Hints & Cues
Proponents of consumer culture theory investigate consume choices, not by economic and financial benchmarks, but from the perspective of a culture. Understanding the identity of an organization is a key component under consumer cultural theory. From a cultural perspective, an organization’s identity may be marked by its goals, its past accomplishments, or its mission statements. The objectives of an organization and the types of people that comprise an organization play fundamental roles in determining the identity of an organization from a cultural perspective. However, the sum of an organization’s parts does not equal the organization’s whole. That is, identifying the cultural identities of each individual member of an organization does not reveal the identity of an organization. After all, every organization has organizational goals that affect an organization’s cultural identity. For example, an organization that deliberately targets individuals of diverse races for employment just to appear diverse without relying on the input of any members of a minority race has a much different identity than an organization that, instead, values hiring culturally diverse employees because they contribute in different ways, adding value to the organization. Likewise, an organization that maximizes its financial contributions to protecting the environment has a much different identity than the identity of an organization that only contributes funds to a cause that only appears to help the environment, just so the organization can appear responsible to its consumers.
The case study presented here focuses on the Barnes & Noble Bookstores Company, a bookstore that has gone through major changes in the past few decades. The two primary reasons that Barnes & Noble Bookstores was chosen for this case study are that the book company has been a major participant in the proliferation of ebooks, the distribution of which significantly reduces physical waste that harms the environment and the book company has had to face major challenges in attempting to compete with digital competition, namely Amazon.com. By 1991, Barnes & Noble Bookstores Company remained private, selling books in 68 superstores, while there were more than 700 Dalton books stores that the large company owned, as well as various other smaller chains that the growing company owned. In 1992, Barnes & Noble Bookstores CEO Leonard Riggio made Barnes & Noble Bookstores into a public company in order to raise capital to both reduce the debt of the book company and to increase growth. Also, Riggio hoped to add another 65 stores in the next year, which would have almost doubled the number of superstores that the book company owned. Furthermore, the goal of expansion for Barnes & Noble Bookstores was focused on the development of more brick and mortar stores, rather than a focus on the internet. Consumer cultural theory proponents may identify Barnes & Noble Bookstores as not being intimately concerned with environmental issues, just from the information presented thus far. However, market and competitive forces would force Barnes and Noble to shift towards e-books, but also towards additional shipping for book purchases due to online orders. The cultural identity of Barnes & Noble Bookstores would forever be changed.
During its efforts to develop a website to compete with Amazon, Barnes & Noble Bookstores also began to focus on selling other types of media. Yet, Amazon.com had already developed such an online presence for the sale of other types of media that Barnes & Noble Bookstores would have to play catchup just to try to be competitive in the online market. Even though there were only two years separating the launch of Amazon.com and BarnesandNoble.com, the former would remain years ahead of the latter. For one, Amazon.com had more innovate features and was constantly coming up with new ways to connect consumers to sales leads. Also, though, the focus by Barnes & Noble Bookstores away from e-commerce set it further than two years back since even with a website up the book company did not take seriously enough the threat of online book sales to brick and mortar establishments. The combination of a lack of awareness of the potential growth of the e-commerce industry and the persistence to stick with the traditional retail model of expanding physical stores set Barnes & Noble Bookstores back in a way that it cannot likely recover. Perhaps the dot com bust allowed Barnes & Noble Bookstores to believe that e-commerce would not become the future of sales, or perhaps it was simply the need to expand physically as quickly as possible. Nevertheless, though falling way behind in technology and internet sales, Barnes & Noble Bookstores continues to be the leader in the physical sale of books under a traditional retail model, while it not occupies a decent space in the online book sale industry. Still, if only Barnes & Noble Bookstores would have recognized that it could have become the leader in online book sales early on, it would likely still be reaping the benefits today.
