Riggio, Leonard S.

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Riggio, Leonard S.

(1941-)
Barnes & Noble, Inc.

Overview

Starting out with a single college bookshop in the mid–1960s, Leonard S. Riggio went on to become the largest bookseller in the United States. In fact, as of 1998 one in eight books sold in the nation was purchased at Riggio's company, Barnes & Noble. As of 2001 Barnes & Noble's revenue surpassed $4.3 billion and profits rolled in from a network of one thousand stores, more than any other book retailer in the United States. Over the previous 30 years Riggio steadily expanded the company into an empire spanning such peripheral operations as a mail–order catalog, book publishing arm, and a video game retail chain. Its website, Barnes & Noble.com, became one of the largest online booksellers second only to Amazon.com.

Personal Life

Leonard Riggio has two daughters from his first marriage and another with his second wife, Louise, whom he married in the early 1980s. They reside in an expansive apartment on Park Avenue in Manhattan, New York and also have an estate in Bridgehampton, New York. The unpretentious Riggio often socializes with blue–collar friends from his youth, preferring their company to that of the rich and famous. Generous with charity, he donated $1 million to his alma mater, Brooklyn Technical High School, in 1998 and over $700,000 to the Children's Defense Fund for the purpose of building a library on the farm of the late Alex Haley, author of Roots. Unlike most philanthropists, though, Riggio is quite low–key about his gifts. For example, instead of putting his name on the library, he and his wife suggested naming it after poet Langston Hughes. Riggio is an avid art and wine collector and also likes to golf. His favorite work of fiction is The Metamorphosis by Franz Kafka.

Riggio was born February 28, 1941 in the Little Italy section of Manhattan. At age four he moved to the Bensonhurst neighborhood of Brooklyn, where his home housed an extended family of aunts, uncles, and grandparents. His mother was a dressmaker and his father, Stephen Riggio, was a prize fighter who beat Rocky Graziano twice in his career. Many times Leonard Riggio was compared to his father because of what critics called a hot temper and antagonistic nature. Resenting this characterization as a fighter, Riggio rebutted that quick thinking was just as important as the physical aspect of the sport of boxing.

Politically active throughout his life, Riggio set up copy machines in the basement of his first store so that students could publish antiwar materials. In 1993 he served as campaign finance chair for New York City mayor David Dinkins, and donated $138,000 to Dinkins and New York governor Mario Cuomo in 1993 and 1994.

Throughout his rise to become one of the nation's leading business executives, Riggio stayed close to his roots. His youngest brother, Steve, is a vice–chair of Barnes & Noble and runs the online sector, and middle brother Jimi is part–owner of a shipping company that handles Barnes & Noble products. "My nationality is New York City," Riggio proclaimed in Business Week. "I don't mean I'm a New Yorker like the New York Times is a New Yorker. I mean it in the Horatio Alger sense."

A gifted child, Riggio skipped two grades and at age 12, entered Brooklyn Technical High School. Small in stature—he grew to only five feet, seven inches—he played the class clown to make friends, and also excelled in sports, earning a spot on the basketball team despite his height. After high school Riggio enrolled at New York University and studied metallurgical engineering at night but found his day job at the college bookstore to be more intriguing. He eventually switched to the business school but ended up devoting all of his energy to bookselling. He began as a store clerk in 1958 at $1.10 an hour, and by 1965 was an assistant manager earning $140 a week. Like many other employees in various establishments around the country, Riggio held the impression that he could manage the store better than his boss, but unlike most, he actually set out to do something about it.

