Art of the turnaround / Global
Bookseller James Daunt has been tasked with changing the fortunes of Barnes & Noble. We take a glimpse inside the covers.
It’s two minutes before 09.00, the scheduled opening time at Barnes & Noble’s flagship on the north side of Union Square in New York. James Daunt is fiddling with his phone as he waits on the street. As the clock ticks to the top of the hour and the doors are flung open, he sweeps inside. But he doesn’t get far: his trajectory is cut short by the first wooden display table and its collection of books, which includes a hardback celebration of a century of American football and the 2020 edition of The Guinness Book of Records. “You’re in the largest bookshop in the world, in New York City, and that is what you see,” he says incredulously.
While that particular accolade may be contested, the new CEO of Barnes & Noble hasn’t got this far by mincing his words. His route to the top of the global book industry has been both surprising and rapid. More used to Marylebone than Manhattan, the 55-year-old UK bookseller was asked in August to perform emergency surgery on Barnes & Noble – the last real remaining chain bookshop of scale in the US – when he was named incoming CEO. The company’s revenue for the 2019 fiscal year was slightly less than half of its 2012 peak of $7.1bn and the brand is increasingly accustomed to making headlines for the wrong reasons, from shop closures to a revolving door of Ceos over the past few years (none, Daunt is keen to point out, have been booksellers like him). Barnes & Noble has also ploughed $1bn (€909m) into its Nook e-reader in an unsuccessful attempt to beat Amazon at its own game. According to Daunt the chain is “at death’s door”: he says that if there isn’t a speedy turnaround, it could be bust in as little as 18 months. But none of this is enough to put him off his stride. Time to end the blame game and club together to fix things “sensibly”, he says, sounding like a cross between a headmaster and a perennially sunny politician.
Daunt has good reason to feel optimistic: he has done this before. After a brief – and what he calls “not very glorious” – career at JP Morgan, which led to his first stint in Manhattan at the end of the 1980s, he quit to pursue a more creative career path. He found the perfect space – a former antiquarian bookseller, that dates back to the Edwardian age, in London’s Marylebone neighbourhood – and opened his first bookshop, Daunt Books, in 1990 at the age of just 26. Over the course of the next few decades he added five more branches across London and turned the brand into an iconic book retailer, proving himself to be someone with a deep passion both for books and the minutiae of selling them.
This new world led him to become acquainted with Russian tycoon Alexander Mamut, who at that time owned UK bookshop chain Waterstones; Daunt was drafted in as Ceo in 2011 when the UK chain was spiralling towards bankruptcy. Despite his success the appointment raised a few eyebrows in the industry: the profile of Daunt Books was tiny compared to the nearly 300 Waterstones shops he would now be responsible for. Some naysayers even gave him a snarky nickname: Jimmy six-shops. And yet Daunt proved himself to be up to the task: by 2016, Waterstones had made its first profit in seven years. This year it was sold to hedge fund Elliott Management and when Elliott fattened its book portfolio by buying Barnes & Noble this June for $683m (€619m), it seemed logical that Daunt would also manage the US chain (while keeping his two other day jobs). Could the book industry’s anointed book whisperer do it all over again?
For Daunt, the road to recovery at Waterstones wasn’t about waving a magic wand or sprinkling fairy dust: it was a matter of logic. He says that decent booksellers had been “driven out of the chains” as they started to flounder – and that needed to be reversed. “The experiment was: what happens if you give the chain to one of them?” he says. “It happened to be given to me but it could have been given, I think, to frankly any other really good, experienced bookseller.” The rescue plan involved turning Waterstones sites into proper bookshops again – rather than the uniform retail outlets they had become – and tailoring them to their clientele. “James came in and basically said, ‘OK, all chain booksellers are run in this way of having a publishing model. So effectively you’re working on selling your space,’” says Waterstones’ Coo Kate Skipper, who is looking after the day-to-day running of the chain while Daunt focuses on Barnes & Noble. “The way out of this is to create independently minded bookshops. So each has to feel different; it can’t just be these identikit, anodyne shops up and down the country.”
The rise and fall of bookshops in the UK and US. A timeline:
1980s The rise of large-format bookstore chains, such as Barnes & Noble, Borders and Waterstones, squeezes independent retailers.
