Barnes & Noble Starts $40-a-Year Membership Program

From a Wall Street Journal story by Jeffrey A. Trachtenberg Headlined “Barnes & Noble Takes Page From Amazon with $40-a-Year Membership Program”:

Barnes & Noble is launching a $40-a-year membership program that promises to offer 10% discounts, free shipping, a tote bag and bigger lattes to its members.

In asking customers to pay an annual fee for a range of perks, the largest bookstore chain in the U.S. is following some of its competitors, including Inc. and Walmart Inc., whose respective Prime and Walmart+ programs offer no-minimum free shipping, among other benefits.

The bookseller is also launching a free, lower-tier membership program that allows members to earn a virtual stamp for every $10 spent online and in stores, and translate into a $5 credit for future purchases once 10 stamps have been accumulated. People who sign up for the $40 program also get the rebates.

The efforts will give Barnes & Noble the opportunity to learn more about its customers​​—from what they read to when and how often they buy—so that it can pitch them more effectively.

Both new offerings are loosely modeled after a membership program at Waterstones, the U.K.-based bookstore chain that, like Barnes & Noble, is owned by hedge fund Elliott Management Corp.

“If you don’t have a free program, the vast majority of your customers are blank to you,” said Barnes & Noble CEO James Daunt, who is also chief executive of Waterstones. Through such a program, he said, “You can learn what they are buying, and then promote to them and engage them.”

The issue, said Rafi Mohammed, a pricing-strategy consultant and author of “The Art of Pricing,” is whether the add-ons for the $40 membership program are game changers for consumers. “Yes, Barnes & Noble now has a free option, but asking people to pay more during an uncertain economy is risky.” Mr. Mohammed added that he would have kept the current, lower-priced membership program as well.

Mr. Daunt said people who sign up for the B&N Premium Membership would get a 10% discount on almost everything in store and online, free shipping, free drink-size upgrades at the cafes inside the bookstores as well as a new tote bag every year, which he valued at $20.

The move comes as many retailers, from Walmart to Best Buy Co. to Amazon, offer paid-membership programs intended to boost traffic and revenue.

Walmart charges $98 annually for a membership in Walmart+, a program that includes free store deliveries and rewards that can be used on future purchases as well as other perks, including free access to Paramount Global’s Paramount+ streaming service. Amazon Prime offers many benefits, including access to its own streaming service, Prime Video.

Mr. Daunt said the new paid-membership program would replace a previous one, which offered discounts for purchases made inside Barnes & Noble’s physical stores—as well as free shipping for most online orders—and cost $25 a year. That plan didn’t extend discounts to online shoppers, a strategy that Mr. Daunt said conflicts with the retailer’s strategy of making books available wherever customers want to buy them.

Mr. Daunt estimated that at least three-quarters of the 5.5 million people currently paying $25 annually would sign up for the new $40-a-year program. He said he expects the total number of paid members to remain about the same at year-end because he believes new customers will be attracted to the $40 offering.

The new membership programs are intended to better tailor the bookseller’s offerings to individual shoppers, Mr. Daunt said. Although Barnes & Noble no longer publicly reports its financial results, the company recently said it plans to open 30 new stores in 2023 as the chain benefits from store improvements made during the pandemic and continued customer demand.

“If you’re interested in ornithology or cookbooks, we’ll be in a position to offer you recommendations and special offers,” said Mr. Daunt. “It allows us to be much more intelligent and engaging and interesting.”

If Barnes & Noble decides to focus on a specific book, it can send an email to its customers offering them double stamps as an inducement, Mr. Daunt said. The goal, he said, was to make the retailer’s emails more interesting and to give customers a reason to open them.

Jeffrey Trachtenberg covers the book industry and is part of the Wall Street Journal’s Media and Marketing Bureau in New York. During his tenure on the beat, he’s written about the rise of Amazon as the world’s dominant book retailer, the struggles of Barnes & Noble to reinvent itself for the e-commerce era, and consolidation among the biggest publishers as they try to maintain leverage in a changing industry.

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