Career Details

In 1965, with $5,000 in start–up funds from savings and loans, Leonard Riggio opened a competing book shop, the Student Book Exchange, or SBX for short, around the corner from his former employer. By the time he was 30, Riggio had amassed a small chain of campus bookstores on the East Coast but still aspired to do more. In 1971 he made a bid for the failing Barnes & Noble bookstore on Fifth Avenue and 18th Street. Riggio offered $750,000 for this last remaining store of the chain begun in 1873 by Charles Montgomery Barnes and G. Clifford Noble. The offer was eagerly accepted and Riggio immediately overhauled the musty old shop, initiating, among other innovations, a humorous advertising campaign to attract shoppers. He also continued his reputation, started at his college shops, of delivering on every book request imaginable. "We created a crescendo of demand for titles no one else was carrying," he recalled in Publishers Weekly. "We included publications from the Government Printing Office, journal reprints. We carried books no matter what the profit margin."

In the mid–1970s one of the company's landmark moves was to open a Sale Annex, featuring tables of books discounted to one dollar as well as selected bestsellers at a discount rate, a concept that revolutionized the business of bookselling. The store eventually sold thousands of titles at big discounts and encompassed 40,000 square feet, a previously unheard of amount of space for a book retailer. Riggio also added restrooms, park benches, and even supermarket carts and grocery store–style checkout lanes. As he explained in a Forbes article in 1976, "There are 30,000 mini–delicatessens in American bookselling, and we are the only supermarket." Applying aggressive marketing—a foreign tactic in the polite book industry—the store's slogan was, "If you paid full price, you didn't get it at Barnes & Noble," Riggio told Publishers Weekly.

Into the latter part of the 1970s Riggio continued to establish new shops modeled after the Sale Annex, only smaller, ranging from 2,500 to 3,000 square feet. These stores carried a selection of discounted bestsellers and a good deal of remainders. About the same time Barnes & Noble began acquiring several smaller booksellers including Bookmasters, Marboro books, and some college stores. Riggio's company had thus expanded to 37 retail shops and 142 college stores as well as a mail–order business. He really made waves in the industry however, when in November 1986 he purchased the B. Dalton chain of 796 stores from its parent firm, Dayton Hudson.

Chronology: Leonard S. Riggio

1941: Born.

1965: Opened Student Book Exchange book store.

1971: Bought Barnes & Noble book store.

1986: Bought B. Dalton chain.

1989: Acquired Scriber's chain.

1990: Bought Bookstop superstores.

1997: Established Barnes & Noble.com online bookseller.

1998: Barnes & Noble became the number one bookseller in the country.

2001: Barnes & Noble.com was the second–largest online bookseller.

Riggio began attracting criticism for contributing to the growing trend of the corporatization of bookstores. Some complained that the days of personalized service from well–read clerks were ending and others predicted that smaller and more scholarly works would become obsolete. Some small publishers later pointed out that the larger stores were able to stock a better variety of titles, thereby helping to keep their products viable. Nevertheless, Barnes & Noble epitomized faceless corporate America to many. To make matters worse Riggio continued buying out one small chain after another, including Scribner's in 1989 and Doubleday stores in 1990, then began to shut them down when retailing saw a decrease in mall traffic.

About this same time Riggio took note of the "superstore" concept that was growing in retail, whereby chains like Toys 'R' Us and Circuit City were establishing huge warehouse–style stores that offered a wide selection of goods at low prices. Borders Books, sold to K–mart in 1992, was the first bookseller to try this concept, constructing stores that offered more than 100,000 titles. Recognizing that this was the future, Riggio quickly followed suit. In September 1989 he nabbed Bookstop, a Texas–based chain of 24 superstores. By 1991 he began fervent construction of freestanding buildings reaching 20,000 square feet. Riggio added Starbucks coffee bars, easy chairs, and even cooking demonstrations in order to make his bookstores a social event, something to do as an alternative to a movie or other destination. It was not long before his bookstores began hosting singles' nights, creating a touch of a nightclub atmosphere.

