Barnes & Noble College Booksellers is the scholastic subsidiary of Barnes & Noble (B&N), the nation's #1 bookstore chain. Established in 1965, the company operates some 645 bookstores serving more than 4 million students on college campuses nationwide, selling textbooks (new, used, rental and electronic), trade books, school supplies, collegiate clothing, and emblematic merchandise. It also offers merchandise through campus bookstores' websites. Universities, medical and law schools, and community colleges hire B&N College to replace traditional campus cooperatives. Some of its well-known campus bookstores include Boston University and Yale. B&N College accounts for nearly 25% of its parent company's sales.
Barnes & Noble chairman Leonard Riggio, who owned a controlling interest in B&N College, sold it back to B&N for $596 million in September 2009. The two companies reunited -- after having operated separately since Barnes & Noble went public in 1993 -- in a bid by the nation's largest bookstore chain to increase its cash flow by buying a business less sensitive to economic cycles than its own. B&N was also attracted by the college bookstore's access to the growing market for electronic textbooks.
In addition to its traditional college bookstores, B&N College operates about 35 academic superstores at select campuses, including the University of Pennsylvania, Yale, and Vanderbilt University. The superstores range in size from 8,000 to 75,000 square feet (vs. 500 to 48,000 square feet for a traditional college bookstore). The larger stores seek to attract customers from the surrounding communities as well as students and thus are less dependent on course-required materials.
Like an unemployed college graduate, Barnes & Noble is beginning to wonder if its college investment will begin to pay off. The College division's fiscal 2012 (ends April) sales fell 2% vs. the prior year, despite the addition of 11 new stores. The company blamed the decline in sales on increased textbook rentals, which cost less than new or used textbooks. Same-store sales at the college bookstores have posted negative comparisons each year since B&N College reunited with B&N.
B&N College's strategy is to ingratiate itself with students and the colleges and universities they attend. In a bid to capture budget-minded scholars and protect its market share from encroaching online retailers, B&N College launched a textbook rental option in fiscal 2011. The company's rented textbooks are available for about half the price of purchasing a new one. Titles can be rented for 60, 90, and 130 days, and can be returned for a full refund within 21 days.The college bookseller has also expanded its electronic offering of textbooks and other course materials through its proprietary digital platform NOOK Study. The NOOK Study application features highlighting and note-taking functions. While the addition of relatively low-cost textbook rentals is an attractive option for students, it is cutting into the company's sales and profits.