TABLE OF CONTENTS:

Executive Summary … pg. 3

Problem / Necessity … pg. 4-5
Project Description … pg. 5-7
Cost Analysis … pg. 7-8
Assessment Strategy … pg. 9
Conclusion … pg. 10
Appendix … pg. 10-11
Bibliography … pg. 11-12

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EXECUTIVE SUMMARY:
For nearly a decade, Americans have watched as their largest national
bookstore chain, Barnes and Noble (B&N), has drastically lost sales. The company,
which was founded in 1886, peaked in popularity during the early 2000’s with a
staggering 726 stores throughout the country. B&N is known for capitalizing on its
convenient store locations and cheap book prices, characteristics that once helped
it drive hundreds of independent bookstores out of business. However, since the
takeover of online superstores such as Amazon, which can deliver books to your
doorstep in less than 24 hours, B&N has experienced a consistent drop in both
stock price and revenue.
There are currently 632 B&N stores in the United States, with 10 closing last
year alone. The stores sell a variety of merchandise outside of books, including
DVDs, CDs, games (both electronic and board), toys and household items. B&N
critics have associated this assortment of products with a lack of store identity,
relating the company to corporations like Target and Walmart. While this strategy
might have worked in the past, B&N no longer dominates the market for cheap and
easy book selection. Since the creation of Amazon, it is the independent
bookstores, which B&N once threatened, that have been driving storefront book
sales. Knowing this, I believe it is crucial for B&N to transition its focus from
convenience to culture and ditch its superstore approach.
My project, Convenience → Community, proposes that B&N eliminate
its DVD and CD section, in an attempt to appear less corporate and more book-
oriented. Stores will have the option to either downsize, cutting rent expenses, or
convert the space into an area used to engage the community. In doing this, B&N is
not only eliminating an outdated product from its merchandise, but utilizing its
local community to increase store traffic and, in effect, sales. Additionally, B&N
will be helping the environment by decreasing the polycarbonate plastic sold by
the company.

PROBLEM / NECESSITY:

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 Like many superstores, B&N’s main problem derives from the fact that most
of its merchandise is now available online and at a cheaper price. Over the past
five years online superstores have eclipsed B&N in both convenience and low
costs, causing company sales to plummet. However, despite bearish sentiments
about brick and mortar bookstores, Amazon’s recent success with its storefront
locations suggests that the problem does not lie with bookstores in general, but
with B&N itself. Specifically, B&N, which specializes in best-selling novels, has
little to offer that you cannot get online. Customers who prefer storefront
bookstores, are more likely to shop at an independent bookstore, tailored to their
specific interests or needs. In fact, as B&N popularity has dwindled, the number of
independent bookstores in America has gone up by over 30% (Sax, 2016). This
being said, B&N needs to find a niche market that will enable it to get its old
customers off their computers and into its stores.
B&N lacks solid online sales or shopper traffic, and is struggling to find a
constant stream of revenue. Last year alone B&N sales went down 6.3%, due to a
record-low number of customers (Wahba, 2017). As a result, B&N stock prices
have also fallen, leaving the store with few investors to lean on.

Currently, B&N sells a variety of items outside of books, including CDs,

DVDs, games, homeware, accessories and gifts. This wide range of products is not
only overwhelming for customers, but does not translate well with the company’s
intended purpose as a bookstore. Additionally, a number of these products,

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specifically CDs and DVDs, are becoming increasingly outdated. This past year,
B&N’s retail sector, which includes CDs, DVDs, and games, experienced a 5.1%
($59.7 million) decrease in sales.
The problem I am choosing to address in my proposal, is B&N’s loss of
identity as a bookstore and that’s translation to a lack of customers. I believe that
its wide range of inventory spreads the company thin and keeps B&N from
establishing a definite culture. In order to win back old customers, B&N must re-
establish themselves as a prominent bookstore looking to take part in and foster the
various communities it is a part of. In the book Made to Stick: Why Some Ideas
Survive and Others Die, by Chip and Dan Heath, successful proposals are simple,
unexpected, concrete and credible. Heath describes how simple ideas generate their
own solutions. My proposal, which suggests that B&N eliminate their DVD and
CD section to focus its inventory, is extremely straightforward, and a simple fix to
a complex problem. Additionally, B&N’s lack of sales compared to independent
bookstores’ recent growth, provides sound evidence that smaller stores, with a
defined culture are more successful. Knowing this, I can make a concrete and
credible argument, using actual numbers, to prove that my proposal should
ultimately boost B&N sales.

