Not too long ago, Barnes & Noble was nearly written off as a viable retail business. As Amazon grew to dominate roughly 50% market share in the book business, the traditional bookstore—whether a shop on Main Street or a national retail chain like Barnes & Noble—seemed like an anachronism, a place for a dwindling number of hardcore, older readers. 

By 2019, Barnes & Noble was going down fast, reporting a loss of $125.5 million on revenue of $3.7 billion for the 2018 fiscal year and having lost more than $1 billion in market value since 2014. Elliott Advisors swooped in with a lifeline, taking the company private in a $683 million acquisition and adding it to its portfolio that included UK-based Waterstones bookstore chain. 

In Barnes & Noble, Elliott saw a diamond in the rough. It recognized that physical, in-person book selling hadn’t been destroyed by Amazon. It just needed to be reframed as a place for personal discovery that algorithms can’t match. 

New Leader, Old Ideas

Elliott turned to Waterstones CEO, James Daunt, with over 30 years of experience in the book business, to turnaround the chain. Over the past five years, he has brought Barnes & Noble back to life by returning to the reader-discovery roots of book retail, even acquiring two independent but bankrupt longtime community booksellers—San Francisco-based Books Inc. and Denver’s Tattered Cover Book Store—and allowing them to retain their name and existing local management, yet benefiting from backend system-wide support.

Having revived the struggling U.S. chain and turned up the heat at Waterstones, Elliot is evaluating an IPO for the combined companies in either New York or London for the second half 2026, according to the Financial Times and the Wall Street Journal. 

Proof of concept is that Barnes & Noble opened over 60 stores this year with plans to open the same number next. According to sources, the combined companies generated approximately $400 million in profits on roughly $3 billion in sales last year.  

“The reason Barnes & Noble has rebounded from a very difficult period in just a few years has to do with James Daunt,” Bradley Graham, co-owner of Politics and Prose bookstores in Washington, D.C. told the WSJ. “He came with a philosophy of letting bookstores reflect their local communities.”

A difficult period it’s been. Bookstore sales in the U.S. have declined 8% over the last five years, from $8.6 billion in 2019 to $7.9 billion in 2024, according to the Census Bureau’s Annual Retail Trade Survey. 

Bookstore Retail Is A Different Retail Business

Unlike other retail categories, bookstore retailing is a distinctly different business because of the nature of the product it sells. While books have entertainment value, they also offer consumers a personally transformative experience that sets books apart from other discretionary purchases. Books give readers information, insight and a greater understanding of the world around them and the world within.

While there are other transformative products sold in retail, like skincare, health supplements, exercise equipment and health food, but these transform the body. Books transform the mind and the very best also transform the heart and the soul. And unlike fashion, which expresses personal identity outwardly through one’s style and brand choices, books help shape and build one’s inner identity.   

Book consumers, a relatively narrow and self-selecting group of people, understand the power of investing their time—one’s most precious and limited resource—in reading books. 

Transformative Power Of Books

As Jeff Bezos said, “Books aren’t just things to read—they are a way to change your life,” a truth that he proved in founding Amazon as an online bookstore. He is ranked third behind Mark Zuckerberg and Elon Musk as the wealthiest people on the planet, according to Forbes. 

And Musk often credits his business success to his unquenchable thirst for knowledge satisfied only by books. “I read a book about rockets and then I built rockets,” he said.

Barnes & Noble’s CEO Daunt understands the transformative power of books—he majored in reading-intensive history at Cambridge, became a banker with JP Morgan then bought an independent bookstore in London in 1990 which has grown to a chain of six stores.  He is applying that learning to transform the Barnes and Noble bookstore business by correcting previous mistakes and reframing stores around local book culture. 

Books Got Lost In The Shuffle

Upon his arrival at Barnes & Noble—not to be confused with Barnes & Noble Education, which was spun off as a separate public company in 2015—Daunt recognized that it had lost its way by taking its eye off books and expanding into too many unrelated categories, such as games, toys, gifts, home décor, CDs and DVDs. 

He didn’t throw them out in Shakespearean fashion—“The first we do, let’s kill all the lawyers!”—but he sharply curated the selection to most align with the audience it serves. For example, paper products, like cards and stationery, fit nicely into the mix and Elliott acquired the 130-store Paper Source chain in 2021, which Daunt also oversees. 

Misadventure Into Technology

Barnes & Noble also got into the ebook digital business with the Nook reader in 2009 to play catch-up with Amazon’s Kindle reader, released two years earlier. While it still sells and supports the most current Nook models, it can’t be much of a business for Barnes & Noble. In its last reported fiscal year, Nook revenues had dropped by nearly half in two years, from $192 million in 2016 to $111 million in 2018. 

Currently, Barnes & Noble stores sell Nook, but with the writing on the wall, a much smaller space is devoted to it than before.

Back To Analog, Amplified By Digital 

While ebooks have their place, they hardly replace the tactile, analog experience of reading a real book and a vast majority of readers agree. 

A recent survey conducted by Stora Enso found 65% of the 2,300 book readers and listeners surveyed prefer physical books, compared to 21% who favor ebooks and 14% audiobooks. And unlike ebooks, audiobooks complement rather than compete directly with physical books. You can enjoy audiobooks while driving, walking, and exercising where reading a book isn’t possible.

