B. Dalton Bookseller Inc. Business Information, Profile, and History

History of B. Dalton Bookseller Inc.

B. Dalton Bookseller Inc. is the second-largest operator of shopping-mall bookstores in the United States. This subsidiary of Barnes & Noble, Inc., the world's largest bookstore chain, also oversees the operations of two smaller bookstore chains, Doubleday Book Shops and Scribner's Bookstores.

Suburban-Mall Specialist: 1966-78

B. Dalton Bookseller was founded in 1966 by Dayton Co., an expanding retailer best known for its Minneapolis department store. Company president Bruce Dayton later explained the decision to enter the fragmented retail book trade in this way: "Sears, Roebuck, and Penney's, our typical competitors, weren't strong on books. And on the other hand, we saw nonpublishers like General Electric and Xerox making books and saw no reason why a previously non-bookseller like Dayton's couldn't sell them." He went on to add, "We felt that what the book business needed was merchandising knowhow, the kind of selling that 'mom-and-pop' stores don't do. Naturally, our emphasis was on salesmanship rather than bookmanship."

Accordingly, Dayton had no qualms about hiring Richard N. Hagen, a former department store buyer specializing in women's hosiery, as the first president of B. Dalton. Hagen targeted well-educated, middle-class suburbanites 20 to 35 years of age, the customers whom market research indicated spent the most money on books. The first B. Dalton store opened in a shopping center in Edina, a suburb of Minneapolis. By April 1968 there were nine B. Daltons, all in suburban shopping centers.

These outlets of 4,000 to 7,000 square feet were uncluttered, with parquet flooring, wide aisles, and an unrestricted approach to the book displays so customers did not have to squint or stand on tiptoe to read titles. The average store carried 20,000 titles, including a hardcover list of 8,000 adult books and 3,000 to 4,000 juveniles, with the rest in paperback. Their stock was 85 percent books; stores also carried greeting cards, adult games, phonograph records, den decorations, and various novelty items. A furniture section displayed Bank of England chairs and Williamsburg decks, and a $1,200 world globe was featured in the window.

B. Dalton could count on vital support from the parent company, which became Dayton Corp. in 1967 and then Dayton Hudson Corp. in 1969, after it acquired Detroit's J. L. Hudson department store. By adopting the use of Dayton's NCR315 computer system, B. Dalton became the first completely computerized book operation in the country, with each sale recorded on tape and the tapes shipped to the computer center on weekends so that the new inventory figures were back in the stores by Monday. As a volume buyer, B. Dalton could afford to place large, preseason orders with publishers at an advantageous discount. At this time, however, an estimated 75 percent of sales volume was in backlist books rather than best-sellers.

By mid-1968 there were 12 B. Dalton bookstores in Arizona, California, Kansas, Minnesota, Missouri, Ohio, and Wisconsin. Just two years later there were 27, including outlets in Indiana and Nevada as well. By 1974 there were about 125 B. Dalton stores in operation, each of them stocking about 25,000 titles. By then the chain had converted to a high-volume, mass-marketing approach, catering to a broader class of reader than before. The walls were now covered with books piled to the ceiling, with more stacked on the floors at the ends of display islands (a strategy later described as "pile 'em high and watch 'em fly"). Many of the outlets displayed hardcover books and paperbacks side by side, an unusual method for the time. By late 1976 there were some 360 B. Dalton stores in existence, with store space ranging from 1,400 to 9,000 square feet.

In 1976 another Dayton Hudson subsidiary, Pickwick Book Shops, Inc., was merged into B. Dalton. Founded by Louis Epstein, Pickwick was operating seven stores in southern California when it was acquired by Dayton in 1968 for $8 million. The main store, opened in 1938 on Hollywood Boulevard, had attracted among its customers (or browsers) such authors as Bertolt Brecht, Theodore Dreiser, William Faulkner, F. Scott Fitzgerald, Aldous Huxley, and Thomas Mann. Among the film colony in attendance were Charlie Chaplin (who complained about the prices) and Marlene Dietrich (whom one customer reportedly mistook for a clerk). The Pickwick chain grew to 16 by 1972. After merger with B. Dalton, it became B. Dalton/Pickwick. The main store--later B. Dalton Hollywood--closed in 1995.

