Barnes & Noble's New CEO Sees Non-Book Items as Key to Holidays

  • Biggest U.S. book chain turns to computer kits, art supplies
  • Boire promises to maintain expansion of non-book category

For Barnes & Noble Inc., it’s going to be a hands-on holiday season, said new Chief Executive Officer Ron Boire.

The biggest U.S. bookstore chain is counting on new do-it-yourself merchandise such as Raspberry Pi computer kits, art supplies, journals and even a Benedict Cumberbatch coloring book to lure shoppers at Christmas and beyond. Toys and other non-book items have been Barnes & Noble’s fastest-growing category, rising at a double-digit pace, Boire said.

“It’s going to continue to grow,” he said this week during a tour of the company’s store in New York’s bustling Union Square.

For the New York-based bookseller, whose shares have fallen 12 percent this year, the additions are part of an effort to diversify its selection to compete with Amazon.com Inc. Boire says he’ll continue predecessor Mike Huseby’s expansion of non-book items.

Long known for its author talks, Barnes & Noble is now sponsoring events such as coloring-book days and a coding and 3-D printing weekends. (It also conveniently sells a $350 da Vinci Jr. 3-D printer.) The new merchandise is prompting kids to drag their parents into the store, Gabelli & Co. analyst John Tinker said.

“It’s all about the toys, the games and all the other stuff,” Tinker said. “You’re in the entertainment business; you’ve got to entertain. Once you buy on Amazon, they’ve lost you.”

Millennial ‘Destination’

Even Internet giant Amazon recognizes the potential of bricks and mortar. The company opened its first store in its Seattle hometown this month so customers can play with its gadgets, and says it may open more.

Barnes & Noble is expanding exclusive or hard-to-find merchandise, including Gundam anime kits that can cost as much as $150. A large swath of the second floor at the Union Square store is devoted to toys, which the retailer has grouped by age, category and brand.

To lure young adults, the store has doubled its selection of manga comic books from last year and expanded its array of graphic novels and anime figures. It also has added a large selection of vinyl records, which executives expect to be a top seller this holiday as the old format becomes more popular with urban hipsters and indie music fans.

Those categories, Boire said, have made Barnes & Noble “a destination for millennials.”

Event Draw

Maritza Castro, a 28-year-old pharmacy worker from New York, represents both the challenges and the chances that Barnes & Noble has to capture her age group. She compares prices and has shifted the bulk of her book-buying to Amazon. But it was an event that drew her to the store this week, where she spied a $45 Superman figurine on display. It was sold out.

“I would definitely would come back,” she said.

In addition to boosting the nontraditional product lines, Barnes & Noble is also changing the way it sells books. For the holiday this year, it’s cut featured titles highlighted in a display at the front of the store by almost half, to 55. Instead, there are more copies of each, and popular books are now presented in several categories. Stacy Schiff’s new book on the Salem witch trials, for example, pops up in history, best-sellers and a new section called “Popular Life Stories.” Overall, the company is promoting more titles than in past years.

Boire, 54, took over in September after the retailer spun off its education division and Huseby left to lead the new entity. The new CEO, who came over after a brief stint running Sears Canada and time at Sears Holdings Corp., Brookstone Inc. and Toys “R” Us, arrived at an opportune time. The company is beginning to stem the drain from its Nook e-book unit.

Under Huseby, Barnes & Noble pulled back on investing in the money-losing digital division and bought out investors Pearson Plc and Microsoft Corp. The Nook division contributed to a first-quarter loss of $34.9 million.

Barnes & Noble suffered four consecutive years of losses through 2014, but the retailer enjoys a strong brand reputation and Boire is a solid replacement for Huseby, said Tinker, who recommends buying the shares.

“They recovered from the Nook, which nearly took ’em out,” he said. “They have an audience. They have huge goodwill. It’s now just a question of leveraging it.”

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