PROJECT DESCRIPTION:
I am proposing that B&N eliminate its DVD and CD section, in an attempt
to appear less corporate and more book-oriented. Stores will have the opportunity
to either downsize, cutting rent expenses, or convert the space into an area used to
engage the community. This project will help B&N (1) eliminate outdated
merchandise, (2) reduce company waste, and (3) rebrand itself as a community-
oriented store with its own established culture.

(1) ELIMINATE OUTDATED PRODUCT. For the past decade, we have

seen the number of DVDs and CDs sold in America fall drastically thanks to
the introduction of online programs such as iTunes, Netflix, Hulu, etc..
Companies like these make it possible for consumers to watch any movie
they desire with the click of a button. According to the DEG (Digital

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 Entertainment Group), national DVD sales are down 14% from last year and
an additional 10% from 2016, when the number of movies streamed
officially surpassed the number of DVDs purchased. When looking at B&N
specifically, we can see that their retail department, which consists of DVDs,
CDs, and games, experienced a 5.1% ($59.7 million) decrease in sales this
year. By removing DVDs and CDs from merchandise now, B&N is avoiding
further losses and cutting decreasing store space with little consumer
footfall.

The chart above compares past, present and predicted future movie watching statistics.
By looking at the columns it is evident that DVDs are a product of the past.
(2) REDUCE WASTE. Due to their complex makeup, both DVDs and CDs are
virtually impossible to recycle. In fact, the discs, which include a
combination of platinum, aluminum, gold and plastic, can actually ruin
traditional recycling machines if disposed of in the wrong way. To be
properly recycled, discs must be mailed to a specific facility, where they are
taken apart. However, studies show that nearly 100,000 pounds of DVDs
and CDs get thrown out every month (CD Recycling Center of America). As
a result, polycarbonate plastic, which makes up a large majority of a disc,
has been linked to both animal health problems and polluted groundwater.
By eliminating DVDs and CDs from store merchandise, B&N would be
cutting down national disc production significantly each year. This would
not only reduce non-recycled waste, but the amount of carbon dioxide
emitted into the atmosphere. According to the CD Recycling Center of
America, every disc manufactured results in a full kilogram of carbon

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 dioxide emitted into the atmosphere. By stopping B&N disc production
B&N would be reducing its environmental footprint in a number of ways.
(3) REBRAND ITSELF (CONVENIENCE → COMMUNITY). After
eliminating the DVD and CD section, B&N stores will have the option to
either downsize, or use the open space to engage their local community.
Even in the midst of online shopping, independent bookstores, tailored
towards a specific audience, have been gaining popularity. My project,
Convenience → Community, proposes that B&N imitates these
bookstores, and creates a section in stores that is specifically tailored to the
neighborhood they are in. In addition to promoting local authors, stores
could host a variety of events ranging from guest speakers to local
clubs/organizations. These events would hopefully generate more footfall
and, ultimately, increase store sales. Creating the space itself would be
relatively inexpensive. While costs would vary based on store size, I would
recommend that each section be filled with comfortable seating and a small
podium in case of guest speakers. After the flat fee of paying for furniture,
there would be little to no costs associated with the change. Engaging the
community is a relatively free way to increase store traffic, and helps B&N
move into a less monopolistic market.

My proposal incorporates the triple bottom line by working to improve the

financial, environmental, and social standards set at B&N. By eliminating
unprofitable products, decreasing the environmental footprint associated with
plastic discs, and building community relations, B&N would improve its all-
around sustainability.

COST ANALYSIS:
Because B&N does not disclose the exact number of DVDs and CDs they
buy/sell a year, it is hard to quantify the exact amount of money that would be
saved. However, knowing that in 2017 alone B&N’s retail sales (DVDs. CDs,
games) went down 5.1% ($59.7 million), one can assume that these products are
no longer generating a profit for the company. That being said, converting this
section of the store will come with up-front costs.