An issue facing Barnes & Noble Bookstores today is not so much that it cannot keep up technologically. Rather, Barnes & Noble Bookstores lacks the branding as a technologically advanced company that Amazon.com has had from the beginning. While Barnes & Noble Bookstores has long branded itself as having superb stores that give pleasant buying experiences to customers, it has yet to compete with Amazon.com as a brand of technological innovation. Perhaps part of this issue is due to the lack of a technological figurehead for Barnes and Noble. While Apple had long had Steve Jobs as its technological figurehead, a wonderful speaker and presenter of technology, and Microsoft still to some degree relies on the appearance of technological genius of Bill Gates, Barnes & Noble Bookstores has never had a strong technological figurehead. Even Amazon.com has a strong figurehead with Jeff Bezos who many consider a technological pioneer, as well as a business pioneer. It is unlikely that a figurehead will emerge from Barnes & Noble Bookstores as one of the next technological geniuses or innovators. It seems more likely that Barnes & Noble Bookstores will continue to lag behind Amazon, if not technologically, then in the public’s perception of being technologically advanced.
Under consumer culture theory, an organization’s identity can be determined by assessing its goals and ambitions. Recent research on the topic of identity among consumer culture theory scholars reveals that cultural identity is, in fact, very malleable. That is, organizational identities change and adapt quickly to market conditions and competitive forces. By featuring an examination of the competitive forces that are driving Barnes & Noble, this case study can reveal the identity of the organization under consumer culture theory. A major market disruption for Barnes & Noble Bookstores came when Amazon.com entered the book market, offering low –priced books online. By 1985, Jeff Bezos had raised enough capital to establish Amazon.com in the center of the .com boom that provided a large amount of capital to willing entrepreneurs. The following bust soon followed and many speculators thought that Amazon.com may go down like many other technology companies before Amazon.com. Instead, Amazon.com continued to grow by reducing prices, reducing costs, and also expanding offerings. Bezos’s organizational strategy consisted of pleasing the customer first. He wanted to not only provide customers with a pleasurable online buying experience at an affordable cost, but also cut costs and hire creative employees. In establishing Amazon.com as the place to buy books and other goods online at rates comparable to Walmart, the book company could establish long-term connections with consumers that would drive sales for years to come. Perhaps the most remarkable characteristic of Amazon.com in its early years was its remarkable online infrastructure. From the beginning, Bezos sought to hire a strong creative technical team that could deliver outstanding online experiences to customers. At a time when internet speeds were drudgingly slow, Amazon.com found a way to provide a relatively simple and pleasant buying experience online. In the 1990s, the Amazon.com website of today would take minutes to load each webpage, deterring customers from ever establishing long-term connections with the e-commerce company. However, at the time Amazon.com simplified the e-commerce user interface, cutting load times down and enhancing user experience. Another remarkable characteristic of Amazon.com during this time period was its ability to constantly become more efficient, which has carried over to today. With an impressive growth rate of 20% per year, Amazon.com managed to reduce the costs of operations from 20% of sales to just 10% of sales by 2003. Additionally, at the same time it managed to produce an inventory turnover of 20 times, while others were lucky to get 15 times.
With two years of competition with Amazon.com without having its own e-commerce website, Barnes & Noble Bookstores began developing BarnesandNoble.com in 1997, almost as a direct response to Amazon.com. Even with the emergence of Amazon.com and other online retailers, Barnes & Noble Bookstores persisted on focusing on the development of physical bookstores at the turn of the 21st century and, although it had created an e-commerce site to compete in the online sales of books, insisted on the brick and mortar store as its primary medium of creating positive buying experiences for its customers. In many ways, BarnesandNoble.com was simply a complementary experience to go along with the company’s physical stores. Like Amazon, Barnes & Noble Bookstores sought to hire outstanding talent. But instead of focusing on an impressive online infrastructure and user interface, Barnes & Noble Bookstores hired outstanding distribution and retail management and partnered with some of the country’s top book publishing companies. Barnes & Noble Bookstores also was very flexible in its operations, allowing freedom for managers to innovate each organization’s culture to solve real-time and regional-specific challenges. While Amazon.com expanded its research and development department, hiring several thousand technologically skilled employees, Barnes & Noble Bookstores did not seek direct competition with Amazon.com as being an online retailers. Rather, the book company focused its resources on physical stores. This reflects how Barnes & Noble Bookstores initially resisted market forces in keeping its identity. However, it was only a matter of time before Barnes & Noble Bookstores would be virtually forced to change its fundamental cultural identity to one that is much more similar to Amazon.com’s identity. Globalization and technological changes would have major impacts on the Barnes & Noble Bookstores identity.