By 1993 Barnes & Noble had grown to become the country's second–largest book chain, next to K–mart's Waldenbooks/Borders. It was clearly leading the pack in superstores, though, with 168 such outlets as opposed to Borders' 35 superstores. That year Barnes & Noble went public. It subsequently suffered under low profit margins and unstable earnings, but by 1998 its fortunes had rebounded. Stock had risen from $13.50 per share in late 1996 to $35 by mid–1998. At the same time, with 483 Barnes & Noble superstores and 528 mall–based B. Daltons, the company boasted annual sales of $2.8 billion, surpassing Borders.

Competitors, particularly independent booksellers, were dismayed at Riggio's enormous success. And they did more than grumble. In April 1999 the American Booksellers Association, a coalition of 4,047 bookstores, filed a federal lawsuit against Barnes & Noble claiming that the chain coerced publishers into giving it price breaks that made it impossible for the small shops to compete. On a cultural level, critics contended that Barnes & Noble was having a negative impact on the industry. They claimed that the chain did not lend itself to individual recommendations from one reader to another as customers often receive at the smaller shops, thereby putting a damper on the kind of word–of–mouth publicity that can make a lesser–known book into a sleeper hit. Other critics charged that Barnes & Noble was "dumbing down" the business of books by offering mainly bestsellers and fad items. However, according to Business Week, bestsellers accounted for only three percent of sales at Barnes & Noble in 1997, about the same percentage as at any other bookseller. In addition, many publishers were delighted that Barnes & Noble, thanks to its generous shelf space, could stock an even greater selection, enabling more obscure publications to share the floor.

Riggio, however, had something bigger to contend with by the mid–1990s—the dawning of online book sales, particularly the Internet upstart Amazon.com. Founded by Jeff Bezos in 1994 as a "virtual" bookstore, this website was able to offer a wider selection, sometimes at discounts of up to 30 percent, than any physical store because it was not limited by shelf space. Not to be outdone, Riggio began an online venture, Barnes & Noble.com, in March 1997. Initially, the online venture had its share of snags and was slow to attract large numbers of customers, prompting some to predict that it would fail. But by 2001 Barnes & Noble.com, averaging 5.3 million unique visitors a month, had become the second–largest online book distributor behind Amazon.com, as well as the fourth–largest e–commerce retailer. The website, one of the largest in the world, offered books, music, software, magazines, prints, posters, and other products.

As Barnes & Noble's biggest shareholder, Riggio controls 22 percent of the company and two percent of Barnes & Noble.com. He also owns 80 percent of Barnes & Noble College Bookstores and all of Babbage's Etc., which operates Babbage's and Software Etc. software retailers. Seeking new growth in mid–1999, Riggio announced plans to acquire Ingram Book Group, the nation's largest book wholesaler, for $600 million. This purchase would give Barnes & Noble an edge in distribution and faster delivery, key elements in finding success in the online world. The deal fell through though, when the Federal Trade Commission ruled that it would violate antitrust law. Riggio then focused on different ideas for building distribution networks. Since Barnes & Noble already operated a wholesale facility in New Jersey that accounted for 60 percent of its distribution, Riggio believed that he could increase this warehouse space to surpass Ingram's network.

Social and Economic Impact

Leonard Riggio's passion for bookselling revolutionized the industry. His concept of the superstore, combined with his ideas for making the bookstore a more fun and entertaining place to spend time, set a trend among others. His vision led him to expand Barnes & Noble, acquiring bookstore after bookstore and making his company the nation's leading bookseller. Not content to rest on his laurels, Riggio stepped up to take on the e–commerce giant Amazon.com with his online venture Barnes & Noble.com, which grabbed a large percentage of Amazon's market share and grew to become the second–biggest online bookseller. The GameStop division, which encompasses Babbage's Etc., FuncoLand, and GameStop, has become the leading video game retailer in the country.

With this success, however, has come a backlash from critics who have derided the corporate nature of the book industry and the demise of small, independent shops. Riggio countered with the argument that he has democratized book shops, transforming them from the musty, mysterious institutions of yore into cheery, accessible places where crowds congregate over cups of cappuccino. Such criticism has not deterred Riggio who is always seeking to expand his empire even farther.