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 There are currently 632 B&N stores in the United States. Assuming that half
of these stores decide not to downsize, there would be 316 DVD and CD sections
in need of renovation. B&N DVD and CD sections range anywhere from 300-
8,000 square feet with an overall average store size of 26,000 square feet (2017
Annual Report). From my experience as a B&N employee and customer, I would
estimate that a DVD and CD section typically takes up about ⅙ of the store. If this
is true, the average DVD and CD section is approximately 4,000 square feet.
Because this is a large space, that would require a lot of seating, I estimate that
each renovation would cost around $15,000. This means that in total, B&N would
be investing $4.74 million on building community relations. While this may sound
like a lot, the goal of this project is to win back previous customers. In B&N’s
peak, they were generating a net revenue of around $75 million per year. If B&N
can retain even half of these customers, they would be able to pay off the
renovations in less than ten years (ignoring the effects of altered merchandise).

STORE COMPANY
ITEM COST QUANTITY TOTAL TOTAL
(x316)
Podium: $130 x1 $130 $41,080
Couches: $1,000 x5 $5,000 $1,580,000
Tables: $200 x10 $2000 $632,000
Chairs: $50 x40 $2000 $632,000
Renovation $5000 $1,580,000
Fees
Total: $9,130 $4,465,080

ASSESSMENT STRATEGY:

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 The intended outcomes of my proposed change include an increase in
customers and a shrinking environmental footprint. Immediately after eliminating
their DVD and CD section, B&N would see a decrease in inventory costs. Stores
that decide to downsize will cut down their rent expenses and have more
employees on the book floor. These employees could help customers who come in
have a more tailored experience and still contribute to personalizing the company.
Stores who choose to convert the DVD and CD section to a space for the
community, will face initial renovation costs. However, overtime these stores will
attract more customers by hosting group events such as book clubs, study groups,
tutoring sessions, and lectures. Additionally, B&N can work to promote themselves
and their neighborhood through featuring books by local authors and having
regular readings and signings.
Overtime B&N will work to transform their image from that of a corporate
superstore to a community oriented company that promotes sustainability.
Additionally, by cutting DVDs and CDs from their inventory year over year, B&N
will make a substantial difference in terms of helping the environment. My project
will not only minimize company waste, but decrease the carbon footprint caused
by disc production.
Thanks to its many positive results, my project is sure to “sticky”. To make
sure Convenience → Community is both understood and implemented by
store employees, I will send out a memo explaining the project in full depth. The
memo is a straightforward and simple way to lay out the benefits of my proposal.
This being said, the success of my project largely depends on getting customers off
their computers and into B&N stores. To advertise the change, B&N will release a
press statement, of the CEO’s choosing, to the public. Since B&N has been widely
criticized for its wide array of merchandise, I expect both the public and investors
to be happy about the change. In addition the press statement, B&N stores creating
a community section will advertise with both flyers and emails when their
renovations are complete. Because these advertisements will be tailored to the
community the B&N store is located, they should have an emotional appeal on
people in the area who value where they live.

CONCLUSION:

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 Despite bearish sentiments about B&N, they remain America’s largest
bookstore chain. Recent events, such as the success of Amazon’s brick and mortar
stores, have proven that the problem does not lie with bookstores, but with B&N
itself. To address this problem, and begin winning back customers, it is crucial that
B&N shifts its focus from convenience to community. By eliminating the DVD
and CD sections from its stores, and using the space to target local customers,
B&N will provide something Amazon has not - a customer relationship. B&N’s
mission statement claims that “Above all, we expect to be a credit to the
communities we serve, a valuable resource to our customers, and a place where
our dedicated booksellers can grow and prosper.” My proposal works to fulfill this
mission, while simultaneously improving financial, environmental and social
sustainability.

APPENDIX:
Demos Parneros
CEO
Barnes & Noble Booksellers
122 Fifth Avenue #2
New York, NY 10011

Dear Mr. Parneros and Barnes & Noble Staff,

I want to thank you for the opportunity to present my project, Convenience →

Community. As a former Barnes and Noble employee, it has come to my
attention that our wide array of merchandise often takes away from our main
product, books. For the past decade, Barnes and Noble has been struggling to keep
up with online superstores such as Amazon. Now, with the creation of Amazon’s
brick and mortar stores, the competition is stronger than ever. My project, which
proposes Barnes and Noble convert its DVD and CD sections to a space used to
focus on engaging the local community, targets a market Amazon does not yet
dominate. By hosting a range of events, including book signings, book clubs, study
groups and guest speakers, Barnes and Noble would build a personal relationship

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 with their customers and help foster community growth. The goal of this project is
to create a long-term relationship with customers to increase store traffic and, in
effect, total sales.

