Evan Schuman's StorefrontBacktalk

One of the delicious ironies of merged-channel retail is how easy it is to lose track of the real business. When Barnes & Noble (NYSE:BKS) Chairman Leonard Riggio said on Monday (Feb. 25) that he wants to buy the chain’s regular bookstores and E-Commerce operation, everyone suddenly took another look at what was presumed to be a dying brick-and-mortar business. Surprise! The stores are profitable. It’s the Nook that’s been bleeding the retailer dry.

The Nook was supposed to be merged-channel perfected: Buy anywhere, instant delivery, no distribution centers required. The physical stores were expected to be steamrolled by Amazon (NASDAQ:AMZN). Instead, Amazon has crushed the Nook, while B&N’s stores (with no more competition from Borders) are hanging on. Welcome to Merged Channel 2.0—or possibly Merged Channel II: The Showroom Strikes Back.

Riggio, who bought the lone Manhattan Barnes & Noble store in 1971 and adopted its name for his company, said in a U.S. Securities and Exchange Commission filing that his proposed purchase “would include, among other things, Barnes & Noble Booksellers, Inc. and barnesandnoble.com; and would exclude NOOK Media LLC (comprising the digital and College businesses).” At this point, there’s nothing else specific about the deal; price, timing and all the details are to be negotiated.

But what is clear, even with the E-Commerce site thrown into the deal, is that this is a bet on the stores. In the age of showrooming, that seems all wrong. Any customer can walk into a B&N store, find a book she wants and promptly buy it from Amazon. It’s Best Buy (NYSE:BBY), with lower shipping costs. What is Riggio thinking?

In fact, it seems that the executive Riggio hired to take the chain into digital media in 2009, William Lynch, felt the same way about the showroom stores and all but abandoned them and even the chain’s old corporate headquarters. Lynch and several other executives (including the CFO) work out of the chain’s dot-com headquarters a mile from the corporate offices, according to the Wall Street Journal.

For a merged-channel strategy, that’s disastrous. Even for a simpler multi-channel approach, it’s catastrophic to focus on a single channel—digital in this case—and forget all the advantages of other channels. In the case of brick-and-mortar stores, the biggest advantage is the one thing many chains most fear: the store as showroom.

Let’s be clear: B&N hasn’t ignored its stores.