1995 A year after being set up by Jeff Bezos, online book retailer Amazon sells its first title: Douglas Hofstadter’s Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought. Acquiring huge warehouses enables the company to offer a wider selection than its bricks-and-mortar rivals and it quickly becomes a market leader, claiming to be the “world’s largest bookstore”. Two years later, the US’s biggest bookshop chain, Barnes & Noble, tries to sue it for false advertising; it fails.
2007 Amid rising sales of e-books, Amazon releases its first Kindle e-reader in the US. It sells out within hours. Other companies follow suit, most notably Barnes & Noble with its Nook.
2009 Sales of printed books start to fall for the first time in decades.
2011 Borders, the second-biggest bookshop chain in the US, files for bankruptcy and begins to close hundreds of branches. On the brink of a similar fate, Waterstones in the UK is sold by the struggling hmv Group to Russian billionaire Alexander Mamut; many sound its death knell. In fact it creates breathing room for smaller shops.
2015 Amazon opens its first bricks-and-mortar bookshop in Seattle. Today it runs 19 across the US. Sales of printed books pick up.
2018 E-book sales begin to fall as audiobook sales boom ends. The number of independent bookshops in the US is up 40 per cent from 2009 and the sector sees the beginning of a recovery in the UK as well.
Daunt says that the rule book for Barnes & Noble is exactly the same: empowering staff in the bookshops around the US to take back control of the places in which they work, from the titles they choose to stock to the offers they choose to run. His argument is that it’s these experienced booksellers (“They’re still here,” he says. “They’ve just gone underground”) that best understand the customer and the market in which they are operating. Achieving that goal in the UK meant loosening the all-encompassing reach of a head office by scrapping so-called co-op fees, where publishers pay bookshops to place books and negotiate discounts. Daunt now has his eyes set on doing the same thing in the US. He might have a fight on his hands, however: co-op fees are more ingrained in the US than the UK due to a “legal history”, says Brian Murray, president and CEO of Harper Collins. But, he adds, he is open to hearing “what James has to say and how he plans to implement it”.
For all the talk about unshackling individual Barnes & Noble outlets from the centralised corporate behemoth, Daunt isn’t about to cede total control to the shop floor. He has clear ideas about what works in a bookshop and what doesn’t, even if he likes to make it into a joke by saying that his job is more about tinkering with the led lighting in order to find the precise shade of warmth than any real power. Waterstones’ Skipper says that Daunt cares deeply about every detail, from the precise angle of shelves (he has a much-publicised preference for a three-degree tilt) to the fact that he personally approves every carpet colour in the chain’s new shops and refits.
He has plenty to get his teeth stuck into in Barnes & Noble’s shops. Walking around its Union Square flagship – the stunning Queen Anne-style Century Building – he frequently remarks on the sorry state of the shop floor. There are the quick-assemble cardboard display shelves (“ghastly fixturing!”); a mish-mash of souvenir mugs, candles and chocolate lining the route to checkout (“the queuing experience at the greatest bookshop in the world doesn’t have a book in it!”); and a bafflingly large amount of space afforded to a poor-quality gift-card selection (“shitty doesn’t even begin to do it!”).
Despite the fighting talk – “the challenges are the same; the shop structures are the same; what they sell is the same, the ethos, mentality and qualities of the booksellers are the same” – some industry insiders note the differences in the challenges on either side of the Atlantic. First, Barnes & Noble’s shops tend to occupy much larger spaces than Waterstones’ outlets in the UK. According to Arizona-based Neil Saunders, managing director at GlobalData Retail, the firm’s “management didn’t really make smart choices” by failing to downsize when it needed to. As a result the chain’s 627 shops include many big-box locations in shopping centres and malls, many of which are suffering from a nationwide decline in footfall.
Daunt, of course, has an answer. “I don’t think that the physical size is any impediment to creating really nice shops,” he says, referring to the work he did at Waterstones’ Piccadilly flagship, where departments were separated to make it a more welcoming place for people to come in and browse. Nor does he think that boxy spaces need be soulless, pointing to the Daikanyama outlet of Japanese bookshop chain Tsutaya and its success creating “coherent environments” by spinning three standard retail units into one.
