Barnes & Noble’s fate rests in the hands of a British indie bookstore owner

James Daunt, who runs Waterstones, is the new CEO at Barnes & Noble.

In 2018, it seemed like the days of the United States’ last major bookstore chain were numbered. A decade of falling sales, brutal layoffs, 150 store closures, six chief executives, and a $1 billion loss on its Nook e-reader had left Barnes & Noble in the throes of an identity crisis. So acute was its struggle that one New York Times critic imagined a sequel to the 1998 romantic comedy You’ve Got Mail in which Tom Hanks—the big-box bookstore owner who crushes Meg Ryan’s independent book shop—is now the David to Amazon’s Goliath.

But here’s a better plot twist: What if Meg Ryan got tapped to save the big chain, and teach Hanks what people really want from their bookstore?

That’s the mission that Elliot Advisors, the hedge fund that purchased B&N for $638 million in June, has handed to freshly appointed CEO James Daunt. A 55-year-old Englishman, Daunt has spent nearly three decades in the bookselling business. For most of that time, he was exclusively Team Indie, overseeing an idyllic, boutique book-buying experience as the founder of Daunt Books, which has six locations in well-heeled neighborhoods in London.

Despite his small-business bona fides, Daunt has in the past decade emerged as an unlikely savior for big-box bookstores, first overseeing the revival of Waterstones, a UK chain with close to 300 branches, and now at Barnes & Noble. His turnaround strategy is centered on a simple premise: In a world where Amazon offers unbeatable convenience and prices, big book chains will only survive if they act more like independents.

Humanizing the big-box bookshop

“A good independent bookshop is something pretty special,” Daunt tells me. “It has personality and character, and that’s primarily driven by the people working in it, the booksellers. Also the manner in which they display their books, the amusement and serendipity of how they curate their shops.”

 “Books, if you’re lucky enough to read and to be educated and opened up to reading, it’s hugely affirming.” Daunt’s London bookstores guide readers toward such serendipitous discoveries. Some have books arranged by country rather than genre, a setup that encourages browsing: You might visit the Japan section looking for Haruki Murakami novels only to find yourself paging through a history of ramen or a book of haikus about cats. All Daunt stores eschew detailed signage for genres like “self-help” and “history” in favor of closely themed tables of books. In a recent podcast interview, Daunt said this is “so you can find your way around a shop subliminally.”

Daunt Books locations are also beautiful spaces, filled with dark wood shelves, green lamps, and gold light. The original location in Marylebone, which opened in 1990 on the site of an Edwardian-era bookseller, is long and narrow, with tall galleries of books offering a reassuring vision of orderly abundance. When authors do readings in Marylebone, their backs to an arched stained-glass window that serves as the room’s centerpiece, the scene resembles nothing so much as a church service.

That’s in keeping with Daunt’s attitude toward reading as a sacred act, and bookstores as gathering spaces for the devout. “Books, if you’re lucky enough to read and to be educated and opened up to reading, it’s hugely affirming,” he says. “It’s something that humanizes at all ages.”

Daunt’s personal affinity for books was what inspired him to open a bookstore at age 26, having worked for four years as an investment banker at JPMorgan—well, that and the urging of his then-girlfriend (now wife), who wanted Daunt out of finance. “I thought if I’m not going to do that office job, which was about as good as an office job as I could imagine, then I had to do something else,” he told the Financial Times in 2011. “And I like traveling and I like reading and it really wasn’t more sophisticated than that.”

The core of Daunt’s bookselling strategy relied upon investing in, and trusting, his staff. “The key to good staff is to keep them long-term; to build their careers; to teach them the trade,” Daunt told Jen Campbell for her 2014 book The Bookshop Book. “I think that the intelligent, proactive people who make good booksellers also make good bookshops.”

Daunt Books employees know how to make customers feel that they’re part of a community of readers. They abide by certain principles: Never recommend more than three books at a time, lest you overwhelm the customer. When someone asks for a recommendation, don’t just dish out your personal favorites. Instead, start by asking them, “What was the last good book you read?” Someone who loves Tana French mystery novels is more likely to appreciate Ruth Rendell than the newest Thomas Pynchon.

