Barnes & Noble had a rough holiday season: Same-store sales fell compared to a year ago and revenue from sales of the Nook tablet stalled. Despite a heavy investment in the Nook business, Barnes & Noble is expected to have a three-year cumulative loss of more than $700 million, according to Barclays Capital — an indication that the bookstore’s multi-front war with online retailer Amazon.com doesn’t seem to be working.
On January 3, Barnes & Noble leadership acknowledged that the firm faces many challenges. The company said its holiday sales for the nine-week period ending December 29 were $1.2 billion, down 10.9% from a year ago. Same-store sales for the period were down 3.1% due to “lower bookstore traffic.” Nook product sales fell 12.6% from a year ago.
Barnes & Noble isn’t alone. Many traditional retailers are struggling against online powerhouse Amazon.com. Best Buy has hatched plans to downsize its stores, focus on installation services and match Amazon’s prices. Target, too, has said it will match prices from Amazon and other select online retailers in 2013. Bricks-and-mortar retailers are battling a phenomenon called “the showrooming effect,” the consumer practice of checking out a product in a retail store and then buying it online at a better price.
“Barnes & Noble and Best Buy are places that are showroomed like crazy,” says Wharton marketing professor Stephen Hoch. Hoch predicts that neither chain is likely to survive Amazon’s assault because the stores don’t have the service levels to stand out. “Go into a Barnes & Noble or a Best Buy and you see big box stores that should know their businesses. What you find out, however, is that employees don’t know their business, and you don’t get great help.”
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