By the early 2000s, Barnes & Noble Bookstores was in need of a serious online makeover. It had fallen way behind Amazon.com in both online sales and sales in general. This is not surprising given Amazon’s much more expansive offerings of goods compared to Barnes and Noble’s sales being almost exclusively of books. Still, Barnes & Noble Bookstores was falling way behind Amazon.com in online book sales. Amazon.com had established itself as the go-to website for online book purchases, while Barnes & Noble Bookstores was developing its physical stores. A major problem during this time was the professional culture at Barnes and Noble. It modeled itself heavily after Mintzberg’s concept of a Professional Bureaucracy which did not include a focus on being internet savvy. Barnes & Noble Bookstores needed to shift focus, at least partially, towards the emerging e-commerce world. Unfortunately for Barnes and Noble, Amazon.com had a strong foothold in the online sales of books. Barnes & Noble Bookstores was viewed by the public as not being a major participant in the online community. Thus, when consumers considered buying books, although they may consider Barnes & Noble Bookstores first when they wanted to drive to a physical bookstore, when wanting to make online purchases of books, they tended to consider Amazon.com first. If no physical Barnes & Noble Bookstores store was close enough to a customer, that customer would likely consider Amazon.com next. This would not be an easy obstacle for Barnes & Noble Bookstores to overcome. The company’s technology was outdated and it needed to have an answer in the e-commerce industry fast. The perception of Barnes & Noble Bookstores as being outdated technologically and not a serious competitor in the online market even made it difficult for Barnes & Noble Bookstores to hire a sufficient number of highly qualified technology experts, software engineers, and researchers. Even so, the need for innovation drove Barnes & Noble Bookstores during this time period and by 2005 Barnes & Noble Bookstores had developed a website to compete with Amazon. Moreover, Barnes & Noble Bookstores lacked the online branding that Amazon.com had established in the past decade. The sudden change in identity for Barnes and Noble marks a period in which the company was forced to respond to Amazon.com and a ‘digitized’ book-buying market. The resistance to change shown by Barnes & Noble Bookstores has left the book company behind Amazon.com in having an online presence. The culture of Barnes & Noble Bookstores has largely remained the same, in that the company has continued to provide high-quality, in-person services and products for its customers. Customer service has always been a focus of Barnes & Noble. The growth of the online book industry and the ebook industry have not changed this. There has, thus, been remarkable resistance to cultural change by Barnes & Noble. The question now is, how long can such resistance continue?