Over the years, Daunt Books developed a devoted fan base, securing a spot on pretty much every list of the best bookshops in London. In 2010, it even launched a publishing imprint, featuring both original works and reissued classics by authors like MFK Fischer and Arthur Conan Doyle.

Then, in 2011, Daunt’s career took an unexpected turn. Waterstones was sold to Russian billionaire Alexander Mamut, who tapped Daunt to be its managing director. His task was to turn around the struggling chain, which by that point was both unprofitable and widely perceived as money-grubbing and tacky. “They decided to take on the supermarkets and Smith’s by discounting prices and celebrity biographies,” former Waterstones managing director Tim Coates told The Guardian in 2009. “It was a strategic error. What they should have done was take on Amazon by offering something Amazon can’t—the lovely, serendipitous experience of being in a really good, big bookshop.”

The power of autonomy

Daunt describes the beginning of his Waterstones reign as “horrendous“—he cut costs by closing stores and laying off 200 employees. But then Daunt set about breathing life back into the company, in part by doing away with everything that made it cookie-cutter. He gave booksellers at each of the remaining stores autonomy over their inventory and promotions, so that each location’s offerings could be tailored to the communities it served. “What we did was give freedom over what they chose to display, in what quantity, and how,” Daunt says. Booksellers at individual stores could even set their own prices.

 “A lot of what I did at Waterstones was spend money to make the places look nicer.” He also passed on some tricks of the trade. Daunt told booksellers to check the visual appeal of their displays by borrowing someone else’s glasses: With the titles fuzzed out, they might see how the colors juxtaposed. He did away with staff uniforms and three-for-two discount deals, and worked to make the shabby branches look polished and welcoming again. “A lot of what I did at Waterstones was spend money to make the places look nicer,” Daunt says.

He also had Waterstones stop peddling so many non-book products. Stationary, greeting cards, and other paper-based items were similar enough to books to be sensible. Educational toys and games were logical, too. Galoshes, on the other hand, were not. Says Daunt, “You’ve got to be able to work out why you’ve put the thing that isn’t a book in a bookshop.”

The retail rules do not apply

Daunt’s changes eventually paid off. In 2016, Waterstones turned a profit for the first time in eight years. In 2017, annual profits rose 80% over the year before, and in 2018 it was sold to Elliot Advisors. The turnaround was all the more remarkable because Daunt essentially convinced Waterstones to think locally—a reversal of the usual formula for success in big retail stores.

Starbucks, for example, trains baristas to make mocha lattes taste the same way at every location. Branches of Gap and Dick’s Sporting Goods don’t try to differentiate themselves with specialized stock; customers are supposed to have confidence in the brand’s consistency and know that they can walk into any store and pick up the same fishing pole or pair of skinny jeans.

 “If you apply normal retailing discipline to bookstores, you wind up with something huge and full of books, but they don’t have soul.” But Daunt thinks books are a fundamentally different kind of product. “When you apply retailing principles to books, the wheels come off,” he says. “If you’re selling vitamins, there’s just so many vitamin D’s and vitamin whatevers to make your hair luscious—there’s a limit. Booksellers have got millions and millions of product lines available to them, and the way you make a bookshop interesting is by mixing them up … So if you apply normal retailing discipline to bookstores, you wind up with something huge and full of books, but they don’t have soul.”

Not all of Daunt’s changes have come without controversy. Waterstones faced criticism for opening some unbranded stores that could easily be mistaken for indie shop. Daunt says the stores are categorically different from typical Waterstones outposts. “We decided that as they were very small bookshops in very small towns, it was barmy to call them Waterstones,” he told The Guardian.

Critics have also come after Waterstones for failing to mimic Daunt Books in one important respect: pay. While the workers at Daunt’s independent shops are salaried, Waterstones employees and their supporters recently petitioned for the chain to instate a minimum wage of £9 per hour and £10.55 per hour in London, in keeping with the recommendations of the UK’s Living Wage Foundation.

