Digital platforms are struggling, meanwhile a 136-year-old book retailer is growing again. But why?

I’ve written too many negative stories about digital media platforms in recent months. I’ve started to worry. Am I turning into Dr. Doom and Mr. Gloom?

In all fairness, my predictions have proven sadly accurate. After I served up these dismal forecasts for Facebook, Spotify, Netflix, and others, their share prices took a steep dive.

I’m not sure that’s a good thing—I’d like to see digital media improve and flourish. When they falter, we all pay a price. But each of these companies is now suffering for a good reason. Their dominance led to arrogance, and they decided to impose all sorts of heavy-handed policies on users.

But I finally have good news to share. I have a positive case study—and we can learn from it.

Here’s the surprise: This company has been a failure at digital media, and has succeeded by embracing the most antiquated technology of them all: the printed book.

That’s quite an achievement. So let’s look at the turnaround at Barnes & Noble.

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At first glance, this makes no sense.

All the cool and up-to-date technologies are in financial trouble. Tesla share price has collapsed. Crypto is in decline. Netflix stock has dropped more than 50% in the last year. Facebook is in freefall. Even TikTok might be in trouble.

But Barnes & Noble is flourishing. After a long decline, the company is profitable and growing again—and last week announced plans to open 30 new stores. In some instances, they are taking over locations where Amazon tried (and failed) to operate bookstores.

Amazon seems invincible. So the idea that Barnes & Noble can succeed where its much larger competitor failed is hard to believe. But the turnaround at B&N is real. In many instances they have already re-opened in locations where they previously shut down.

Barnes & Noble is no tech startup, and is about as un-cool as retailers get. It’s like The Gap, but for books. The company was founded in 1886, and it flourished during the 20th century. But the digital age caught the company by surprise.

For a while, Barnes & Noble tried to imitate Amazon. It ramped up online sales, and introduced its own eBook reader (the Nook), but with little success.

Even after its leading bricks-and-mortar competitor Borders shut down in 2011, B&N still couldn’t find a winning strategy. By 2018 the company was in total collapse. Barnes & Noble lost $18 million that year, and fired 1,800 full time employees—in essence shifting almost all store operations to part time staff. Around that same time, the company fired its CEO due to sexual harassment claims.

Every indicator was miserable. Same-store sales were down. Online sales were down. The share price was down more than 80%.

And here’s what happened to its big digital initiative, the Nook eBook reader—a decline of more than 90%. I’m told that eBooks are a growing market, but you would never guess it from these figures.

Source: Statista

Could anybody fix these problems?

Amazon had taken over the book retailing business, and had already killed Borders. B&N seemed destined to disappear as well. Everything it had done to match up with Amazon had failed, and now it was weaker than ever.

After all its bad moves, Barnes & Noble now was back where it started as a bookstore. But I’ll be blunt about it: B&N was a lousy bookstore. I gave up shopping there because it never had the book I wanted in stock. Instead it shifted a huge portion of its floorspace to peddling toys, greeting cards, calendars, and various chachkas.

Not many people were buying these items, as far as I could tell. Do people really go toy shopping at a bookstore? Toys R Us also filed for bankruptcy in 2018, and if they couldn’t compete with Amazon, how could B&N hope to do any better?

In the CEO’s own words, Barnes & Noble stores were ‘crucifyingly boring.’

The other B&N big initiative was cafes inside the store, but these were even less appealing than the bookstore. I drink a lot of coffee, but I’d need to be desperate for a caffeine fix before I’d buy a cup of java at B&N.

And in a bizarre strategic move, the company decided to launch freestanding restaurants under the name Barnes & Noble Kitchen—no books, just meals. But this was another disaster.

The company chairman Leonard Riggio eventually admitted, in September 2018, that running a restaurant is “a lot harder than you think it is....The bottom line is awful.”

In other words, food at B&N was just like the books, except books don’t stink when they get old. But in this case, everything the brand stood for was looking stale.


It’s amazing how much difference a new boss can make.

I’ve seen that firsthand so many times. I now have a rule of thumb: “There is no substitute for good decisions at the top—and no remedy for stupid ones.”

It’s really that simple. When the CEO makes foolish blunders, all the wisdom and hard work of everyone else in the company is insufficient to compensate. You only fix these problems by starting at the top.

In the case of Barnes & Noble, the new boss was named James Daunt. And he had already turned around Waterstones, a struggling book retailing chain in Britain.

Back when he was 26, Daunt had started out running a single bookstore in London—and it was a beautiful store. He had to borrow the money to do it, but he wanted a store that was a showplace for books. And he succeeded despite breaking all the rules.

For a start, he refused to discount his books, despite intense price competition in the market. If you asked him why, he had a simple answer: “I don’t think books are overpriced.”

Daunt’s first bookstore was a beautiful showplace for books

After taking over Waterstones, he did something similar. He stopped all the “buy-two-books-and-get-one-free” promotions. He had a simple explanation for this too: When you give something away for free, it devalues it.

But the most amazing thing Daunt did at Waterstones was this: He refused to take any promotional money from publishers.

