December 11, 2014 | Knowledge@Wharton
How Barnes & Noble Can Recover from the Nook’s Downward Spiral
Now that Barnes & Noble and Microsoft have parted ways on a partnership to produce and sell the Nook e-reader, the book retailer is yet again faced with having to reimagine its business model for an increasingly tech-centric world. For inspiration, it should look no further than the coffee shops inside many of its stores, according to Wharton marketing professor Peter Fader
Recognizing the Competition
According to Fader, Barnes & Noble’s turning point will be in recognizing who its competition actually is. “If they want to be top of the mind when it’s time to go out of the house or the dorm and study, there is a lot of promise there,” he said. “Starbucks [currently] owns that share of mind. Barnes & Noble is in a very good spot to make that happen.” The company could use its larger-sized stores to differentiate itself from Starbucks, said Fader. At last count, Barnes & Noble had 658 retail bookstores and 714 college bookstores across the U.S., many of which have in-store cafes serving Starbucks drinks.
“The Microsoft investment was viewed as a huge opportunity to fund this business, and things just didn’t pan out.” –Emilie R. Feldman
Fader said Barnes & Noble should even begin selling the Kindle, possibly the Nook’s biggest rival. He suggested that the company could articulate its new strategy by saying, “We want to surround the right customer with a variety of products and services, some of which we may not make or make money on, just to show them that we are a trusted advisor and we have their best experience in mind.”