By the end of fiscal 1978 there were 357 B. Dalton outlets in 43 states, with combined annual sales of $174 million, making the chain the largest in sales in the country and second only to Waldenbooks in store number. During that year the company sold 47 million books, including about one-tenth of all hardcover books published. Some of its stores offered such services as reproducing out-of-print books and ordering from foreign publishers. The centralized computer system enabled Dalton's 20-odd buyers to spot popular books early and restock the best-selling ones quickly.

Mass Marketing: 1978-86

In November 1978 B. Dalton opened a 25,000-square-foot, two-story flagship store on Manhattan's Fifth Avenue that carried 100,000 titles and 300,000 books, making it one of the largest in the world. There were other B. Dalton outlets in central business districts and also in freestanding buildings in strip shopping centers, but most remained in suburban malls. Sites were chosen using demographic studies of 36,000 communities with information broken down into census tracts. The chain's research had found that the heaviest readers were between 21 and 49 years old, were generally in managerial or professional positions, and were predominantly female. However, not all locations and offerings were aimed at this kind of reader; an outlet in a working-class neighborhood of Troy, Michigan, for example, stocked almost triple the number of home-improvement books and auto-repair manuals found in a store five miles away.

Whatever the location, B. Dalton stores tended to bear a close resemblance to one another. The parquet floors and heavy fixtures once typical of the bookseller were phased out; dangling pieces of cardboard signage suspended from the ceiling, some showing smiling green worms chewing on books, were introduced. All outlets fed their cash-register data into the company computer--now an IBM 158--so that headquarters could immediately dictate what should be stocked and how it should be displayed. Book sales were broken down into 100 categories, ranging from philosophy to rocks and gems. "Given a lot of display, any book will sell," said a buyer for the chain, adding "The trick is to find out what book will sell best and put it where people can see it." New titles selling more than 80 copies a week were placed on what a store called its "hot list," entitling them to special display on racks near the front. If such a book moved to the chain's best-seller list, it qualified for front-window display.

This kind of commercial appeal, however, found no favor among those with eclectic taste in literature. In a 1979 issue of Saturday Review, a college journalism director complained that among the 40,000 titles in Edina--the original B. Dalton store--"serious readers would look in vain for anything of real interest. Most ... fall in such categories as pop-psychology, how-to, cookery, and gothic romances; the store has the best selection of 'me-first' books in Christendom.... 'Hitler,' the Edina store manager told him, 'is very big this year'." B. Dalton rarely considered stocking a book with a printing of fewer than 10,000 copies.

By the end of fiscal 1981 there were 579 B. Dalton stores in operation nationwide. Late that year the chain introduced a buy-by-category policy, under which money was budgeted to spend on each category, rather than, as previously, by publisher. This system, according to a publisher's sales manager, was similar to the way in which department stores operated, as it better controlled cash flow and proved more efficient for administration. However, the manager noted, it affected reorders adversely "because there's usually no money available to capitalize on the fast-moving titles." Nevertheless, in 1986, B. Dalton's chairman called the change to category buying "the single best thing we've ever done.... I know it creates problems for publishers, but it has improved service 100%."

In 1983 B. Dalton opened Pickwick Books as a discount chain, establishing three outlets on a trial basis in Columbus, Ohio. The number of outlets had reached 22 by the end of fiscal 1984, each carrying some 7,500 titles. Pickwick Books offered a 40 percent discount on hardcover best-sellers and an across-the-board ten percent on all other titles. The number of Pickwick stores reached 37 by June 1986, when B. Dalton announced that the chain would be discontinued. Dalton, which had begun its own discounting program in 1984, said it would convert 17 of the stores to its own chain and close the rest. Store surveys had shown that when B. Dalton lost customers it was to other stores discounting the top ten titles.

Still expanding, B. Dalton had 777 stores, averaging 3,000 to 5,000 square feet in size, at the end of fiscal 1984 and sales of $539.1 million for the year, but its profit margin fell to little more than four percent, compared to a peak of 10.5 percent in 1981. This was the result of a book market increasingly driven by discounters such as Crown Books Corp., which was established in 1978. In addition, the chain's growth prospects were being adversely affected by a slowdown in the construction of shopping malls, and its profits were further threatened by rising rental costs in the existing ones. One promising area for B. Dalton, however, was computer software; the company was, in 1986, testing software "stores within a store" at more than 30 of its locations. Another new foray was into leased book departments; the chain had opened them in eight Dayton Hudson department stores and was actively pursuing other such locations.

