A tote bag from McNally Jackson, a beloved local bookstore chain, hangs on a chair in Barnes & Noble CEO James Daunt’s New York City office. When pointed out to Daunt, he doesn’t get defensive that there’s evidence he’s buying books from a rival—quite the opposite. Daunt confesses he enjoys shopping there, and that, indeed, small booksellers have much to teach Barnes & Noble about enticing readers as the big-box chain pursues a turnaround.
Daunt himself owns a namesake chain of nine local bookstores in Britain. Before taking the reins at Barnes & Noble in 2019, after its purchase by activist investor Elliott Management, he had pulled off a dramatic turnaround at Waterstones, a prominent British bookstore chain teetering on the brink of obsoletion.
Daunt’s approach to fixing Barnes & Noble rests on running the 614-store chain more like a series of regional bookstores than a single national behemoth with centralized decision-making, with each store responsive to what local readers want. Store managers have the discretion to determine what titles to carry, how to present them in stores, and how to motivate staff.
Today, the company is the last large bookstore chain standing in the U.S., years after Borders and Waldenbooks folded. But when Daunt, 60, took over the company, he found a downward-spiraling Barnes & Noble and dumpy stores thanks to poor upkeep and years of too much wasted capital on tech products that didn’t bear fruit.
As Amazon dominated the digital marketplace, many booksellers—the very reason to go to Barnes & Noble over Amazon—lost their jobs or saw their hours cut, depriving customers of the interactions that make a bookstore appealing.
The problem with Barnes & Noble’s previous turnaround attempts, Daunt says, is that leaders were rooted in basic big-box retail tenets, which tend to prioritize homogeneity across chains and cost-cutting, rather than focusing on bookselling.
While Barnes & Noble is privately held and, as such, does not disclose financial results, the retailer appears to be playing offense again. The bookseller, which closed hundreds of stores in the 2010s, plans on opening 50 stores this year, albeit many of them much smaller than traditional Barnes & Noble locations. Under Daunt, Barnes & Noble has also remodeled many stores—installing modular shelving, improving lighting, and reorganizing how books are presented.
This article has been edited and condensed for clarity.
Fortune: From a 30,000-foot view, why do you think the once moribund Barnes & Noble is turning itself around?
The focus got back to the people who sell books. Barnes & Noble had brought in a lot of professional retailers, but professional retailers don’t make very good booksellers. If you apply many of those retail principles to selling books, things tend to go wrong. In many areas of retail, they just kill customer service. We now have people focused on servicing the stores and are empowering employees themselves to do what they regard as best. That combination is powerful, and it moves things, but it does so slowly.
By decentralizing store operations, don’t you risk losing some of the benefits of Barnes & Noble’s scale?
A business needs to allow very different stores to evolve in different places. And we are now opening new stores of increasingly varied sizes. You can’t run the Upper East Side 6,000-square-foot store the same way you do a 24,000-square-foot store in New Jersey. The principles that underpin running them are still the same: Books are attractively and intelligently presented in what is predominantly a bookstore; getting the right books for your customers; and making sure customers are your focus. That means giving your booksellers freedom that allows them frankly to have more fun.
How have you made their jobs more enjoyable and, by extension, more effective?
You have to dismantle what has traditionally been an extremely hierarchical structure to equip each store to run better. There were few career opportunities because of the hierarchy, so if you had ambitions, you’d look elsewhere. We’ve also put our stores in clusters of four or five, and within those, we’ve tried to develop talent for that entire cluster, not just a single store. For example, we might hire someone with a knack for visual merchandising or putting on events who can help multiple stores.
What about interactions with customers?
We have to make shopping as easy as possible and train our booksellers to be as friendly as possible. We train people to just say yes to customer requests, which is not very complicated. Most of the time, the answer is yes unless a customer is trying to steal from me. That empowerment is still the thing we’re trying to push through because managers say no. Just do it.
Many predicted that e-books would continue outpacing physical books and become the dominant format. Why hasn’t that happened?
I was obviously a bookseller who had just taken over when Waterstones was in big trouble, and the explosion of the [Amazon] Kindle happened. But what I believed then and still think is self-evidently true is that a physical book is a lovely thing and a particularly pleasurable way to read. But e-reading and audiobooks are also right in different circumstances. It’s not a zero-sum game. Same for bookstores. If I open up a bookstore and McNally opens a bookstore, we’re not going to simply share a fixed pot between us. The more bookstores there are, the more people will be in them and buying books.
Where do indie bookstores fit in?
As an indie bookstore operator, I get that you have a much smaller physical space, and they tend to be more intellectually elevated. But Barnes & Noble has books for everyone. I think we can coexist. Just as I had no problem with Kindle coming out, I don’t have a problem with independent booksellers doing well. They do something very different and very valuable in society.
You recently said that Barnes & Noble’s e-commerce is underperforming at 9% of your sales. What are you doing to fix this?
The company never invested in e-commerce, so we’re sitting on a platform from years ago that has to be replaced. We will get there slowly, but there is a method to the logic and the pace. We first need to overhaul our membership program. If you have a good website tied to a very active and properly cared-for membership program, you can be extremely successful.
A few years ago, there were fads like adult comic books or Adele’s vinyl records to give Barnes & Noble an unexpected sales lift. What is doing that now for the company, and what categories have surprising resilience?
Ms. Swift, God bless her. We love her because of the vinyl she sells. It’s not just vinyl; it’s CDs and DVDs, too, that are selling. For CDs, I have to say, I was proved wrong. Some of our guys were saying, “We’ve got to keep the CDs.” (They did.) We are also the last retailer standing that has a really thorough and good magazine proposition. Same for toys and educational products. We are a major Lego retailer. Pokémon. We have enthusiasts in all these categories, and it all fits well together.
There’s concern over book banning in some states. Where does Barnes & Noble land in this debate?
We strongly believe that books should be available to all, but we try to remove anything objectionable, such as racist content. I think our booksellers understand where our customers are inclined to object, but they also know that storms are whipped up on social media all the time.
