Barnes & Noble CEO On The Race For Space As Store Demand Heats Up

In a sign of just how much the retail world has changed, one of the biggest challenges facing Barnes & Noble CEO James Daunt is competing for store space with other expansionist U.S. retailers.

It is one of the few things inhibiting the turnaround story at a retailer presumed dead when Amazon, e-commerce and the digitisation of books upended the sector, leaving a trail of vacated bookstores in its wake.

Now Daunt is tracking the very type of store locations his business was once exiting. But while the affable English boss of bookseller Barnes & Noble has recently been on the hunt for vacated Bed Bath & Beyond stores, adding several larger outlets to its portfolio, this does not mean that the company is specifically upsizing its requirements, he told Bisnow.

“Everybody thinks that we must be doing one thing. We must be going small, we must be going large. The fact is we're doing everything,” he said. “On the same week, we'll open a 35K SF bookstore and a 7K SF bookshop. We open stores appropriate to the location.”

But while the size of the store may not concern him, the rate of openings has outpaced expectations. Setting itself a target of 50 new stores across the U.S. in 2024, the retailer should hit 57 openings by year-end as expansion under its owner, hedge fund Elliott Advisors, continues and the estate nudges north of 650 stores, despite the fierce competition for space.

Under the old management, Barnes & Noble peaked at around 750 stores but had cut that back to approximately 625 by the time of the takeover. More initial consolidation under Elliott Advisors took that number to about 580 before net openings began again.

“Every time a store becomes available, there's intense competition,” he said. “Burlington took lots of the Bed Bath & Beyond stores that we would have gladly taken, but they were quicker and smarter and richer, frankly. There are a lot of people out there expanding fast, and some very, very good retailers.”

He said that Bed Bath and Beyond’s typically large-format stores are also in locations that usually work well for Barnes & Noble.

“Whether we open there or open 7K SF stores, we always intend — and this is true in the UK [with sister bookseller Waterstones] as well — to open stores according to the best pitch and space we can get that's appropriate to the market,” he said. “If it's a large market, we need a large store.”

Daunt is a man of deceptively simple maxims. He remains convinced that physical retail’s best chance of performing is to do the simple thing well, from offer to experience to customer service. And he refuses to overcomplicate his ethos.

“A lot of the reasons that you open a store are serendipitous, so unfortunately, the trials and tribulations of others can create opportunities, and Bed Bath & Beyond threw up a lot of stores for us,” he said.

“If the opportunities are there, you take them. And I think as we've been successful, that's come more onto the radar of landlords. So we're getting more opportunities pushed our way, allowing us to move faster.”

He said landlords approaching the business is a sign of positive change for a retailer that was struggling when Elliott bought it for $683M in 2019.

“Perhaps a few years ago, they would have been worried that we were more likely to be closing stores than opening them. I suspect they would have been worried we were going out of business,” he said. “That, obviously, has changed.”

Barnes & Noble is also a good retailer for landlords, particularly in malls, he argued. It doesn't compete with anyone, so if you put a bookstore in a mall, no one else suffers. Other retailers benefit because it brings in footfall, and the demographic is from the youngest children and families all the way through teenagers and up to the oldest citizens. Property owners are beginning to recognize that, he said.

While Barnes & Noble has a broad set of requirements for store size, it has also mixed up its locations from urban to suburban, mall to more remote destinations, although Daunt still sees the bookseller predominantly as a suburban retailer.

“That is the heart of what Barnes & Noble is,” he said. “So most of our stores would fit into that sort of classic mall location, but we’ve opened stores in New York City. We've gone back into Chicago, gone back into D.C. So we're doing the urban, metropolitan store now.”

That hasn't been done for a very long time at Barnes & Noble, he said.

“And we are going back into these remote markets as well where, actually, we do particularly well.”

He also likes to return to previous Barnes & Noble and Borders sites because the company knows those locations worked before and that previous closures were primarily because both “lost their way.” Returning with an operation that works well benefits from a “muscle memory within the community” about what having a good bookstore on their doorstep means.

Barnes & Noble is trading through its busiest spell of the year, Thanksgiving rolling into Black Friday, Cyber Monday and the holiday season. Daunt said the “calendar shifted” this year because of how late the first three were, but he added that the business is set up well and “feeling pretty confident” about the crucial final weeks of the year.

“We've evolved the Amazon out of our bookstores,” he said, referring to a strategic shift away from a huge catalog to a more curated offer. “That meant removing all the books that everybody sort of had to get, which I would otherwise call boring books — all the manuals, technical that or computer the other. We don't have many of those. And what we've replaced them with is quite a lot of categories which are very strong for gifting, all the stationery lines, paper lines, greetings cards, wrap, all of those things.”

Barnes & Noble also has a significant e-commerce business, which he sees as supporting the stores, based around curation and recommendation, replicating what the retailer does in its bookshops. Perhaps surprisingly, he said that Waterstones is ahead of the U.S., and the company is in the process of bringing North America up to speed.

Part of that is aligning the loyalty program, which now totals more than 15 million people and is “heading towards 20 million” after having once fallen to around 5 million. The market for the company’s Nook e-reader, a proprietary rival to Amazon’s Kindle, has also largely matured, as has the company’s audio subscription platform, which has been a strong growth driver.

Daunt has approached that with what he calls a “common architecture,” which means new Barnes & Noble and Waterstones stores share the same design approach, adapted to the building that they are in. Going into 2025, the main focus is on maintaining the pace of store openings “for the foreseeable future,” plus store refurbishments, which have begun in earnest in the U.S.

“The smallest store I've opened is 700 SF, and the largest I've opened is 35K SF, with pretty much every size in between,” he said. “So although you're using the same component parts, what you're producing is quite different. We're also refitting quite a lot of the stores on both sides of the Atlantic, and again, you really can transform them.

“I always say to my owner, who gets sort of periodically excited about, you know, how we're going to do, ‘So long as Christmas Day is on the 25th, it's going be OK.’”