Most interestingly, the survey also found that the youngest readers (aged 16-to-24 years) took the lead with 70% preferring books you hold in your hand and physically turn the page. 

The TikTok #BookTok group is believed to have contributed mightily to young people’s interest in real books. #BookTok is one of the most vibrant user communities on TikTok, having accumulated some 370 billion views.

On #BookTok, enthusiastic readers share their reviews and engage with their like-minded community, amplifying word of mouth for new releases as well as backlist titles. Instagram (Bookstagram) and YouTube (BookTube) have spawned similar book lovers’ groups.   

Likewise, Barnes & Noble has recruited its team of book sellers to post reviews, recommendations, news about upcoming releases and author interviews on B&N Reads. It’s also gotten into podcasting with Poured Over interviews hosted by long-time Barnes & Noble staffer Miwa Messer. 

And complementing its digital presence, every Barnes & Noble store prominently displays local staffers’ picks. Staffers also post personalized shelf-talkers that guide readers to important and interesting books within sections.

Niche Market     

What Daunt recognized is that book readers are, by definition, an insider community who rely on fellow literary travelers to discover new books and authors they would like. While some books cross over into the mass market—Costco, Walmart and Target trade mainly in the latest best-sellers—bookselling is primarily a niche market. 

Only about 15% of adult Americans are intensive readers, defined as those who spend more than 20 minutes a day reading, according to the American Academy of Arts & Sciences.  And power readers, who devote more than 45 minutes per day to reading, are even rarer, or only 11%. But combined, they represent a substantial market with built-in loyalty: once they finish their last book, they are primed and ready for their next.

And within this niche reader market, there are subniches. In fiction, romance, mystery/thrillers, fantasy, general fiction and young adult are the most popular. In non-fiction, biographies, history, self-help, cookbooks, current affairs/politics, science, philosophy, and religion take the lead.  

In 2024, the religious book category was the fastest-growing category tracked by the Association of American Publishers, up nearly 20% from previous year. This is against an overall trade book publishing market, as opposed to educational books, that grew 4.4% in 2024 to $21.2 billion.

Let Local Stores Decide 

While Barnes & Noble, as all other bookstores, has long arranged book displays by genres, it has done away with centralized management of store layouts and merchandising. Like the best independent bookstores, local stores have control over book selection and displays, encouraging greater customer engagement and discovery. 

Rather than dictating what and how to sell, Daunt relies on the local team. “It’s about how you take all of this huge number of books and arrange them and display them in a manner which really engages with your local community,” he shared with PBS News.

“The insight that gives me in terms of running lots of bookstores is leave it to the teams in each store. The vast majority of them will do it exceptionally well, and your stores will become better and busier, and the business will thrive,” he continued.

Community Hub

In keeping with the tradition of combining coffee, books and conversation, most Barnes & Noble stores still operate coffee shops. Back to the 17th century, coffee houses were known as “penny universities” where for the price of a cup of coffee, patrons could participate in discussions about literary, politics, philosophy and the news of the day. 

Despite serving Starbucks-branded beverages, the cafés are owned and operated by Barnes & Noble. Though the in-store coffee cafés can be challenging to run, they help foster the spirit of local community that is vital to Barnes & Noble’s continued growth.

Curiosity is one of the most powerful ways to draw customers into stores—that’s why retailers invest so much in window displays and visual merchandising—and few stores are more naturally curiosity-inspiring than a bookstore. 

Speaking of the success of his turnaround efforts with CNBC, Daunt said, “Stores are places to meet. They are very vibrant, dynamic places,” adding that much of the energy comes from injecting the personality of the local booksellers into the stores. 

“Booksellers generally are vocational. They believe in the power of books. They believe in the purpose of selling books to people of all ages,” he continued.

Staying In Its Lane

While taking Barnes & Noble back into the public market will be a feather in Daunt’s cap and validation of Elliott Advisor’s confidence in him to revive the struggling chain, it doesn’t come without risks. The demands to deliver quarterly growth could undermine the strategy of local autonomy, where some inefficiencies can creep in, and it challenges the traditional top-down, command-and-control model of other major public retailers.

Yet, Barnes & Noble has found a way to successfully navigate despite Amazon’s disruption of the book trade. Daunt has found a lane where Barnes & Noble can thrive right alongside its much bigger rival.

Ironically, Daunt turned Bezos’ working philosophy—“Don’t obsess over competitors. Obsess over customers,” he famously said—back on itself. After Amazon closed its ill-fated Amazon Books locations in 2022, Barnes & Noble took over several of those vacancies as it began its expansion. 

“I actually see Amazon has been a massive positive for what it is to be a great bookseller,” Daunt said, noting that Amazon, has “taken all the boring books out of our stores,” and allowed Barnes & Noble to do what it does best: serve the reading interests of loyal, local customers with an experience clicking a link on Amazon can’t deliver. 

“If you buy Percival Everett’s James from Amazon, it’s the same Percival Everett I will sell you. But if you come into this store to buy it, you will have an experience. And when you walk out of the store with it in your bag, it will lift you. It’s the same book, but I promise you it’s a better book and the reading of it will be more pleasurable because you bought it in a bookstore,” he concluded.