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Barnes & Noble, Inc. Message Board

  • Harriet57 Harriet57 Feb 16, 1998 12:54 PM Flag


    Hi everyone, here are answers to a few questions raised in recent messages.
    1) Software. Around 1994 Borders decided to start carrying CD-ROM software in a limited number of stores (including
    Rockville, MD), feeling that it could be a significant medium for booklovers. B&N immediately followed, inserting it in every new store
    it built for about a year and a half (in partnership with an existing software retailer, whose name I can't remember). Both
    companies found out that sales didn't justify the costs. CD-ROM is very low margin for the retailer, and is also a high theft item.
    Plus, as we now see, the medium never took off as touted by its producers. When Borders decided to eliminate CD-ROMs, B&N followed
    with relief.
    2) B&N is global insofar as they have stores in the US and low-population Canada. Borders has expanded by opening a wildly successful superstore in Singapore, buying a solid book retailer in the UK, with aggressive plans to expand into other English-speaking countries.
    3) Competitive innovation. In countless ways, B&N has followed Borders' lead. Borders started to enlarge its children's
    sections, B&N followed. Borders put cafes in, B&N followed. Software, above. Borders had full-time community relations people in each
    store, to promote in-store events, B&N eventually copied that. Borders title lists were always bigger and superior to B&Ns, but B&N
    is improving, I must admit. (While Borders was truthfully claiming to carry 80-100,000 titles per store, B&N was claiming to
    carry 150,000 BOOKS per store, a slick and childish ploy. In reality they had 50-60,000 titles, except in their biggest
    flagships.) Just because B&N has more stores, in no way means it's the leader.
    4) But what about the internet? B&N did a ready-fire-aim stunt with that, incurring disproportionate costs simply to beat Borders into the market, and launch compeition against the hated Amazon. Fine. Borders is about to enter the market (with music too, not just books); watch it gain market share, watch its stock price jump.
    5) Store design. Take a look at the biggest, most overlooked difference between Borders and B&N. The first thing you see going into a Borders is a big information desk. With people staffing it. B&N hides their info stations. Why? They cost money to staff. Borders spends more on labor, but their sales per store are higher. In addition, their inventory tracking and replenishment system is the best in the business.
    Well, as you can see, I'm a long-time Borders fan who has also closely followed B&N. B&N stock has done well, but compare charts to Borders.
    Lovely day.

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    • Thanks for your thoughts. You have given some of the reasons I bought the stock. I think the bookstores are becoming neighborhood gathering places, and I think that is a wonderful role...and I think their internet presence is undevalued.

      I don't expect the return you've achieved on this stock (congratulations!) to occur regularly...but I expect it to generate a nice annual return and intend to hold it.

      I get concerned with hype because I think it raises expectations beyond what is realistic...and leads too many people to bad investment decisions and disappointment. My concern is not that this is a bad investment; I'm quite content with owning shares! And I am convinced that I will be quite content with the returns over a 3-5 year period.

    • as someone who bought bks in may of '97, i am more than pleased by the recent 2 for 1 split AND my very nice 107% return so far. this is a solid company. i live in charlottesville and went in to the local store here at 10:45 p.m. to purchase a book. the store was filled with some 50 customers: families, singles cruising, college students studying, college students procrastinating...even a high school student doing his work in an easy chair.

      this is the new public realm for america. and it is a great longterm investment, methinks.

      hang in there.

    • I can appreciate your comments. I bought in in mid 1996 at 36 and for the next 10-11 months, it dropped a good $10/share. However, I am a big bookstore fan and everytime I'm in there, it's pretty crowded, so I decided to stick with it.

      The stock finally came back up, and then it split 2 for 1. As of this point, I'm up about $12/share, split adjusted.

      I think they are really the forerunner of the book superstores and even though the Internet has changed lots of things, people still love books and browsing. B&N has a great atmosphere which encourages you to just hang out and kill time - and I don't feel guilty if I don't buy. But - I almost always do and therein is the key.........

      Good luck!

    • I do appreciate your opinions...but your posting consists primarily of opinions, not answers!

      Last I knew, The Netherlands wasn't a part of either Canada or the US...and I doubt if Canadians would consider their country low-population...some provinces are, certainly, but the last I looked, there weren't any book superstores up there in the arctic circle...and their metropolitan areas are not "low population." (Have you been to Toronto recently??? or Vancouver???)

      I love books and have been in many B&N and Borders stores around the US and Canada. In some places where there are both, I prefer Borders. In other places where there are both, I prefer B&N. And while I am sure the reverse is also true, in places where I have found one or the other store, not both, it has been a B&N.

      Waldenbooks tried software before either Borders or B& least I think it was Waldenbooks and not B Dalton...again, I go to lots of bookstores, and that was about 10 years ago.

      I like Borders, but at least among people I have polled, B&N has stronger name recognition. That may be regional, but we had a Borders here before a B&N. But I have gotten B&N ail-order catalogs for years, and never one from Borders. That helps name recognition. And I see more advertising for B&N.

      I have never had trouble getting customer service help in either a Borders or a B&N. It has always been easy to find people to ask for assistance in finding something in the store or for special orders. In general, I haven't had to wait to check out at either store with the exception of the Christmas season.

      I seem about equally likely to find a specific book in either. Or equally likely to not find a specific, the Borders seems to have a better science fiction section; B&N better mysteries. That may vary some by store and market....haven't looked too closely.

      It is a fine line to walk between number of titles available at a given location, lost sales for failure to stock a
      particular title, and the cost of shelf space/storage space for obscure books. In general, I don't have complaints about either store.
      I have been disappointed by each on occasion. It seems I am more likely to buy something on the spur of the moment at
      B&N..don't know if it is floor arrangement, display, number of titles stocked, or selection of titles stocked, but I find things I
      didn't know I wanted more often at B&N. Again, this may vary by location, although I have visited multiple locations.

      I suspect there is room for both to do well in the market place and on the net. I think they each have something that Amazon
      doesn't...recognition by the masses. While Amazon is a familiar name to many who have been surfing for years, people like my Mom, who at 82 just
      got her first computer and is learning about the net, feel much more comfortable buying from a name they know. When she hears
      Amazon, she thinks of a black hole in cyber space. And it is people like Mom who will fuel the big increases in e-commerce volume.

      And like it or not, Borders is currently playing catch-up in the internet world. Music may help them make a name, but there are huge music sites already (Bose, for example)and I'm not sure how many people are candidates for purchasing both books and CDs from the same site... or would expect to purchase music at a book store. So in the short run, my opinion is that B&N has a better position.

      • 2 Replies to Arnquist
      • <Waldenbooks tried software before either Borders or B& least I think it was Waldenbooks and not B Dalton...again, I go to lots of bookstores, and that was about 10 years ago.>

        FYI, Borders owns Waldenbooks, and B&N owns B.Dalton.

      • Maybe someone inside B&N can tell us for sure, Arnquist, but I'd guess the Netherlands store is a solo venture related to a
        Dutch company that heavily backed B&N with funds some years ago. Not the signpost of a global presence. I don't know how you
        define "opinion". I included many facts in my posting. Anyway, who knows? Maybe B&N will be the winner of the superstore horse
        race. They are very aggressive with building name recognition, as you point out. And Borders isn't perfect. Moreover, as both
        companies scrabble harder and harder for profits, their quality may slip, and the independent book shops could come surging back.

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