With print book sales in decline, the effect on chain bookstores like Borders (BGP) and Barnes and Noble (BKS) has been obvious. All one has to do is walk into a store of either chain and see how little relative space is devoted to books as compared to e-readers, gifts, toys, and games. Now B&N is testing out a new model for selling toys in its stores that essentially creates a "store-within-a-store" -- and if the tests prove successful, look for this model to be replicated all across the country.
According to Reuters, five B&N store locations in the tri-state area now contain 3,000-square-foot play areas with educational toys and games. This significantly expands the offerings already available in the retailer's 720 stores nationwide, and includes separate signs and five specific sections organized according to the goal of the toys, such as building, learning or playing.
Investors will probably be happy with that declaration, but it remains to be seen whether they will think expanding toys to take up significant floor space in B&N stores is good from a Wall Street standpoint. Of course, investors were generally skeptical about B&N's Nook e-reader, and while sales of the device and its e-books aren't at the level of Amazon's (AMZN) Kindle, B&N is very solidly in second place. The upcoming Nook Color -- comfortably in between black and white e-readers and full-color tablets -- should also provide a healthy sales boost for B&N during the holidays.
But as long as Barnes & Noble is beholden to shareholders, larger problems, such as the long-running proxy fight with Ron Burkle, solicitation of potential sales bids and the complex relationship between the company and its founder and chairman, Leonard Riggio, overshadow practical changes made to the stores at ground level. If those larger problems are taken care of, B&N will have more breathing room to transform at a rate it dictates, rather than one dictated by others with an interest in whether the stock price goes up and down.
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