Now if the mall offered them a shorter term, they might have taken it and milked the location as a cash cow for a little longer.

Sounds to me like B&N considers all the bricks and mortar sites as cash cows and are hoping to extract as much cash as possible without making a commitment to the long-term. Seems like a reasonable plan.

Michael B. December 10, 2014 um 12:44 pm

in the past, it was observed that b & n was had long term leases (10+ year) in buildings that were owned/managed by companies the b & n’s founder, leonard riggio, had stakes in (if not owned).

prior to a lease expiring in one such, the flatiron NYC, he sold the majority interest in the property firm (in this case, barrister realty), and then later closed the store.

color me cynical if i think this looks a tad like rodents departing submering water transports.

Peter Turner December 10, 2014 um 2:41 pm

If one is concerned (or at least interested) in the relative health of B&N’s *bookselling* activity, it’s important to consider allocation of space for books in B&N’s stores. It’s been an ongoing trend among booksellers to use their retail space to sell things other than books. Many if not most booksellers couldn’t afford to stay in business if they had to float the boat on booksales alone. The margin on book sales (which have remained pretty static over the years) is up against a steadily increase in rent. So, B&N may survice as a retail but (possibly) not as a significant seller of books.

Simon December 10, 2014 um 3:24 pm

This is the stated goal of Chapters-Indigo in Canada: to become a "cultural department store".

I haven’t been in one in ages (probably last Christmas), but typically there are bestsellers up front, then you walk past candles, picture frames etc. to get to the escalators which take you upstairs where the rest of the books are.

puzzled December 10, 2014 um 4:50 pm

When I saw "cultural department store", I thought of rows and rows of stainless steel refrigerators containing Petri dishes.

fjtorres December 10, 2014 um 6:07 pm

I keep hearing Indigo carries a deep line of $50 pillows…

Nate Hoffelder December 11, 2014 um 5:03 pm

Not so coincidentally, Chapters also owns Coles, a chain of _small_ bookstores. They have about a hundred of them. I saw a couple in Vancouver last year, and they were about the size of an airport bookstore. I’ve seen bigger indies.

I’m not sure what Chapters-Indigo will do with those stores now that the bigbox bookstore concept is dead, but on the plus side the Coles stores are small enough that they cost a heck of a lot less to run than.

Nate Hoffelder December 11, 2014 um 5:05 pm

Looking at the music section, cafe, and newsracks in my local B&N, it’s pretty clear that when it comes to floorspace books are in the minority.

It might be time to stop calling B&N a bookseller.

neuse river sailor December 10, 2014 um 4:38 pm

Horrifying vision of gigantic stores full of scented candles, picture frames and assorted "gifts" with a few books (probably mostly those big tabletop picture books) in the back.

oj829 December 10, 2014 um 5:22 pm

Nate Hoffelder December 10, 2014 um 5:35 pm

LOL. I’d forgotten about that cover. It’s even more true today than it was 3 years ago.

Kevin j waldroup December 11, 2014 um 3:41 pm

With the decline in e-book sales. I think Barnes & Noble have a bright future sales books and electronic devices, coffee.

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