How Barnes & Noble is writing its own success story in the age of Amazon

Barnes & Noble’s novel approach to corporate bookselling seems to be paying off. After a decade of falling sales and store closures, Barnes & Noble has reversed the trend and is expanding again. In 2024 alone, the company opened 57 new stores across the U.S., with plans to open 60 more in 2025. Barnes & Noble is also exploring a possible IPO in London or New York, according to The Financial Times. Finally, book sales, which make up about 60% of the retailer’s total revenue, are booming. 

“The long and the short is that we have grown from 2019, so pre-Covid,” Barnes & Noble’s CEO James Daunt told Modern Retail in an interview. “We are hugely up in [the book category]. It’s just been fantastic.”

Daunt took the reins after hedge fund Elliott Management Corp. bought Barnes & Noble in August 2019 and took the company private. At the time, the bookstore appeared to be another casualty of Amazon’s online retail dominance. 

A British businessman, Daunt is no stranger to resuscitating struggling bookstores. In 2011, he was hired to rescue the beleaguered U.K. bookstore chain Waterstones from falling sales. His plan to save Waterstones, of which he is still the CEO, revolved around giving individual stores control over their book selection and reducing the influence of corporate directives. The strategy bore fruit, restoring Waterstones to profitability. He has sought to replicate the same indie bookstore model with Barnes & Noble’s fleet of 600 stores in the U.S.

“The problem wasn’t that physical bookselling didn’t have a valid place,” Daunt said. “The problem was that Barnes & Noble wasn’t running good enough bookstores.”

The indie bookstore model

Daunt’s strategy wasn’t without its risks. In order to cater to the tastes of local clientele, Barnes & Noble stopped accepting payments from publishers for in-store promotions. Previously, publishers would pay Barnes & Noble for prime placement of their books. This practice, while lucrative in the short term, cluttered stores with books that customers didn’t necessarily want to buy, leading to high return rates — that is, the number of unsold books that retailers return to publishers. Around 30% of books were returned to publishers before Daunt’s arrival.

“I mean, it’s a big, big, big, big number. So that’s a bit terrifying,” Daunt said. “But it unlocks a dramatic cost saving on the other side. You don’t have to discount so much, so you’re not constantly just trying to get rid of stuff.”

Since stopping this system, Barnes & Noble’s return rate has dropped dramatically, falling to just 7% by 2024. This reduction has not only saved the company millions in shipping and labor costs but also improved store efficiency, as the books on display are more closely aligned with what customers actually want to buy. 

Barnes & Noble’s new model is drawing more shoppers into stores. Average visits per square foot have increased over the last three years, according to location analytics company Placer.ai. Customers are also lingering, with nearly three in 10 visitors staying 45 minutes or longer. 

Barnes & Noble has also changed how it hires store employees. When Daunt took over, the vast majority of Barnes & Noble employees were part-time, working under a retail model designed to minimize costs by keeping most employees under the threshold for receiving benefits. This directly contradicted the ability to develop a skilled, committed workforce of booksellers, according to Daunt, who has set about changing that. 

Daunt has prioritized promoting from within, stating that nearly all new store managers come from internal promotions, which contrasts with the previous model of hiring from outside the book industry. This shift has directly contributed to the company’s ability to execute Daunt’s vision of localized, well-curated stores

“We’re shifting towards a career model where we have full-time booksellers who are invested in the business,” he said. The company’s goal is to increase the percentage of full-time employees, mirroring the approach Daunt successfully implemented at Waterstones, where the full-time to part-time ratio essentially flipped over the course of a decade.

While Barnes & Noble is still on that journey, Daunt is confident that investing in booksellers will pay dividends. “Better stores mean better sales, which means we can afford to hire better people, and the cycle continues,” he said. 

To Neil Saunders, managing director of GlobalData Retail, Daunt’s success in revitalizing Barnes & Noble suggests that retail companies need to hire executives who understand the business of shopping. 

“The passion and understanding of the category is really important because James Daunt understands books,” Saunders said. “He has an intimate knowledge of how the category works and what the consumer wants.”

E-commerce: A work in progress 

While Barnes & Noble is finding success with its physical stores, its e-commerce platform remains a work in progress. Online sales soared during the pandemic, but they have since dropped back to pre-pandemic levels — a sharp contrast to Waterstones in the U.K., where e-commerce sales have continued to grow. 

“In the U.K., we’ve nailed the e-commerce side, but in the U.S., the platform is garbage,” Daunt said. 

Not only is Barnes & Noble up against Amazon’s dominance in online retail, but the company faces competition from emerging players like Bookshop.org, an online bookstore that shares profits with independent bookstores. To compete, Daunt plans to revamp Barnes & Noble’s digital infrastructure and improve its membership program, which has already grown from 1 million to 18 million members in the past year. Still, Daunt is clear that Barnes & Noble’s success won’t come from trying to out-Amazon Amazon. “People will buy books from us not because we’re cheaper or faster but because we’re a fun, engaging place to buy books,” Daunt said. 

Daunt is careful not to define the company in opposition to its online rival Amazon. Instead, Barnes & Noble is carving out its own niche, focusing on what it can offer that Amazon cannot: a personalized, human-driven experience, tailored to each store’s community. It’s a formula that independent bookstores have figured out, too, and have seen growth as a result. For instance, the American Booksellers Association, which represents more than 2,5000 independent bookstores, saw its membership swell by 11% in 2023 as more brick-and-mortar, pop-ups and online stores opened, according to data cited by USA Today.

“There’s nothing a good physical bookstore has to fear from Amazon,” Daunt said. Far from being Barnes & Noble’s nemesis, Daunt sees Amazon as part of the same ecosystem, even a catalyst for raising the standard of bookselling.

“I don’t dislike Amazon,” Daunt said. “Anything that democratizes the buying of books is good. Anything that makes people buy more books is good. And they do.” 

In Daunt’s eyes, Amazon’s efficiency in selling what he refers to as “boring books” — manuals, textbooks, technical volumes — has allowed Barnes & Noble to focus on what it does best: curation and creating an inviting, enjoyable bookstore experience.

Even though Amazon has revolutionized convenience and selection, it can’t replicate the joy of a passionate bookseller recommending a favorite title, or the excitement of discovering a book serendipitously on a beautifully arranged display table. 

“Amazon recommendations are driven by an algorithm,” GlobalData’s Saunders said. “That’s fine, and it works to a certain extent. But it doesn’t have the same personal touch as when you go into a Barnes & Noble, where you can receive a personal recommendation, and there are handwritten recommendation cards from members of staff who work in the store.”

For Daunt, this human element is key to Barnes & Noble’s success. As he put it, “Nobody wants to buy a book from Amazon. It’s a dispiriting experience if your alternative is a really nice bookstore.”