Barnes and Noble is the nation's largest book retailer with stores in all 50 states and the District of Columbia. The company went public in 1993 and had a two-for-one stock split in mid-1997. Although the company has enjoyed strong success in this highly competitive industry, it is not viewed favorably by all industry observers. Because of the volume in which Barnes and Noble can purchase, it has the ability to put smaller independent bookstores out of business when it moves into a particular market. It has also popularized buying books on the Internet, and recently settled a lawsuit brought by another Internet bookseller, Amazon.com. The history of Barnes and Noble and its recent financial performance illustrates how a company can participate in an industry which is essentially in the mature phase of the product lifecycle, and bring innovation which offers additional growth to that market. This research examines the industry's performance in recent years, the company's performance, the history of the company relating to its success, and the outlook for Barnes and Noble in the future.
The retail book market is not a high growth industry. In 1997, sales for the industry as a whole advanced only four percent to more than $20 billion. This advance was in keeping with the industry's performance during the 1990s as a whole, but is generally viewed as stable by industry analysts. This stability is attributed to the aging of the American public; more than 24 percent of the population aged 25 or older has a college education compared to 11 percent in 1970. This figure is expected to increase as the baby boomers age. The aging of the public is important since reading is typically associated with age. Another factor contributing to the stable growth in the industry is that book publishers have become more adept at producing titles that have mass market appeal. In addition, book superstores such as those operated by Barnes and No...