“Whether the Andrea Gail rolls, pitch-poles, or gets driven down, she winds up, one way or another, in a position from which she cannot recover. Among marine architects this is known as the zero-moment point – the point of no return.” –Sebastian Junger, “The Perfect Storm”
Posts like this aren’t my usual fare, but there’s a lot of readers on Tumblr. So y’all might be interested – or, if not, you really should be.
Fuente original: The entirely unnecessary demise of Barnes & Noble
On Monday, this went down:
That’s the bloodless, matter-of-fact, ho-hum business event way of describing it. Let me paint you a different picture.
On Monday morning, every single Barnes & Noble location – that’s 781 stores – told their full-time employees to pack up and leave. The eliminated positions were as follows: the head cashiers (those are the people responsible for handling the money), the receiving managers (the people responsible for bringing in product and making sure it goes where it should), the digital leads (the people responsible for solving Nook problems), the newsstand leads (the people responsible for distributing the magazines), and the bargain leads (the people responsible for keeping up the massive discount sections). A few of the larger stores were able to spare their head cashiers and their receiving managers, but not many.
Just about everyone lost between 3 and 7 employees. The unofficial numbers put the total around 1,800 people.
We’re not talking post-holiday culling of seasonal workers. This was the Red Wedding. Every person laid off was a full-time employee. These were people for whom Barnes & Noble was a career. Most of them had given 5, 10, 20 years to the company. In most cases it was their sole source of income.
There was no warning.
But it gets worse.
The people who lost their jobs had been actively assured this would NOT happen for the past several months. Home Office decided last year that these positions – head cashiers, receiving managers, leads – were due to be eliminated… but no layoffs were to take place. All current employees were to be grandfathered in. The positions wouldn’t go away until the people currently holding them chose to leave.
For months they told everyone this.
Then on Monday, each person was called into the manager’s office. Fifteen minutes later, each person gathered up their things and left.
Severance packages varied; usually as little as two weeks pay. Demotions were not offered. Those laid off – and I’d like to reiterate that these were career employees – were offered the opportunity to reapply for part-time positions. At base pay.
“Thanks for your 17 years of service. If you’d like to come back in two months to work registers for minimum wage, we’d love to have you.”
(Don’t let the glamor of book sales fool you. B&N entry pay is minimum wage.)
Now. You’re going to hear a lot about the dropped sales. You’re going to hear a lot about Amazon. You’re going to hear about how there was no way around this.
That, dear friends, is bullshit.
I want to talk to you about why sales dropped during the holidays.
A company wants cash on hand to look good to stockholders. The quickest way for a company to get cash on hand is to cut back on payroll. Which Barnes & Noble did this holiday season. During December, staffing at most locations was no different than it would be on your average day in June.
Something kinda important is happening in December, btw.
In particular, hours in receiving were carved to the bone. You know what that means? It means that product – product that could be selling – sat unopened in boxes. In many cases, those boxes had already been logged into the system. The computers showed we had them. Customers came in, expecting to purchase things, knowing they were in the store! But what they wanted was buried under 100, 200 boxes. And there were no employees to find them. There were barely any employees available at all.
Customers went away annoyed. And they shopped on Amazon instead.
Because, well, why not?
(As a side note: people often want to know why Amazon’s prices are so much lower than B&N’s, and why B&N doesn’t price match. There’s a lot of different reasons, but the biggest is that Amazon loss-leads their books: that is, sells them at a loss, then makes up the money with expensive add-ons, like Echos or Kindles or other non-book stuff.
Barnes & Noble only has books; they can’t make up the discount loss by selling water coolers. Amazon undercuts prices, and once they’re the only players in the market, that will stop. Just so you know.)
Yeah, sales sucked. Cutting hours during the busiest season of the year punched quarter earnings in the gut. Big shock.
So, if you were trying to solve the problem – if you were trying to revitalize this business – what would you do?
“Oh, I know! I would tighten my belt at the executive level, then I would double-down on what we can offer that Amazon can’t: enthusiastic staff that can find and upsell books to suit each customer, and the largest in-store selection possible so that everyone who comes in can walk away with what they want. If I absolutely had no choice but to reduce payroll, I would eliminate some part-time positions, and count on the knowledge and experience of our veterans to get us through the lean times.”
Those are definitely the choices you would make if you wanted to rebuild a company to last.
But here’s a secret:
The Barnes & Noble executives do not intend to rebuild.
How do I know this? Because every decision from the upper levels is being made solely to increase cash on hand.
There’s been so many things – so many things – but me tell you about the canary in the coal mine. Let me tell you how I know saving Barnes & Noble is not in the home office’s plans.
Last summer, the decision was made to switch to “ship from store”. Previously, when a customer ordered a book online, the book would be shipped to them from one of our warehouses. The new policy, however, had stores taking books off their shelves, packaging them up, and sending them out each day.
This was to “decrease shipping time by sending books from the closest location to the customer.”
(Spoiler alert: that wasn’t true.)
So each store takes employees off the selling floor – where they could, you know, help customers – and sets them to fill orders. The stores remove books from their own shelves and mail them out.
The stores do not get credit for those sales.
Let me repeat:
The stores do not get credit for those sales.
The company makes money. The brick and mortar store – which Barnes & Noble is based on – loses the opportunity to sell that book (pissing off customers), and gets nothing in return.
Which hurts the bottom line of that store.
“Uh-oh, your sales dropped. Better cut back hours.”
This is a decision that is only made if the executive level of a company is no longer interested in helping their business. This is a decision that is made only if the executive level has decided the company is dying, and don’t care if they hasten along the demise as long as they can harvest the organs for themselves and leave everyone else with the shriveled husk.
Speaking of organ harvesters.
By the way, it should be noted that the last CEO, who worked for Barnes & Noble for less than a year, received a $4,500,000 payout. The CEO before him, who also worked at Barnes & Noble for less than a year, received a $10,000,000 payout.
The company saved $40m by firing 1,800 employees.
After paying out $14,500,000 to two executives.
Which brings us back around to Monday’s layoffs.
By getting rid of their most expensive (ie, most experienced) workers, B&N was able to replace said workers with part-time, benefit-less, minimum-wage employees. This is not to knock newbies – we were all ones once! – but a new hire can’t do what a 15 year veteran can. They just can’t. Not right away. Not for a long time. And not in the specialized departments that were laid off: head cashiering, receiving, digital, newsstand, bargain. Those are hard jobsthat take training.
Who’s going to train?
And who’s going to want to be trained for something that hard, when there’s no possibility of a promotion down the line? When you’re only working minimum wage for a maximum of 25 hours a week?
At the beginning of this post, I quoted Junger and the zero-moment point. The loss of these veterans, and the positions they worked, cannot be recovered from. Barnes & Noble is going under.
“That sucks, but it’s the way capitalism works. Hate the game, not the player.”
On Monday morning, as thousands of lives were upended, Barnes & Noble – literally in the same hour – released this:
“His deep knowledge of retail and proven track record are exactly what we need to invigorate our merchandising strategy and grow our business.”
Grow our business.
I don’t know what happens after Barnes & Noble sinks. It’s all well and good to say “Support indie stores!” but there are huge swaths of America where there aren’t any. B&N is the last thing standing between Amazon and a total monopoly of the publishing industry, and a monopoly is never a good thing. But the entire book world needs to be prepared, because it’s coming.
The zero-moment point came Monday, and in the crassest, cruelest, more heartless way possible.
Barnes & Noble has slit its own wrists. Now we just wait to bleed out.