Change Can Be Costly

That Barnes & Noble is trying to change its business model to meet a changing world is admirable. But change is difficult and sometimes costly. The consequences of doing nothing can be costlier, even resulting in bankruptcy. The landscape is littered with retailers that didn't change - Tower Records, HMV, Blockbuster, and many others. And don't forget those still mired in muck and likely to be added to the list - companies like Borders. So that B&N hqave invested in digital technology and specifically the Nook, is at least an attempt to stay relevent and around.

"The New York-based book chain -- headed by controversial founder and Chairman Len Riggio -- said yesterday the handheld device has quickly captured a 20 percent market since its launch last year, despite stiff competition from Amazon's Kindle and Apple's iPad. Nevertheless, the Nook's quick growth has come at a price. Yesterday, B&N reported a wider-than-expected quarterly loss, and said losses for the current fiscal year could surpass $50 million -- twice as steep as the previous forecast -- as B&N invests heavily in the Nook." Yes, success does come at a price. And a combination online and brick and mortar store can work. Apple is proving that.

B&N has invested in a new business model and must continue to follow strategies that merge the success of the Nook with its store. Game Stop uses free downloads when you visit their store with your game device. B&N can develop other motivations to assure that customers enjoy the advantages of both an on-line and in-store relationship. Other ideas might require a shift in inventory to include new lines, online couponing redeemable in store, gaming, etc.

Staying the leader is never easy, especially as external market forces change. The transition for B&N may be costly, but in the long run, it may be what ultimately keeps them alive and successful.