Bookstores might seem old school in the AI era, but Barnes & Noble has staged a fairy-tale comeback under CEO James Daunt.
After shrinking to under 600 locations in 2023, the storied American bookstore chain opened 57 locations in 2024 — more than in the entire decade between 2009 and 2019.
It expanded by more than 60 stores last year, and it’s targeting another 60 this year, it said in a news release this week.
Barnes & Noble was taken private in August 2019 when Elliott Management acquired it for close to $700 million, including debt. The hedge fund tasked Daunt — who led the turnaround of British bookstore chain Waterstones, which Elliott acquired in 2018 — to revitalize Barnes & Noble as well.
Daunt explained how he turned the page at Barnes & Noble during the latest episode of the “Masters of Scale” podcast. Here are the key insights from the conversation.
Culture change
Daunt said Barnes & Noble had the same core problem as Waterstones: its bookstores “weren’t very good.”
He said that for booksellers, attention to detail, presentation, service, assortment, inventory, and judgment all matter. Steadily improving those things year after year has been key to his success, he said.
But Daunt said another key plank of his strategy has been to shift away from centralized control of stores, and put local booksellers in charge instead.
“Almost everything I do is about flattening those hierarchies, and then trying to introduce collective responsibility amongst the team once you’ve done that,” he said.
When each store’s team is running the show, that’s a “much nicer way to work, much more engaging and much more empowering, and all of those good things,” he said.
“But it’s so much more difficult that often people resist it: ‘We’d rather have the hierarchy, just tell me what to do, please.'”
Daunt said that changing a company’s culture takes time, and it’s like “stretching a rubber band. The minute you relax, it just pops back.”
Data danger
Daunt — who built his own independent bookstore chain, Daunt Books, before taking charge of Waterstones in 2011 — said that store data can be more of a curse than a blessing.
“The data can occasionally be an interesting reference point, but it’s the judgments you make almost in defiance of the data that will give you an inspiring store,” he said.
As data is often held centrally, relying on it can unlock a “Pandora’s box” where it’s used to “impose uniformity on the stores, and that really is the death knell for us,” he said.
Setting aside the data “empowers the local stores to really start interrogating how they’re engaging with their customer base,” and to rely on their “gut instinct” when merchandising, he said.
He gave the example of a data-driven store allocating too much shelf space to board books, overwhelming parents whose young kids would happily read the same titles again and again, while not giving preteen readers the large array of books they want.
Daunt also noted that “booksellers and numbers tend to be sitting in opposite corners of the room.”
“We are the nerds who read all our books, and when we got to the maths and science, just gave up,” he quipped.
Forgetting mistakes
Daunt said that a key element of his approach — which has clear parallels to Warren Buffett’s model of decentralized autonomy at Berkshire Hathaway — is moving on when mistakes get made.
Instead of scrutinizing and punishing errors, he prefers to “not look in the rear-view mirror,” say something was “idiotic,” and move on.
He’s found that this encourages junior employees to challenge decisions from higher up and frees senior staff to change their minds.
Spreading the word
Daunt said that Barnes & Noble has no marketing department and has “zero marketing dollars to spend.”
“But what we do have is young booksellers,” he said. “And again, this model of leaving stores to do what they want turns out to be fantastically adapted for the social media age.”
Daunt hailed BookTok, the passionate community of readers on TikTok, as a powerful source of word-of-mouth recommendations.
“As long as we leave it to the kids with the blue hair, we’ll be fine,” he joked.
Daunt added that there’s no need for a broader marketing push behind popular books.
“The booksellers are fantastically good at communicating within store to store,” he said. “Books that start taking off in one store just sort of spread like a rash through the business,” he continued, adding that the organic process has a valuable authenticity.
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