Daunt admits that he’d like to “relocate” as many of the older or failing stores as possible rather than simply closing them – just as he did at Waterstones – but he believes that the Barnes & Noble brand remains strong and has the potential to open more shops in the US. None of it works, though, without a cash injection from Elliott Management. “If you chuck everything that shouldn’t be in here in a dumpster outside, you’ve then got a very large bill to replace it,” says Daunt.
One of Daunt’s first tasks when he took over at Barnes & Noble was to travel to Orlando for an internal management get-together. As he gets stuck into his new role there is a clear sense of anticipation in the industry at the prospect of a bookseller with a proven track record coming in to sort out the mess. Harper Collins’ Murray says that they “want and need him to be successful”, while Oren Teicher, Ceo of the American Booksellers Association, is “rooting for him”. Both are seeking the same thing: a viable network of independents and chains, which is vital to the overall health of publishing in the US. Tough decisions will still need to be made but there is a feeling that if anyone can rescue Barnes & Noble, it’s Daunt. “As well as obviously being a good businessman, I think he’s a showman as well,” says Saunders. “I don’t mean that in a negative way: I think he understands retail theatre, and displays and merchandising – how to create excitement and interest for the consumer.”
During his career as a bookseller, Daunt has never seemed to lack confidence. Back in 2009, when he was still a relatively small-fry independent, he had a confrontation with Tim Hely Hutchinson, publisher of Hachette UK, on BBC Radio 4’s Today programme. It was about the company’s exclusive deal – ironically with Waterstones – to stock Glen David Gold’s book Sunnyside. Daunt was riled by the decision, saying that it failed to create a level playing field and was wrong for the book industry. The Hachette executive was won over by his passionate, articulate argument and the deal was pulled.
Last year Daunt was invited to talk at a Harper Collins conference and was asked what Barnes & Noble could do to turn itself around (this was before he had any involvement with the brand). His answer was a seven-minute-long monologue in which he offered an analysis of everything that was wrong with the chain, followed by a step-by-step riposte for how it could be fixed. “He’s the only bookseller I’ve ever come across who, when he walks into a room with publishers, still thinks that he’s the most important person there,” says Philip Jones, editor of UK trade publication The Bookseller. “And that, I think, is great news for the bookselling industry in general.”
While the headwinds of digital retail remain – online book sales continue to outstrip bricks-and-mortar – there are plenty of positive indicators for the industry. For one, the release of Amazon’s Kindle was once thought to have been the death knell for the printed book. But whatever the reasons – some attribute it to screen fatigue, others to a global backlash against technology companies – the e-reader market seems to have plateaued. At the same time independent bookshops are thriving: according to the American Booksellers Association, its members run 2,524 bookshops in 2019 compared to 1,651 in 2009. And once-struggling Waterstones is now “in a really good place”, says Skipper; it continued its slow and steady recovery in the UK by opening five new shops last year and relocating two.
All of this is good news for the book whisperer. Unashamedly erudite, he believes that even Barnes & Noble – a brand that came to be seen as the face of corporate bookselling – doesn’t have to be uniform and mass-market. Instead of carbon-copy shop floors with clashing tomes on display tables, customers want to encounter books that have been carefully selected for a coherent experience, overseen by thoughtful staff.
Back on the shop floor at the Union Square flagship, bookseller Lesley Juele-Coffey, a 17-year Barnes & Noble veteran, buzzes over to Daunt as he is doing his rounds. She is keen to voice her excitement about having him take over the reins. “Your life is going to become a lot harder,” he says with a laugh. But she couldn’t look happier about it.
Daunt’s five bookshop fixes:
Empower booksellers: Allow them to make decisions in their own shops. The business model works far better than identikit diktats from an overly zealous head office.
Good books: Stock titles that people actually want to read – and make sure they have a prominent place as you walk in the door. Ensure that displays are consistent rather than having books jumbled together.
Impressions count: A cosy space that encourages browsing is always more appealing than a big-box feel.
Details matter: Customers may not immediately perceive them but everything – from the space (or lack of) between books to the angle of shelves – plays a part.
It’s not just books: Think long and hard about which products to sell aside from books: endlessly stacked piles of dross aren’t appealing. Quality stationery will work better than gimmicky fridge magnets.