Barnes & Noble might be a massive chain operation, but its physical stores, as meaningful assets, also can provide the kind of local, in-person access to shoppers that competitors like Amazon lack. Recognizing the relevance of this locational advantage, Barnes & Noble is seeking to intensify the benefits by encouraging even greater local specialization, with the help of another of its key assets: its human resources.
In particular, the top management team heading the corporation has committed to granting far more control to local store managers when it comes to selecting which titles will appear on store shelves. In addition to catering to local tastes, such dispersed control can help each store develop a sort of personality. A location in a more rural area might stock more how-to books, not just to support local farmers’ and ranchers’ efforts to fix things around their homesteads but also to reflect the store manager’s own love of projects. A store that sits on an outparcel near a mall with both a yoga studio and an aromatherapy store might want to stock more meditation, philosophy, exercise, and self-help books to potentially appeal to shoppers who are likely to drop in for an unplanned visit.
Despite the promised benefits of such a strategy, it also creates some new challenges for the bookseller. Although store managers gained more responsibility and control, other jobs became redundant. Specifically, Barnes & Noble undertook layoffs of many of the corporate-level book buyers, who previously had responsibility for selecting the titles for all retail operations. Widespread layoffs can be detrimental to employee morale, even as the company is hoping to encourage more buy-in to the revised organizational chart.
Furthermore, the book buying industry features long-standing, well-established contracts between retailers and the publishers that provide their inventory. If Barnes & Noble allows local store managers to decide which texts to stock, it might find that it cannot meet preset quotas for orders of certain titles. The decentralized decision making also means that Barnes & Noble runs the risk of undermining some of the bulk discounts that it receives from publishers. If one particular store simply chooses not to carry a title, because the manager believes it will not sell, the entire chain ultimately might not buy enough to earn the discount rate.
But the firm’s executives assert that these potential concerns are worth the risk, because ultimately costs across the chain will decrease if each store turns over its appropriate, curated inventory more efficiently. They also will not have to enter into excessive negotiations with publishers to get them to take back unsold books—a practice that currently eats up a lot of time and energy in the book supply chain.
Discussion Questions:
- For which category of human resources is this decentralization initiative beneficial, and for whom is it detrimental?
- Are purchases of books sufficiently varied and subject to local whims and tastes to justify a localized strategy? Defend your answer.
Source: Tom Ryan, “Barnes and Noble Counts on Store Managers Running its Business Better,” Retail Wire, December 7, 2020