Under consumer culture theory, organizations may resist changes in culture and identity, especially those caused by market forced. As Amazon.com continues to advance technologically, coming up with new offerings monthly, Barnes & Noble Bookstores will be forced to decide whether to continue resisting changes in the market or commit more completely to the growing influence of Amazon.com’s digital marketplace by abandoning its high customer experience model that requires higher prices. Innovation, expansion, and continued customer-focused sales describe the future of Amazon, while conservative policies and providing excellent in-store experiences describe the future of Barnes and Noble. Certainly Amazon.com can be considered a wild card when compared to Barnes and Noble. With the recent announcement of a possible drone delivery program for Amazon.com packages, Amazon.com has proven its commitment to innovative solutions. As discussed earlier, this sort of innovation creates a high-risk, high-reward characteristic for investments in Amazon. Amazon.com spends a considerable amount of capital on research and development. Though this is likely required for the continued growth rates that Amazon.com has experienced over the last few decades, it also means that Amazon.com will be relying more on unproven markets and technology in the future. Its track record is certainly promising for investors, even though Amazon.com had not yielded outstanding profits. Possible avenues for innovation, such as drone delivery systems, are in the works and promising for Amazon. Drone delivery may considerable decrease the operational costs at Amazon, in large part by cutting out third-party delivery partners, even though Amazon.com has made considerable progress in reducing the relative cost of deliveries. Even if such innovative approaches to cutting costs and improving customer satisfaction do not all pan out, if even a considerable number of them do then Amazon.com will likely continue setting trends for future online retailers. Another way to view such innovative approaches is considering the amount of public awareness that such innovation brings to Amazon. The announcement of a possible drone delivery system seemed a bit premature on Amazon’s part, but it did bring in considerable PR to Amazon.com and its services. Amazon.com has never been the type to intentionally make waves in public relations. However, this may be another innovative tool in Amazon’s marketing arsenal, to go along side data-driven targeted advertising. Amazon.com is certainly continuing to change the market in which Barnes & Noble Bookstores competes. Resistance to cultural changes will be difficult for Barnes & Noble Bookstores.
One of the most fascinating areas of change in the Barnes & Noble Bookstores market is the types of offerings, as being determined by technological advances. Much of Amazon’s innovativeness has to do with its commitment to being a technology company. The competitiveness of Barnes & Noble Bookstores in the book market, on the other hand, may depend heavily on factors that shift sales either towards or away from in-store purchases. As discussed earlier, Barnes & Noble Bookstores is still primarily a brick and mortar company, with its secondary sales coming from online purchases. Thus, if factors in the market shift demand towards or away from in-store sales, then Barnes & Noble Bookstores would likely be heavily affected, one way or the other. If, for example, the price of fossil fuels rises in the next decade, such that online companies such as Amazon.com may be forced to increase their prices of goods, then Barnes & Noble Bookstores would seem to benefit, even though Barnes & Noble Bookstores would likely have to pay a little bit more for the mass delivery of their goods. If, on the other hand, the cost of delivery decreases, whether because of new technologies like drones arise in the delivery service market or some other combination of reasons, then it seems that online retails such as Amazon.com will have even greater advantages over companies such as Barnes & Noble Bookstores who rely primarily on sales in physical stores. The future prices concerning in-store and online book markets is difficult to predict, as is the future of books. If e-books are the future of books, then Barnes & Noble Bookstores will have to keep up with Amazon.com and other online e-book providers, which may be difficult given its relative lack of technological infrastructure and branding. The current cultural resistance to changing its core culture may be what keeps the Barnes & Noble Bookstores brand strong. From a consumer culture theory perspective, such resistance is good for consumers who seek a stead brand and predictable organization. However, with the advancing technologies and low prices of Amazon.com, the current resistance shown by Barnes & Noble Bookstores may necessarily give way to a culture that allows for worse customer experiences to drive down costs.
This project has featured an examination of how consumer culture theory, especially identity and resistance, can be applied to a single organization, namely Barnes & Noble Bookstores. The project has revealed that Barnes & Noble Bookstores has largely resisted the cultural changes that today’s technologically advanced and globalized markets seem to require. Barnes & Noble Bookstores still offers high quality customer service at moderate prices, unlikely its biggest competitor, Amazon.com. Nevertheless, Barnes & Noble Bookstores was forced to enter the online book sales market and the ebook market by tough competition. Moving forward, it will be interesting to see how the culture, identity, and goals of Barnes & Noble Bookstores change over the next several years. The current resistance shown by the bookstore company may hold. Consumer culture theory will be applicable in determining how consumer perceptions and the cultural identity of Barnes & Noble Bookstores change during this time period.
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