What does it take to turn around a failing business?
Once dismissed as a relic of the past, Barnes & Noble pulled off one of the most remarkable turnarounds in modern retail. After years of losing ground to Amazon, B&N reinvented itself—not by competing on price, but by leveraging its greatest strength: local bookstores with a human touch.
The result? 600+ profitable stores, renewed customer loyalty, and a revitalized brand.
For business owners and leaders, this case study offers invaluable lessons. Here’s how Barnes & Noble transformed itself—and how you can apply these insights to your business.
1. Flatten Hierarchies and Empower Your Frontline Employees
One of the first things CEO James Daunt did upon taking over was to banish hierarchy.
“If I play any role, it is to constantly articulate that this is what we are doing—to banish hierarchy. Because I think hierarchy is the thing that constantly undermines us.”
B&N operated like a typical corporate chain for years, with book selection dictated by New York headquarters. Local booksellers had little say in what went on their shelves. Daunt reversed this, giving store managers complete control over inventory based on what their customers wanted.
The takeaway? Trust your team. If you’re running a business, don’t micromanage from the top. Give decision-making power to those closest to your customers—they often know what works best.
2. Prioritize Long-Term Strategy Over Short-Term Gains
Many struggling businesses make the mistake of prioritizing quick wins at the expense of long-term stability. Daunt took the opposite approach:
“You always make sure that it’s going to work in the medium and long term. Nothing is done for short-term expediency.”
One of his most controversial moves was eliminating publisher co-op fees—payments from publishers to place books in prominent store locations. While this practice generated short-term revenue, it also eroded the customer experience by making bookstores feel more like advertising platforms than curated literary spaces.
Ending co-op fees restored trust in B&N’s brand and allowed booksellers to highlight books that genuinely resonated with customers rather than the highest bidder.
Lesson for business owners: If your business model prioritizes immediate gains over long-term relationships, it might be time for a reset.
3. Localize Your Operations to Compete with Industry Giants
Many assumed that Amazon’s scale made it invincible in the book industry. But Daunt identified a key weakness: Amazon is terrible at discovery.
“They are really terrible at putting a book in front of you that you never thought you’d want to read.”
Unlike an algorithm, a local bookseller understands their community and can make personalized recommendations that keep customers engaged. By embracing platforms like #BookTok and leaning into local book trends, Barnes & Noble became a powerful discovery engine—something Amazon could never replicate.
This underscores an important truth for business owners: You don’t need to out-scale the giant—you need to out-localize them. Amazon may dominate logistics, but a local business can build relationships, personalize service, and offer a curated experience that no algorithm can match.
4. Deploy Capital Strategically to Drive Transformation
Private equity investment was one of the most significant factors in B&N’s turnaround. 2019 Elliott Management acquired the struggling bookstore chain for $683 million and installed James Daunt as CEO.
Rather than cutting costs for short-term profitability, Elliott made long-term investments in:
- Store renovations to improve the shopping experience.
- New layouts to encourage browsing and discovery.
- Operational autonomy to allow managers to make local decisions.
Within two years, B&N had returned to profitability. Smart capital deployment—not just cost-cutting—was the key.
The lesson for business owners is clear: If you take on investment, make sure it fuels real improvements, not just financial engineering.
5. Balance Scale and Autonomy for Maximum Impact
Barnes & Noble found a unique balance between a national brand’s efficiency and an independent bookstore’s personalization.
“Although we don’t do anything centrally, we are nonetheless a single company, and there’s a lot of chat between booksellers. That creates a sudden momentum around books.”
While each store operates independently, booksellers share insights and best practices across locations. This means that when a book gains traction in one region, it can quickly spread across the network.
This highlights an essential principle for business owners: Autonomy doesn’t mean isolation. If you have multiple locations, teams, or franchisees, encourage decision-making at the local level—while ensuring knowledge-sharing so the entire organization benefits.
Final Takeaways for Business Owners
Barnes & Noble’s turnaround isn’t just about books—it’s a blueprint for any business navigating disruption. Whether you run a retail store, a consulting firm, or an online business, these lessons apply:
- Flatten hierarchies—empower your team to make decisions.
- Prioritize long-term value over short-term profit.
- Compete with industry giants by doubling down on local expertise.
- Deploy capital strategically—invest in transformation, not just cost-cutting.
- Balance autonomy with shared learning—let teams operate freely but exchange best practices.
Barnes & Noble didn’t try to beat Amazon at its own game. Instead, they focused on what Amazon couldn’t do—creating meaningful, human-centered bookstore experiences.
Now, it’s your turn.
What’s one lesson from B&N’s turnaround that you can apply to your business? Share your thoughts—I’d love to hear how you adapt to today’s business landscape.
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