The Future of Barnes & Noble to Include Alcohol

Will Barnes & Noble survive if it serves alcohol and offers full-service dining?

Barnes & Noble’s executive team is betting that if stores offer alcohol and full-service dining, book-loving customers will come more often and stay longer. With that in mind, Barnes & Noble has announced that four suburban pilot stores in New York, California, Minnesota, and Virginia will begin doing so in 2017.

According to Jaime Carey, president of development and the restaurant group, this is the way to “create a better bookstore.” In an interview with Fortune magazine, Carey put it this way: “We already have a cafe, so we said let’s have a much better food experience frankly.”  So, Barnes & Noble’s attraction becomes less about getting in and out with a book or magazine and, instead, a broader consumer experience with added pleasurable options.

Is Barnes & Noble trying to do with its stores what Starbucks did with its caffés? Accentuate their value as social meeting places, so time-in-store duration stretches from minutes to hours?  It is no coincidence that B & N stores house Starbucks cafes: both work to glamorize otherwise mundane tasks (obtaining reading material or getting caffeinated). In a previous blog, we examined how Starbucks has added spice with, among other things, French-themed premium baked goods. High-markup alcoholic beverages and upscale meals might do the same for Barnes & Noble.

Let’s be clear: this is not standard caffé fare we are discussing. The concept stores will offer full meals.  They will be supported by onsite kitchens, dining areas, chefs, and wait staff. The existing caffé footprints will at least double, and the decor will be posh.

They certainly have to try something new: in its recent 10-Q filing with the SEC, Barnes & Noble reported retail revenue ($1.8 billion for the first six months of 2016) which was down 2.3% from the same time last year.

All of this raises two really interesting questions: (1) who are these targeted Barnes & Noble customers and (2) what happened to the last white knight touted to save the bookstore chain?

To answer (1), we turn to Placed.com. This research firm affords a bird’s eye view based on the Android apps most “likely to be installed by Barnes & Noble customers.” The top 10 apps suggest that users appreciate coffeehouse ambiance (Starbucks), high-level professional networking (LinkedIn), leisure activities (Fandango), and fitness (FitBit). Sounds like a combination of high disposable income and broad interests.

In a way, Barnes & Noble’s reliance on this constituency is largely the reason it finds itself scrambling for solutions. This well-educated and employed demographic could more easily order on Amazon and have the book delivered to their door. (Just to hedge its bets, Amazon is opening a few brick-and-mortar storefronts of its own.)

As for (2), there is a one-word answer: Nook. This e-reader has not sold well. Nook sales just fell over 22% from a year ago, and Microsoft’s 2012-2015 investment earned it a $238 million loss. Enough said.

Not all is lost, though. Barnes & Noble has no debt and does have cash reserve. Also, good old-fashioned hardcover books have shown signs of life. For example, Harper Lee’s much-talked-about To Kill a Mockingbird sequel, Go Set a Watchman, sold well.

Anyway, if the bookstore dining experience catches on at those four pilot stores, it will be rolled out in a large number of Barnes & Nobles other 600 stores. Only time will tell.

Written by Ali Bakir

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