A Barnes & Noble Subsidiary: 1986-97

B. Dalton had 798 outlets in November 1986, when Dayton Hudson sold the company for around $300 million to a corporation owned by Barnes & Noble Bookstores Inc., the nation's third-largest bookseller, and two other parties--Leonard Riggio and the Dutch retailer Vendex International, N.V. Operations for both Barnes & Noble and B. Dalton were consolidated, with all back-office operations moved to Westbury, Long Island, and B. Dalton's buying office moved to New York City. "Under Dayton Hudson, B. Dalton was fairly bureaucratic," a publishing executive said in 1991. "Under Lenny's direction," he continued, "it's a lot more entrepreneurial."

One of the parent company's first moves was to eliminate home-video products from the 550 B. Dalton outlets that regularly carried the category. The chain had repeatedly failed to devise a program to match the success that Waldenbooks enjoyed in video operations. B. Dalton continued to carry audio tapes, including the self-hypnosis/subliminal-persuasion type that dominated this category. By the summer of 1988 Riggio, the chief of both Barnes & Noble and B. Dalton, was spending $5 million a year on spot television commercials in which "Books Dalton," a bookish-looking, bespectacled, suspenders-wearing character, promoted the chain's best-selling titles. Nevertheless, backlist titles kept in print because of steady demand made up about 70 percent of B. Dalton's business and were higher-profit items than best-sellers because they were rarely discounted.

B. Dalton opened another chain of bookstores after acquiring the Scribner's bookstore name and the Scribner's bookstore in Costa Mesa, California, in 1989. (The publishing house Charles Scribner's Sons, acquired in 1984 by Macmillan Inc., continued to be held by that company.) In 1990 B. Dalton gained the resources of another chain when its parent company purchased 39-outlet Doubleday Book Shops Inc. from Bertelsmann A.G. for about $20 million. (Bertelsmann, which had also purchased the publisher Doubleday & Co. in 1986, retained what had become Bantam Doubleday Dell Publishing Group.) B. Dalton continued to position Scribner's and Doubleday as upscale rather than mass-market chains. A few months later Barnes & Noble bought a Texas and Florida chain of discount bookstores called Bookstop and about this time opened a mall-based retail chain called Software Etc.

As the construction of shopping malls slowed in the late 1980s, B. Dalton cast around for new ways to stimulate sluggish sales growth. In 1990 it introduced a "Booksavers Club," which, for a $10-membership fee, offered discounts and mailed newsletters and coupons to its enrollees. Also that year, the chain introduced a "Discover Great New Writers" program promoting 29 novels by unknown or little-known authors, some of whom were published by small presses. A Wall Street Journal article reported that a string of fiction and nonfiction books had become surprise best-sellers in the past years without the chains paying much attention. As a result, according to a small-press founder, "The chains like B. Dalton are trying to pick up on what has made some independents so successful."

In September 1990 B. Dalton opened the first of what it said would be a series of large stores stocking more than 100,000 titles. The chain had, in 1989, begun closing more than 50 outlets a year because of disappointing sales while also seeking better sites for others within the malls. A prototype store was developed in 1993, and over the next three years B. Dalton fielded more than 100 new or converted stores. At the same time, however, the number of B. Dalton outlets continued to shrink--from 698 in 1994 to 639 in 1995, 577 in 1996, and 528 in 1997. Sales volume for the combined Dalton, Scribner's, and Doubleday chains fell from a peak of $732 million in 1991 to $707 million in 1993, then to $646.7 million in 1994, $603.2 million in 1995, $564.9 million in 1996, and $509.4 million in 1997.

At the end of fiscal 1997 B. Dalton's 528 stores in 45 states and the District of Columbia included 18 Doubleday Book Shops (down from a peak of 40) and nine Scribner's Bookstores, both of which were in higher-end shopping malls and placed a greater emphasis on hardcover and gift books than the B. Dalton outlets. B. Dalton stores ranged in size between 2,800 and 6,000 square feet and were stocking between 15,000 and 25,000 titles. About 90 percent were located in enclosed regional shopping malls.

The B. Dalton store on Manhattan's Fifth Avenue closed in May 1997, a victim of the high rents in that part of midtown. One month later, the last remaining Doubleday Book Shop on the avenue closed its doors after 36 years. There had been at least one Doubleday bookstore on Fifth Avenue since 1916.

Principal Subsidiaries: Doubleday Book Shops, Inc.