This seemed stark raving mad. But Daunt had a reason. Publishers give you promotional money in exchange for purchase commitments and prominent placement—but once you take the cash, you’ve made your deal with the devil. You now must put stacks of the promoted books in the most visible parts of the store, and sell them like they’re the holy script of some new cure-all creed.

Those promoted books are the first things you see when you walk by the window. They welcome you when you step inside the front door. They wink at you again next to the checkout counter.

Leaked emails show ridiculous deals. Publishers give discounts and thousands of dollars in marketing support, but the store must buy a boatload of copies—even if the book sucks and demand is weak—and push them as aggressively as possible.

Publishers do this in order to force-feed a book on to the bestseller list, using the brute force of marketing money to drive sales. If you flog that bad boy ruthlessly enough, it might compensate for the inferiority of the book itself. Booksellers, for their part, sweep up the promo cash, and maybe even get a discount that allows them to under-price Amazon.

Everybody wins. Except maybe the reader.

Daunt refused to play this game. He wanted to put the best books in the window. He wanted to display the most exciting books by the front door. Even more amazing, he let the people working in the stores make these decisions.

This is James Daunt’s super power: He loves books.

“Staff are now in control of their own shops,” he explained. “Hopefully they’re enjoying their work more. They’re creating something very different in each store.”

This crazy strategy proved so successful at Waterstones, that returns fell almost to zero—97% of the books placed on the shelves were purchased by customers. That’s an amazing figure in the book business.

On the basis of this success, Daunt was put in charge of Barnes & Noble in August 2019. But could he really bring that dinosaur, on the brink of extinction, back to life?

The timing was awful. The COVID pandemic hurt all retailing, especially for discretionary items like books. Even worse, the Barnes & Noble stores were, in Daunt’s own words, “crucifyingly boring.”

But Daunt used the pandemic as an opportunity to “weed out the rubbish” in the stores. He asked employees in the outlets to take every book off the shelf, and re-evaluate whether it should stay. Every section of the store needed to be refreshed and made appealing.

As this example makes clear, Daunt started giving more power to the stores. But publishers complained bitterly. They now had to make more sales calls, and convince local bookbuyers—and that’s hard work. Even worse, when a new book doesn’t live up to expectations, the local workers see this immediately. Books are expected to appeal to readers—and just convincing a head buyer at headquarters was no longer enough.

Daunt also refused to dumb-down the store offerings. The key challenge, he claimed was to “create an environment that’s intellectually satisfying—and not in a snobbish way, but in the sense of feeding your mind.”

That’s an extraordinary thing to hear from a corporate CEO. Daunt wanted to run a bookstore that was “intellectually satisfying” and “feeds your mind.” The first time I heard an interview with him, I decided I trusted James Daunt. I wanted him to succeed. But the odds seemed stacked against him.

Then it started to happen—book sales at Barnes & Noble began rising again. Sales in 2021 quickly got back to pre-pandemic levels, and then kept growing. Readers regained trust in the company. The workers at the stores were more motivated and started genuinely acting like booksellers.

I recently visited a Barnes & Noble store, for the first time since the pandemic. I saw a lot of interesting books, and bought a couple. I plan to go back again.

But I’m not the only one.

The turnaround has delivered remarkable results. Barnes & Noble opened 16 new bookstores in 2022, and now will double that pace of openings in 2023. In a year of collapsing digital platforms, this 136-year-old purveyor of print media is enjoying boom times.

Of course, there’s a lesson here. And it’s not just for books. You could also apply it to music, newspapers, films, and a host of other media.

But I almost hate to say it, because the lesson is so simple.

If you want to sell music, you must love those songs. If you want to succeed in journalism, you must love those newspapers. If you want to succeed in movies, you must love the cinema.

But this kind of love is rare nowadays. I often see record labels promote new artists for all sorts of gimmicky reasons—even labels I once trusted such as Deutsche Grammophon or Concord. I’ve come to doubt whether the people in charge really love the music.

Maybe they once did, but at some point they lost faith in the redemptive power of songs. That’s the only explanation I can give for what they’re doing. Instead they put their faith in something else—maybe a brand licensing deal, or a fashion line tie-in, or a human interest story. Or maybe they just decided that money talks, and began making creative decisions based on discounted cash flow projections.

But here’s the problem. If you don’t really love the music (or books or newspapers or cinema or whatever), those cash flow projections turn out to be wrong. That’s because creative fields like music and writing live and die based on creativity, not financial statements and branding deals.

Frankly, I could draw many other lessons from the Barnes & Noble turnaround. I praise its decentralization, and its willingness to empower booksellers at the local stores. I like the way the stores look nowadays, and the improved selection on the shelves. But the key element uniting all of this is putting books and readers first, and everything else second.

That’s a strategy that others could learn from. Although I’m not sure you can teach it.

You don’t fall in love for logical reasons, and you could never convince someone else to do so on the basis of arguments. People either feel it or they don’t. That’s true whether you love your spouse or you love something more intangible like a song or a book or a movie.

But even if you can’t teach this kind of love, you know it when you see it. There are people who are passionate about these things. They believe in them with ardor and devotion. You can find them and hire these people—and those are the individuals you can trust.

And maybe, in some rare instances, one of them even becomes the boss. If it happened at Barnes & Noble, it could happen anywhere.