The Brick and Mortar Bookstore Battle Wages On Between Barnes & Noble and Amazon

Barnes & Noble Inc. CEO Demos Parneros believes book lovers still desire brick-and-mortar stores. The new CEO said: "There is no doubt the customers have a love affair with their book stores, and more specifically with their local Barnes & Noble store. They want their book store to be there for them, we just need to continue to evolve the experience and make it better for them."

Parneros took the reins of the bookstore chain in April, after serving as COO since November 2016 and as Staples President, North American Stores & Online. As rival Amazon has opened now eight physical bookstore locations, he may be right.

Parneros told Fortune in May that Barnes & Noble stores are "a completely different shopper experience compared to Amazon."

"We have beautiful, large stores-- the ability to roam and explore much more than in an edited, curated place," he noted.  "I walked several of the Amazon stores, and they are what they are. But they don't have that richness and years of experience from people who are local and understand that market."

Total sales for Barnes & Noble decreased 6.3% for the fiscal 2017 fourth quarter and 6.5% for the full year. Comparable store sales declined 6.3% for both the fourth quarter and full year, but online sales increased 2.9% for the quarter and 3.7% for the full year.

"Over the past six months I've spent a lot of time visiting stores and meeting with our booksellers and customers," said Parneros. During those visits I've heard a lot of valuable feedback on the things that we do well along with some areas that we can do better."

"We are well aware of the challenges that the company and the industry are facing," he continued. "We view these challenges as great opportunities. There is no question retail is changing and customers are shopping differently. As a company we have and continue to evolve, providing customers the ability to shop however they choose."

Parneros said Barnes & Noble has a lot of areas to examine within the store to stay current with shopping behaviors. To reach omnichannel shoppers he said the company is examining every aspect of the business.

"As we continue to pursue the next stage of growth, we are examining everything with an open minded view," he said. "Our new test stores are good example of this. We launched three test stores over the past year and continue to receive great feedback from our customers and book sellers."

Barnes & Noble's test stores are smaller than the average store and feature a more intuitive store layout. They have better adjacencies and expanded food and hospitality offerings. Booksellers' devices will be loaded with assisted selling capabilities that will enable them to help customers from anywhere on the floor. Customers will also be able to text booksellers for assistance.

Amazon Books, which just opened its eight location in June in Paramus, NJ, blends its online experience into the store. Sections in the store are filled with books readers might have enjoyed and recommendations based on those titles, as well as books based on online shopper ratings. Also, using curators, books are displayed that may represent what readers might be reading in the region and what statewide readers are interested in, reports NJ.com.

The Barnes & Noble test stores also boast more "omni-integration," which includes an app that can help guide customers to the location of a specific book, mobile checkout and advanced digital kiosk to help service customers.

Likewise, Amazon Books incorporates its own app into the shopping experience to help customers navigate the store and process transactions. According to Marketwatch, shoppers can scan barcodes on the shelves for more information about books, including pricing for Prime members, and the checkout process is cashless, with shoppers paying with either their Prime account or a payment card. 

As Amazon continues to roll out locations, Parneros said Barnes & Noble is learning a lot from its new test stores and will open two more test stores in Plano, Texas and Loudoun, Virginia later this year.

"This will help inform us as we re-imagine our store of the future," he said. "We'll continue to test and learn from these new stores and our goal is to develop new format that we can test, pilot, enroll. We'll use the learning to modify and enhance our existing store base as well."

Parneros continued "our team believes strongly in launching a series of tests that can help inform the future direction of the company. Currently we have multiple tests in flight, including changing layouts to reflect today's trends, rightsizing space allocated to underperforming businesses, including Nook and music DVDs, while expanding space dedicated to children's books.

"We also see a big opportunity aligning our stores and digital offerings closer together. Our goal is to provide customers with any book, anywhere, any time, and in any format they choose. BN.com is an important component of our omnichannel offering to serve the customer."

He noted that the company finds multi-channel customers are more engaged. Barnes & Noble plans to also evolve its BN.com experience with a redesign of its desktop and mobile sites, which will be a phased roll-out over the current fiscal year.

Shoppers will have to wait and see what comes of the Barnes & Noble test stores, as Parneros himself noted the company is working on getting the brick-and-mortar puzzle right and "the best way to do that is actually go out and do some [tests] and then measure them for a while, and then choose the winners and hopefully roll those."

As he told Fortune, "what the five test stores hopefully will do for us is teach us. Did we find our lightning in the bottle for one of them that we can replicate? If we don't, but some pieces are working, we can roll those backwards into the chain."