In an era of e-readers and downloadable books, what will become of the 3,000-store book chain?
Gene J. Puskar / AP / File
The Barnes & Noble ($BKS) battle with the activists has concluded (for now). Founder/Chariman/ CEO Len Riggio will keep his Empire of Dead Trees. But as I've written several times, the real battle is still in front of him - what to do with 3000 physical stores in the Twenty Teens.
I don't have the answer, myself. I'm not willing to call Barnes & Noble "the next Blockbuster" as many have because BN does have a decent chunk of the e-reader market, it's not as though they've been completely asleep.
The problem is, Amazon ($AMZN) will dominate almost anything on the web, digital books included. Amazon currently claims 70% to 80% market share. it's safe to say they ain't giving much of that up anytime soon.
Also, Riggio is a book lover. He was dragged into the digital age against his will, kicking and screaming, regardless of what he says on conference calls. The irony that being a book lover would be a handicap for someone in the business of books is not lost on me, by the way. I am a book reader too and am currently shlepping the 750 page hardcover of Justin Cronin's The Passage back and forth across Manhattan every day. I'll give up my physical books when I am forced to, thank you very much - but that's just me.
Ron Burkle, the thwarted activist from the Yucaipa Fund, had it in his head that BN's square footage could be used for selling other items and services besides books. Others see all of that prime real estate as the new town square or as Riggio himself described his stores, as "cultural piazzas". Adorable! Len said this over the summer in a New York Magazine profile:
“We believe bookstores will exist all during and after this revolution. We’re just absolutely convinced, both as citizens and as businesspeople, that bookstores are going to be important to the American culture.”
And of course, there will always be physical books, but probably not as many stores or stores quite as large as the current ones. And people will always buy paperbacks - one doesn't need to buy a $150 device to consume a $6 paperback, says another publishing industry vet in the same article.
The next challenge for the Riggios (and BN shareholders) will center around the potential sale of the company. Bids are being solicited and the possibility of a Riggio family-led takeover may lead to yet another battle between the company and outside activist shareholders.
An iconic company facing a tidal wave of evolution. Sad and yet fascinating.
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