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Despite bright signs, book industry frets about less marketing lift from retail chain

By Jeffrey A. Trachtenberg 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (June 5, 2018).

Book publishers have some reasons for optimism these days, with an uptick in print unit sales, and promising new titles like a coming memoir from former first lady Michelle Obama and a thriller from former President Bill Clinton and James Patterson.

But permeating the industry is a sense of foreboding about struggling bookseller Barnes & Noble Inc., a sentiment that was palpable in recent days at the annual book show in New York.

The retailer's continuing sharp decline raises fundamental questions for the book business, publishing executives say, including whether it will become increasingly difficult to introduce new writers and make their books visible to consumers. The company's 630 stores nationwide make it the dominant brick-and-mortar bookseller, and publishers depend on its stores to market a variety of books that otherwise might not gain traction through Amazon.com Inc. and other online services, some executives said.

"The lifeblood of our business is all about finding the next great writer," said Brian Murray, chief executive of HarperCollins Publishers, which like The Wall Street Journal is owned by News Corp. "We need retail partners and promotional vehicles that help us introduce readers to writers."

BookExpo 2018 and fan-focused sister event BookCon wrapped up Sunday.

An Amazon representative said the website provides many ways for users to find new books and authors, noting in particular its Kindle Unlimited and Prime Reading programs that act as the "online equivalent of physical display tables."

Barnes & Noble's business picture is bleak. Same-store-sales fell 5.8% in its most recently reported quarter, ended Jan. 27, reflecting a drop in traffic at its stores. Total revenue for fiscal 2017 fell 6.5%, the fourth consecutive fiscal year in which sales declined. The chain will report full-year earnings on June 21.

After closing nearly 150 stores over the past decade, including mall stores, the retailer says it will open five new stores in fiscal 2019 that are smaller than its usual 26,000-square-foot stores and will offer a new design. Barnes & Noble recently opened five prototype stores with restaurants. The new ones won't have restaurants, but other details about them, including their locations, haven't been disclosed.

"They have a store format problem that is solvable and they are working on it," Mr. Murray said. Online retailing, he added, is fine for readers who know exactly what they are looking for, but browsing for books on a phone screen or tablet isn't a great experience. "You go to a store to browse, to discover, to talk to an expert," said Mr. Murray.

Leonard Riggio, Barnes & Noble's chairman, made a similar point in a speech at the show's opening, noting that "bookstores are the place where demand is created because we are the showrooms for the publishing industry. More bookstores equal more demand."

Mr. Riggio was introduced by Oren Teicher, chief executive of the American Booksellers Association, a trade group for independent bookstores that once sued Barnes & Noble and the now-defunct Borders Group Inc., alleging antitrust violations. The lawsuit was later settled.

"Times change," Mr. Teicher said in an interview. The trade publication Publishers Weekly described the introduction as "a show of solidarity."

The call for more bookstores by Mr. Riggio came as some attendees were yearning for new strategic insights to reinvigorate the book industry at a time when digital and social platforms are siphoning consumers' dollars and attention.

Mr. Riggio later said in an interview that he wanted to find a common denominator with independent booksellers while not getting into a strategic discussion with publishers at that specific forum.

Markus Dohle, chief executive of Penguin Random House, said the publisher has increased its investment in consumer-marketing activities, including analyzing more data on how and where consumers read books, and finding ways to reach them directly with newsletters and promotions. That is becoming more important in a book industry increasingly dependent on online sales.

Publishers were happy that print book unit sales increased 1.9% to 687 million in 2017, according to book tracker NPD BookScan. And there are promising new titles in the pipeline.

One bookseller, Len Vlahos, co-owner of the Tattered Cover Book Store in Denver, said Mrs. Obama's memoir, "Becoming," will "be one of the biggest books of the fall," and he is making a significant order for its four stores. "There's lots of pent-up anticipation for the story she is going to tell," he said. The book publishes Nov. 13.

Mr. Vlahos said he also expects to do well with "The President is Missing," the Clinton-Patterson title that is a co-publishing venture between Alfred A. Knopf and Little, Brown & Co. Paul Bogaards, a spokesman for Knopf, said the publishers have printed a million hardcover copies. The book publishes on Monday.

At a Little, Brown luncheon, author George Pelecanos discussed his crime novel, "The Man Who Came Uptown," which in many ways is a tribute to the power of reading, while Julián Castro, the former U.S. secretary of housing and urban development, spoke movingly about the family struggles he chronicles in his coming memoir, "An Unlikely Journey."

Write to Jeffrey A. Trachtenberg at jeffrey.trachtenberg@wsj.com

(END) Dow Jones Newswires

June 05, 2018 02:47 ET (06:47 GMT)

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