Barnes & Noble Was Given Up For Dead. It Came Back By Trusting Its Own People.

Situation

My daughter and her best friend do not just read books. They curate them, shelves arranged by color and by feeling. I have taken her to independent shops all over the country because I want her to see what real intention on a shelf looks like, not just what is popular this week. But she is a teenager, and teenagers are drawn to what is trending, so her favorite bookstore has always been Barnes & Noble. She trains for ballet all over the world, and two years ago we were in New York for the entire summer. Before we had even unpacked, she wanted to know when we were going to the Union Square Barnes & Noble. I love that store for her. I also love that it is still standing at all.

By 2019, almost nobody expected Barnes & Noble to still be standing. Revenue had not grown in seven years and had fallen by roughly $700 million since 2015. In its final year before the sale, the company lost $125.5 million on $3.7 billion in revenue, had shrunk to 627 stores, and had just laid off 1,800 employees. Market value was down more than $1 billion since 2014. Every retail analyst had the same read: Amazon had won, and Barnes & Noble was a casualty waiting to be declared.

Then hedge fund Elliott Management bought the company for $683 million in 2019 and handed it to James Daunt, a bookseller with thirty years in the trade who had already turned around Waterstones in the UK and ran his own small chain of independent shops. What he did next had almost nothing to do with pricing or cost-cutting. He rebuilt the exact thing that had made Amazon look unbeatable in the first place.

Insight

What Barnes & Noble was actually deciding when Daunt took over had almost nothing to do with what most people assume killed bookstores.

For years, headquarters controlled nearly every shelf in every store. Corporate merchandising teams decided which titles got the big front-table display and which got buried in the stacks. Publishers paid for placement the way brands pay for an endcap at a grocery store. That co-op placement revenue looked like free money on a spreadsheet, but turns out it was not free at all. Bookselling runs on brutal, thin-margin economics with hundreds of thousands of titles in play, and one of the biggest hidden costs in that business is the returns system: unsold books get shipped back to the publisher for credit. Every mis-ordered title costs more than a lost sale. It ties up cash in inventory, doubles freight, and erodes margin on both ends of the shipment. When a head office in New York decides the same display and the same order quantity for a store in Manhattan and a store in a small town in Ohio, it is optimizing for neither of them. Daunt had a blunter way of putting it. He called the stores that resulted “crucifyingly boring.”

So he tore out the pay-for-placement system. Individual store managers, not headquarters, started deciding what to feature, how much to order, and how to arrange their own shop, based on their read of their own customers. That is a full reversal of the underlying financial incentive. Instead of optimizing for what publishers would pay to promote, Barnes & Noble started optimizing for what would actually sell, store by store. The result was fewer books ordered with far more precision, lower returns, faster inventory turns, and shelves stocked with titles that someone who works there has actually read and believes in. The comeback that followed was not small. The company opened 57 new stores in 2024, more than it had opened in the entire decade before that, then 67 more in 2025, with 60 more planned for 2026. Store traffic was up double digits year over year by the spring of 2024. The combined Barnes & Noble and Waterstones business is now profitable enough that its private equity owner is preparing to take it public, with banks already selected for a listing that could value the company north of $4 billion. Daunt grew the business again by trusting the people standing closest to the customer more than he trusted his own head office.

Application

If you already run a business with more than one person, one location, or one offer making decisions in your name, this is exactly the calculation worth running against your own numbers.

Push the decision to whoever is closest to the customer. If you have staff, contractors, or even just a repeatable client process, ask where you are still requiring your own sign-off on something the person doing the work could judge better than you. Every decision that has to travel up to you and back down again is a decision made without the freshest information available.

Run the same offering analysis on your own revenue. When I sit down with clients to evaluate what they offer, we look at three things side by side, never just one: what percentage of revenue each offer represents, what it costs in time and/or cost of sales to deliver it, and how much passion and lifetime client journey it carries forward. Barnes & Noble’s pay-for-placement dollars would have scored well on the first measure and badly on the other two. An offer that looks good on revenue alone can still be quietly costing you your most valuable client relationships.

Track sell-through, not just revenue. A dollar of revenue tied up in something that does not convert, renew, or get used is not the same as a dollar of revenue from something your clients are actively pulling toward. Know which of your offers are being pulled and which are being pushed, and build your inventory of time and energy accordingly.

A note especially for women founders: a lot of us were taught that being the most hands-on person in the business is what makes us responsible. There is a real difference between staying deeply informed and being the only person allowed to make a call. Daunt stayed close to the business. He simply stopped being the only person in it allowed to use judgment. Trusting more people with real decisions is its own kind of control, aimed at the right target.

Takeaway

Barnes & Noble came back by becoming trustworthy again, one store, one shelf, and one bookseller’s judgment at a time. Price had almost nothing to do with it. Efficiency is not the villain of this story. Centralized buying, identical displays, and one set of rules for every store are genuinely efficient, and efficiency matters. But efficiency and relevance are not the same goal, and Barnes & Noble had optimized so hard for the first one that it quietly gave up the second. A business can run beautifully efficient and still be the wrong shelf for the customer standing in front of it.

My daughter cannot tell you a single thing about Elliott Management or a private equity IPO. She can tell you that the Union Square store felt like it was built for her. That is the whole turnaround, actually, in one sentence.

“Efficient is not the same as effective. Somewhere between the two is where your customer lives.”

Sources & References

Barnes & Noble Was Given Up For Dead. It Came Back By Trusting Its Own People.

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