Bargain Book Baron
Chairman and CEO of Barnes & Noble Inc.
"Don't look at successful people as aberrations. Excellence is out there for anyone."-Leonard Riggio
Leonard Riggio has been called "the Ted Turner of bookstores"-a mercurial maverick whose outsized risks have repeatedly drawn predictions of failure, even while he remade the industry in his image. One of the first book retailers to understand that the store is a stage and that retailing is great theater, Riggio made bookstores fun, turning them into modern village greens where people flock as much for entertainment value as the huge selection. It is that kind of marketing savvy, combined with a willingness to break the rules, that has helped make Riggio one of the most powerful and controversial figures in the book world.
Riggio began his bookselling career in the early 1960s. Too poor to attend college full time, he took a day job as a clerk at New York University's (NYU) campus bookstore while studying metallurgical engineering at NYU's uptown campus in the evenings. As his interest and experience in retailing grew, Riggio came to the conclusion that he could do a better job than his boss did. So in 1965, at the age of 24, he dropped out of college and, with $5,000 in savings, opened his own college bookstore, SBX (for Student Book Exchange), just around the corner from the NYU bookstore. The store thrived, and Riggio used the profits to open four more campus bookstores throughout New York City. Then in 1971, Riggio convinced bankers to lend him $1.2 million so he could purchase the struggling Barnes & Noble Bookstore on Fifth Avenue and 18th Street.
Until Riggio came along, selling books was a fusty, monkish pursuit. But he would change that. In 1974, he opened the Barnes & Noble Sales Annex across the street from the original Barnes & Noble store. He loaded tables with remaindered books, provided shopping carts, installed wood benches-and gave away free copies of The New York Times Book Review. Taking a page from mass merchants like Wal-Mart, Riggio advertised aggressively. His slogan: "If you paid full price, you didn't get it at Barnes & Noble." His genteel competition was appalled, but Riggio knew that retailing was changing. "We feel we're the picture of bookstores to come-there's no question about that," he told a reporter in the late 1970s. "The days of list-price book selling are numbered."
Riggio graduated to the big leagues in 1986, when, using junk bonds for financing, he bought B. Dalton, a chain of 800 mall bookstores. Combined with his 37 Barnes & Noble bookstores plus 142 college bookstores, the purchase made Riggio the biggest book retailer in the country. Over the next few years, he bought one small mall-based bookstore chain after another, including Scribner's, Bookstop and Doubleday Book Stores. But sensing yet another change in retailing, Riggio abruptly abandoned his mall-based strategy in the early 1990s and turned his attention to building superstores.
Envisioning his new stores as gathering places where customers could linger and mingle, Riggio equipped them with comfortable chairs, served Starbucks coffee, and kept the door open until 11 p.m. Riggio's strategy was to sell more than just books-he wanted to build a brand name.
Riggio didn't invent the superstore concept. Borders was the first. But like many entrepreneurs, Riggio took an existing idea and improved on it. "He saw what was going on, bet his company on the concept, and it worked," recalls Bobby Haft, who was then running Crown Books. "In the beginning, you had publishing executives who didn't believe [in superstores]. Len went out and built them anyway. And they all said, 'Ah, yes. Of course! That's it!' "
Following this superstore plan, Barnes & Noble Inc.'s total revenue more than doubled, from $1.08 billion in 1992 to $2.4 billion in 1996. By 1998, Barnes & Noble superstores were opening at the rate of 90 per year. But with dominance came controversy. Riggio became the target of criticism from small independent bookstore owners who claimed his superstores were forcing them out of business. They even accused Riggio of coercing publishers into giving him secret and illegal deals. Riggio denied the charges, explaining them away as sour grapes. "The bookstore business was an elitist, stand-offish institution. I liberated it from that."
Indeed, by selling books the way The Home Depot sells two-by-fours, Riggio dragged his industry kicking and screaming into the 1990s. For better or worse, Riggio's superstores changed the book business as profoundly as anything since the advent of the paperback.
Yet Riggio says the revolution has just gotten started.and the Internet will be the battleground. Barnes & Noble is already embroiled in a struggle with online bookstore pioneer Amazon.com for the biggest share of Internet book sales. But Riggio sees the Internet as more than just a place to sell books. Envisioning an online service that will allow shoppers to download and print all or part of a book, Riggio believes the Internet will change the very concept of what constitutes a published work. "The change in the next 10 years," he predicts in a 1998 Businessweek article, "will be much more profound than what has happened in the last 10." And if Riggio has his way, Barnes & Noble will write that next chapter in retailing history, too.
Both Barnes & Noble Inc. and its main competitor, Amazon.com, have claimed to be the largest bookseller in the world. With the aim of appropriating the title, Barnes & Noble initiated a lawsuit in early 1997. Amazon.com countersued. Both suits were dropped in October 1997, with neither party paying or admitting liability, but agreeing to compete in the marketplace instead of the courtroom.
Power To The People
As a child, Leonard Riggio's father, an ex-prizefighter turned cab driver, taught him to respect the "working class." It's a lesson Riggio never forgot. In a Fortune magazine survey of 204 chief executives, Riggio was the only one to call for policies to raise wages. "Money can be a burden, like something you carry on your shoulders," he says. "My nature is to be a ball-buster, but my role is to help people."