Written by Ivy Kolpon
Edited by Sam Eisen
Given the expanding market for e-readers, e-books, and tablets, it should come as no surprise that many bookstores are becoming obsolete. Forty years ago competing bookstores Borders and Barnes & Noble opened their first stores. Borders advertised its brand as a book megastore that offered DVDs, music, and food along with a library of books. Borders’ early competitive advantage of superior inventory allowed the company to gain significant market share.
However, in the 1990s, Borders changed its marketing plan to focus on CD music and DVD sales. Competitor Barnes & Noble withdrew from the multimedia market because it realized the market for music and movies was becoming digitized. Borders’ decision to increase its music and movie sales may be the single element that eventually caused the company to go out of business, allowing Barnes & Noble to steal customers and increase sales. Showing great foresight, Barnes and Noble focused on increasing online sales and entered the tablet market with the introduction of the Nook. While Barnes & Noble familiarized itself with the digital market, Borders was too busy remodeling its stores to realize the demand for books was becoming wireless. As brick and mortar book stores struggled financially, the firm realized customers were no longer interested in buying books from a physical location. By then, the damage had been done. Borders filed for bankruptcy in February of 2011.
Although Borders failed when the market demand shifted, Barnes & Noble prospered. Barnes & Noble managed to withstand the evolving market due to market research, and the company’s profits increased last year after Borders went out of business. As demand changed, so did the marketing strategy for Barnes & Noble. The company focused its efforts towards online sales and developing an e-reader, the Nook. Not only has Barnes & Noble successfully adapted to a digital marketplace, it has cultivated a lucrative branding strategy compared to former competitor Borders. Borders’ stores hosted a no-name café, while many Barnes & Noble stores currently offer customers offers food and beverages from Starbucks Coffee
Quick to adjust to the changing demands of the marketplace, Barnes & Noble is beginning to experiment with the expansion of boutiques inside its stores. Hoping to boost Nook sales, forty Barnes & Noble locations nationwide doubled the size of their in-store Nook boutique. A Nook boutique features Nook e-readers and accessories ready to be viewed and sampled by customers. In an effort to further expand its brand, Barnes & Noble has introduced new Penguin boutiques inside some stores. These boutiques offer space dedicated especially to Penguin publishing house books and other merchandise such as tote bags, notebooks, and mugs. The instant success and positive customer reaction these boutiques have generated has prompted Barnes & Noble to open an additional twenty Penguin boutiques nationwide. Penguin CEO John Makinson said, “the sales have been incremental rather than cannibalizing Penguin sales elsewhere in the store because it’s a different experience.’”
Though Barnes & Noble has outlasted Borders and remains profitable, it is crucial the company remain aware of other competitors. The Nook e-reader faces much competition in the tablet market, especially from Apple’s iPad and Amazon’s Kindle. The Nook is mostly compared to Amazon’s Kindle because both were originally introduced as e-readers. Although the Kindle is very successful, Barnes & Noble may hold an edge in the long-run because customers can visit a Nook boutique, try a Nook, and talk to a professional before they purchase one. Ironically, the focus on physical storefronts that harmed Borders’ business prospects may help Barnes & Noble ultimately topple Amazon in the e-reader market.
In order to remain successful and stay ahead of the competition, Barnes & Noble must be aware that the marketplace will continue to change. Just because the company was able to beat out one of its competitors does not mean it will always have that capability. Consumer demands are changing rapidly. Right now, Barnes & Noble’s in store boutiques are showing rapid growth and success. However, it is important that Barnes & Noble recognizes the life cycle of these boutiques. Barnes & Noble must pay close attention as the Penguin and Nook boutiques travel through the product life cycle and satisfy consumer demands at each stage. The leading U.S. bookstore recognized the growth of digitalized sale of books and music before Borders did. It is crucial the company continue with its market research to match consumer demands and trends.
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