When James Daunt was appointed CEO of Barnes & Noble in 2019, the timing could hardly have been worse. Charged with rescuing the bookselling chain from irrelevancy and decline (in that order), he barely had time to put his feet under the desk before the pandemic changed the retail landscape for everyone.
But the banker-turned-bookseller used the subsequent “downtime” to his advantage. Instead of cutting deals with publishers trying to manufacture bestsellers, Daunt was more interested in returning to the roots of why people read in the first place — for the love of books. So he asked employees to clear the shelves of every book and decide if they actually belonged there. The directive was a radical departure from book business as usual.
Daunt had form. He took over Barnes & Noble on the back of resuscitating the UK book retailer Waterstones, where he had betrayed a reverence for books and a distaste for homogenization, leading one critic to label him a “highbrow bookseller.” It was meant to be an insult.
This is the same man who borrowed money when he was 26 to buy his own independent store in London. He also once argued with an Italian showroom designer about the best angle a bookshelf should be tilted for book covers to catch the light. Daunt appeared to be a throwback to an age before Amazon beat chains at their own game — putting competition out of business.
Daunt’s MO at his new assignment was to follow the model he developed in the UK and sell books people actually want to read. With Barnes & Noble on the brink, it was quite the job.
The Death Spiral
By 2018, Barnes & Noble was reeling. Its biggest brick-and-mortar competitor, Borders, had long been buried and the book retailer lost $18 million that year while firing 1,800 full-time employees without warning, and removing its CEO for sexual harassment. Its share price had tanked by 80%. All attempts to arrest the slump fell horribly short.
Barnes & Noble invested heavily in e-commerce but its decision to take on Amazon ended badly. Sales of the e-book reader, the Nook, had plummeted from $933 million in 2012 to $111.5 million in 2018. In the meantime, the chain’s focus on its core business was being sacrificed at the altar of diversification, including the ill-advised launch of full-service restaurants at select locations.
In a withering account of Barnes & Noble’s decline, the author and critic Ted Gioia echoed the view of many disillusioned customers when he wrote: “B&N was a lousy bookstore. I gave up shopping there because it never had the book I wanted in stock. Instead, it shifted a huge portion of its floorspace to peddling toys, greeting cards, calendars, and various chachkas.”
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The Rescue Act
Daunt began his tenure at Waterstones in 2011 by encouraging local stores to act like independents. In practice, this meant sacrificing £27 million ($32 million) in lost deals with publishers in order to remove discounted books and two-for-one deals. He also insisted there would be no greasing the wheels to ‘earn’ a spot on the bestseller charts.
The quality of books under this hidden, but widely accepted, practice scarcely mattered. Publishers offered discounts and threw big money at marketing their anointed books in exchange for bookstores ordering in bulk. As a result, Waterstones had been returning an “immense” number of books.
“As a retailer, of course, I’d love the money that I would be given by the publisher,” the 59-year-old told the BBC. “The consequences of that, though, are terrible for the bookshops.” Those consequences include putting promoted books in the most valuable store real estate and then hawking them at every opportunity.
But when Daunt let staff decide what to stock, 97% of books on the shelves were purchased and returns fell to almost zero. The lost revenue was recouped very quickly. “He’s essentially created a series of independent bookstores with the buying power of a chain,” Tom Weldon, CEO of Penguin Random House UK, told the New York Times.
The Reinvention
At its peak, Barnes & Noble had stores in 726 locations and was perceived as the big-box villain and symbol of megastore dominance. That number shrank to 600 as $1 billion was wiped off the chain’s market value between 2014 and 2019. But now, after over a decade of contraction, Barnes & Noble is opening at 30 locations this year. “We’ve now got both the profitability and the confidence to start opening up stores again,” Daunt said.
The turnaround has defied conventional wisdom around centralization and efficiencies — and been as much a culture and image reboot as restructure. Gone are middle managers, replaced by hands-on store managers. “That’s key to us giving the independent spirit back to booksellers. Waterstones’ retail director Luke Taylor said. “They know what customers want and what’s selling.”
With book sales at the chain up 14% over pre-pandemic levels, the entire publishing industry is now “rooting” for Barnes & Noble as a counterweight to the might of Amazon. “It would be a disaster if they went out of business,” literary agent Jane Dystel told NYT’s publishing reporter, Elizabeth A. Harris. “There’s a real fear that without this book chain, the print business would be way off.”
Finest of Margins
“How is it that bookstores do justify themselves in the age of Amazon?” Daunt asked a virtual audience in 2020. “They do so by being places in which you discover books with an enjoyment, with a pleasure, with a serendipity that is simply impossible to replicate online.” It’s sentiments like this that have cast Daunt as a new cultural hero.
According to the Englishman, the best angle for a bookshelf tilt is three degrees, not four. Why? Because with that extra one-degree tilt, the spine of a book starts to — barely perceptibly — bend. These are not the kind of margins usually talked about in the publishing world. If it weren’t yet obvious what’s really behind his revival of the once-moribund chain, Gioia put it in a different light: James Daunt’s superpower is that he loves books.