In addition to improving company business, my project works to limit Barnes and

Noble’s environmental footprint by eliminating waste and decreasing global disc
production. Barnes and Noble stores will have the choice to downsize, cutting rent
expenses, or convert the new space into an area focused on engaging the
community. The layout of this space would vary by store, but would likely require
the purchase of comfortable seating and a podium for guest speakers. Regardless of
whether a store decides to utilize the new space or not, all Barnes and Noble stores
should work to tailor their business to meet community needs.

As America’s largest bookstore chain, we should be excited to implement this

change. By eliminating DVDs and CDs from our merchandise, we are increasing
the emphasis on our most important product, books. It’s time to refocus our
mission and make our stores a place where dedicated booksellers come to grow
and prosper.

Sincerely,
Kelly Honts

BIBLIOGRAPHY
Heath, Chip, and Dan Heath. Made to Stick: Why Some Ideas Take Hold and Others Come Unstuck.
Random House Books, 2010.
Lopez, Ricardo. “Disc Sales Decline Deepens in Annual Home Entertainment Spending Report.”
Variety, 9 Jan. 2018, variety.com/2018/digital/news/home-entertainment-spending-2017-
1202658638/.
Peckham, Matt. “DVD Sales Plunge in U.S., Digital Sales On the Rise.” Time, Time, 4 May 2011,
techland.time.com/2011/05/04/dvd-sales-plunge-in-u-s-digital-sales-on-the-rise/.

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Sax, David. “What Barnes & Noble Doesn't Get About Bookstores.” The New Yorker, The New
Yorker, 19 June 2017, www.newyorker.com/business/currency/what-barnes-noble-doesnt-
get-about-bookstores.
Statista. 2017, Statista, www.statista.com/statistics/199012/number-of-barnes-noble-stores-by-type-
and-year-since-2005/.
Wahba, Phil. “Barnes & Noble Is Falling Further Behind Amazon.” Fortune, 7 Sept. 2017,
fortune.com/2017/09/07/barnes-noble-books/.
Wiener-Bronner, Danielle. “5 Things Barnes & Noble Can Do Right Now to Save Itself.”
CNNMoney, Cable News Network, 17 Jan. 2018,
money.cnn.com/2018/01/17/news/companies/save-barnes--noble/index.html.
Heath, Chip, and Dan Heath. Made to Stick: Why Some Ideas Take Hold and Others Come Unstuck.
Random House Books, 2010.
Lopez, Ricardo. “Disc Sales Decline Deepens in Annual Home Entertainment Spending Report.”
Variety, 9 Jan. 2018, variety.com/2018/digital/news/home-entertainment-spending-2017-
1202658638/.
Peckham, Matt. “DVD Sales Plunge in U.S., Digital Sales On the Rise.” Time, Time, 4 May 2011,
techland.time.com/2011/05/04/dvd-sales-plunge-in-u-s-digital-sales-on-the-rise/.
Sax, David. “What Barnes & Noble Doesn't Get About Bookstores.” The New Yorker, The New
Yorker, 19 June 2017, www.newyorker.com/business/currency/what-barnes-noble-doesnt-
get-about-bookstores.
Statista. 2017, Statista, www.statista.com/statistics/199012/number-of-barnes-noble-stores-by-type-
and-year-since-2005/.
Wahba, Phil. “Barnes & Noble Is Falling Further Behind Amazon.” Fortune, 7 Sept. 2017,
fortune.com/2017/09/07/barnes-noble-books/.
Wiener-Bronner, Danielle. “5 Things Barnes & Noble Can Do Right Now to Save Itself.”
CNNMoney, Cable News Network, 17 Jan. 2018,
money.cnn.com/2018/01/17/news/companies/save-barnes--noble/index.html.

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