At first glance, riding down the escalator into Barnes and Noble’s newest location in Eastchester, New York, you might think you’re entering an average bookstore, but it is anything but.
The store had bright, white lights, iPads on tables to search for books, and employees around the store with mobile pay devices.
Just to the right of the entrance is a softly lit area with a bar and sit-down restaurant. The bookstore itself has an open floor plan that guides customers to the middle of the store, where they can easily spot each section of books. If not for the books, you might confuse it with an Apple store.
The bestsellers and new softcover releases are piled atop pale, wooden tables that are evenly spaced out. And there are reading tables placed between leather arm-chairs throughout the store, for those who want to sit and read.
Barnes and Noble is the last remaining national bookstore and this new “test store,” as CEO Len Riggio called the Eastchester location, is part of a new strategy to turn the flailing company around.
“We think it’s going to be a homerun,” said Riggio. “The customers and the community are really, really excited to have us.”
Alexis Cole played music at the grand opening of the Eastchester store and she is excited by the possibilities of this new store. “I am so proud to be featured at this new, beautiful Barnes and Noble store,” Cole said. “This is the kind of place that can be used as a community center and I think that is important.”
Patrons can buy a brisket burger or kale salad at the gourmet restaurant. They can even quench their thirst with a $7 craft beer, a Rushing Duck Baby Elephant IPA.
Barnes and Noble wants to create an atmosphere that encourages people to spend more time in stores: The longer they are in the store, the more likely they are to buy a book.
As for being easier to shop, the store has iPad kiosks that assist customers with finding the books they want. Once a shopper is ready to pay, they can check out with Barnes and Noble employees throughout the store who are equipped with mobile payment devices.
With Barnes and Noble’s stock flatlining around record lows, it needs to improve its prospects quickly and the new test store is the company’s latest foray into improving in-store sales.
Luckily, Barnes and Noble has a structural advantage that other retailers don’t have.
Seema Shah and Mariam Sherzad, analysts at BI Consumer Hardlines, said that Barnes and Noble is in a “unique position as one of the last physical bookstores and a place where publishers can display their products” to help increase sales.
Barnes and Noble have two goals for improving the business, according to its most recent quarterly report: significantly reducing losses and growing its sales in-store and online sales.
If Barnes and Noble’s new Eastchester store is about increasing sales, the company wants to mainly cut costs from its Nook division.
The Nook, Barnes and Noble’s e-reader, is not the earnings driver the company thought it would be when it introduced the device. In fact, it is one of the biggest drags on its bottom line. But Barnes and Noble recently announced multiple changes that could solidify and expand the business.
So the bookseller has taken a two-pronged approach to help turn its Nook business back into a revenue generator: cutting costs by outsourcing Nook operations and launching a new, $50 Nook that can compete with competitor Amazon’s cheapest Kindle.
The low-cost Nook will help Barnes and Noble sell new Nooks but that does not mean loyal Nook users will want to buy the new device. Michael Owens is a loyal Nook user and has had the Glowlight, which has a screen that mimics actual paper, for years. “I really like my Nook,” Owens said. “It does not have any special features but it is a whole lot easier reading it than holding up a book.”
Barnes and Noble have also moved to tackle its Nook losses by cutting costs.
Unlike other tablet makers such as Amazon and Apple, Barnes and Noble isn’t a tech company. The bookseller started to outsource all of its development, production, and support of the tablets in order to cut costs. It also stopped producing the Nook’s app and video sections (the app still functions), which allowed it to close two offices in Santa Clara, California and Taipei, Taiwan. And it’s reducing production costs through its partnership with Samsung, which makes the Nook tablets.
Barnes and Noble’s cost cutting measures and the new test store seem to be a strong way to help restructure the company, but for Barnes and Noble to parlay this strategy to success, it needs to defend its role of the last remaining national book chain against Amazon’s new brick and mortar stores Amazon Books.
Amazon Books will only be filled with highly rated books or best-sellers. There is no stacking of books: every book on the shelves will face out so the customer can see the cover. The prices are no different than if a customer was shopping online. And if she does not want to carry the books, Amazon will deliver it with the same pricing as if you ordered it from your computer.
This kind of bookstore is aimed at creating a sleek, efficient place for people to buy books but it seems to lack the community center vibe of the Eastchester store. This could be a flaw in the Amazon store that Barnes and Noble can exploit to fend off Amazon Books from hoarding in on its brick and mortar business.
But Barnes and Noble should not solely focus on building a better store than Amazon. It should use its membership program as a way to lure customers to shop with them as opposed to Amazon. Riggio says the program “is important to us, and it really does drive loyalty, and it affects our bottom line in many, many respects.”
Using the membership program as a way to maintain loyal customers has worked in the past. But Barnes and Noble is struggling because its business is not growing beyond those loyalists. If it wants to compete with Amazon it needs to appeal to a broader audience that wants easier and pleasurable buying experiences. The test store in Eastchester is a good start.