Daunt told The Bookseller that he agrees the wage for entry-level employees is inadequate, and said he’s “very sympathetic to the notion that booksellers should be paid better.” But, he said, “there is an equation to be had to what is a sustainable level of profit for the business and whether it’s wise to inflate the cost at the base rate at the moment.”

Why we still need Barnes & Noble

The UK consensus is that Daunt brought Waterstones back from the brink. Now Elliot Advisers is hoping he can do the same for Barnes & Noble. B&N operates at a much larger scale than Waterstones, with 627 locations, and its stores take up more square footage. Nonetheless, Daunt sees clear parallels between the two chains. As with Waterstones, he thinks this turnaround should start with giving booksellers autonomy over what they sell and display.

“That strategy has worked well for Waterstones, and it could work for B&N, which in its heyday gave some autonomy to regional and store managers and had regional buyers,” says John Mutter, editor in chief of Shelf Awareness. “Unfortunately in cost-cutting moves, buying has been centralized and made less personal, and most display ‘ideas’ come from headquarters. It’s one of many reasons that the company has had problems.”

Barnes & Noble stores could use a facelift. (AP Photo/Nati Harnik)

Daunt also expects to give B&N locations some of the aesthetic TLC that has been put off in an effort to hold down costs. With the company going private under Elliot’s ownership, Daunt expects Barnes & Noble will be somewhat liberated from short-term financial pressures.

As for how Barnes & Noble fits into a bookselling landscape where Amazon offers unbeatable convenience and indie shops hold the key to bibliophiles’ hearts, Daunt has faith that the big-box store remains valuable. Chains “have considerable resources in terms of availability, scale, and locations people want to be in,” he says. Moreover, they’re no longer the nemeses of independent sellers. As chains have faltered, indie bookshops are experiencing a resurgence in the US, increasing their numbers by 53% to more than 2,500 stores between 2009 and 2019, according the the American Booksellers Association.

“Only two decades ago, [Barnes & Noble] and Borders were considered the major rivals of indies,” Mutter says. “Now for most indies, B&N is more of a grumpy uncle who you hopes does well.”

Independents want Barnes & Noble to succeed for two major reasons, according to Donna Paz Kaufman, who consults with independent-bookstore owners and runs her own store, Story & Song Bookstore Bistro in Fernandina Beach, Florida. They’re rooting for the chain both as a hedge against Amazon—a monopolistic force in bookselling if ever there was one—and because when Borders closed in 2011, along with its 399 remaining stores, many communities were left without access to any bookstores at all.

“Chains are fine and they’ll bring bookstores to places that maybe would otherwise not have bookstores,” Kaufman says, noting that many independent booksellers can’t afford the large retail spaces that permeate the suburbs. “We really feel like brick-and-mortar stores are important to the culture and US society at large.”

 Everyone who wants the US to have a thriving book trade should be rooting for Barnes & Noble to stick around. Support your local corporate behemoth bookstore” may sound like an odd rallying cry. But Mutter notes that the fate of the entire book industry is intertwined with that of Barnes & Noble. “If B&N disappeared, publishers and wholesalers would have so many fewer brick-and-mortar stores to sell to, which would mean all kinds of cutbacks in sales, marketing, distribution, warehouses, etc., that service indies and B&N,” he says. In other words: Everyone who wants the US to have a thriving book trade should be rooting for Barnes & Noble to stick around.

A Barnes & Noble revival could also benefit the stores’ surrounding communities. Lively public spaces with the capacity to host readings, book clubs, children’s story hours, and larger events are a boon to both suburbia and cities. At Waterstones’ Picadilly location, the chain’s largest, a Friday evening might see four or five events going on on different floors. “Frankly, if you’re looking to meet someone in a nice environment and have an intelligent conversation, go there,” Daunt says. “It’s absolutely stuffed full of young people meeting each other and having fun. It’s a dramatically nicer place to do it than a pub or bar.”

Inside a Los Angeles Barnes and Noble. (AP)

Of course, this approach requires a staff to support it, and breathing room to build connections with local schools, clubs, and businesses. As of April 2018, Barnes & Noble had 23,000 employees, half of what it had in 2003, and Mutter notes that the company has a history of undervaluing its rank-and-file workers. “Only last year, there were company-wide layoffs that focused on the most experienced booksellers,” he says. “It made sense to the numbers guy in headquarters, but was a terrible move.”

The guys in Seattle

And what of Amazon—or, as Daunt sometimes refers to it, “the guys in Seattle.” In 2011, shortly after taking control at Waterstones, Daunt referred to Amazon as “a ruthless, money-making devil” and said it devalued booksellers by outsourcing their work to an algorithm. “All that ‘If you read this, you’ll like that’—it’s a dismal way to recommend books,” Daunt told The Independent. “A physical bookshop in which you browse, see, hold, touch and feel books is the environment you want.”

A year later, Daunt had changed his tune; he announced that Waterstones would selling Kindles in its stores. But by 2015, Waterstones had started pulling the e-readers due to “pitiful” demand.

These days, Daunt is philosophical on the subject of Amazon. In his view, the company’s unmatchable scale is liberating for booksellers; it means stores can focus on curating books that communicate a particular aesthetic, rather than stocking up on things people need but don’t get excited about. “They’re allowing us not to have the boring books in our shops and just be places where you discover books and talk about books,” he says. “We don’t have to clog up [stores] with medical textbooks.”

He is similarly even-keeled about e-readers, one version of which he’s inheriting in Barnes & Noble’s Nook. While many industry experts have given up on the device—Mutter says it “failed irretrievably,” and Nook sales fell 17% during the fiscal year ended in April 2019—Daunt has not yet expressed plans to kill it, especially since B&N already dealt with the losses involved in its development. “It cheers me up greatly, now we’re in the position of being able to reap the benefits,” Daunt says. “As long as your reader is as good as a Kindle, which the new versions, and I’ve got one, seem, you’re letting customers choose to interact with you.”

The purpose of bookstores

The central conflict inYou’ve Got Mail revolves around the question of what bookstores are for. According to big-box CEO Joe Fox (Tom Hanks), selling books is the same as selling hardware or mattresses: They’re commodities, and Fox Books exists to help consumers buy the goods they want, cheaply and efficiently.

Meg Ryan—whose store is called The Shop Around the Corner—has a more idealistic view. Bookstores are communal and spiritual spaces. “She wasn’t just selling books,” Ryan’s character says of her late mother, who ran the shop before her. “She was helping people become what they were going to be.”

The past decade seems to have proven Ryan right. When community redevelopment projects poll residents about which businesses they’d like to see open in their area, Kaufman says the top answer is a bakery; the second is a bookshop. “A bookstore in a community is an anchor and a symbol of ideas and solutions and dreams and stories,” she says. “It’s really a lovely symbol and place for people to be, and to remember that all of those things are important in our lives.”

The success of chains rests on their ability to credibly convey this kind of symbolism. By contrast, Barnes & Noble for a long time seemed to be a bookstore that didn’t much care about reading. “Sadly, like Borders, B&N as a publicly held company had to please institutional investors, which meant, among other things, that it hired many executives from outside the book industry,” says Mutter. “Sometimes it’s been helpful to have a non-industry perspective, but the flood of non-book people helped sink Borders and has had, in the end, a bad effect on B&N.”

It’s safe to say that Daunt is, at the very least, a book person. He adores the work of Irish novelists Edna O’Brien and Sally Rooney, and reminisces about the joyful costume parties that took over Barnes & Noble locations during every Harry Potter release. Already, he’s planning (and “seriously overexcited about”) the rollouts for The Testaments, Margaret Atwood’s forthcoming novel, and The Mirror and the Light, the final book in Hilary Mantel’s trilogy on Thomas Cromwell.

“We as booksellers, for those who are lucky enough to be able to buy books, are the way in which you can create an environment that communicates fun and humor and good nature,” Daunt says. “It’s important that they continue to exist.”





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