Barnes &; Noble kept the Chateau's distinctive marquee over the main entrance. CUTLINE: Barnes &; Noble employees Jane Finucane, left, Mary Lee Lambert and Chrissie McKinnon sort books in preparation for opening day. CUTLINE: The new store's interior preserves much of the Chateau's decor, which depicts a 14th-century village. ntertainment was the Chateau Theater's past: vaudeville jokes, movie scripts, musical extravaganzas on stage and screen. Barnes &; Noble Inc., which spent more than $1 million restoring the neglected interior of the historic moviehouse, will usher in a modern type of entertainment at the Chateau when it opens this week.

The New York-based chain has set out to banish any idea that bookstores need to be uninspiring to their customers.

``Bookselling, like all of retailing, involves creativity, adventure, excitement and entertainment,'' chairman Leonard Riggio writes in the company's 1993 annual report. Customers enjoy some theatrics with their shopping.

The Barnes &; Noble Superstore opening on Friday may be among the most interesting exercises of the chain's formula to date. It combines retailing with restoration.

The company is bringing to Rochester its two best-known business trademarks:

Breadth and depth of selection -- Instead of two books on a topic, a customer might find five or 10. Or the store might stock all of an authors' works instead of only the most recent bestseller. The new Rochester store will carry 100,000 titles of about 900,000 in print, says Mike Hejny, Barnes &; Noble district manager.

Discount pricing -- Bestsellers are sold at 30 percent off the list price, and most hardcovers at 20 percent. The chain also publishes and sells in-house versions of classic hits. And it prominently features a bargain book section, with drastic reductions.

But in Rochester patrons also will find features that are rare in other bookstores.

They will enter through an ornate lobby and browse in the atmosphere of a 14th-century village, the decor that surrounded moviegoers in the Chateau. They will stop on the second level at the Barnes &; Noble Cafe to chat, sip coffees and perhaps sample a gourmet sandwich. They'll hear chamber music one day and accompany their children to a puppet show the next as part of a slate of events.

Customers also will be able to come in as early as 8 a.m. and shop until 10 p.m. on weeknights and Saturdays, later than any other retailer in the downtown area. The extended hours on Sunday are 10 a.m. to 8 p.m.

``I believe this is one of maybe a half-dozen downtown stores that we have, so that's pretty unusual,'' Hejny says. Of course, even more unusual is the revival of the Chateau for use as a bookstore. But the Chateau is not the sole example. Barnes &; Noble has restored theaters for business purposes in places such as Houston, San Diego and Memphis, Hejny says.

The company believes it is selling to consumers, not just bibliophiles, in its superstores. Earlier this year, Riggio gave an astonishing appraisal to Fortune magazine about books as consumer products: ``People have the mistaken notion that the thing you do with books is read them. They think all a book is about is information.'' Actually, he says, only about 5 percent of what's in print gets read. They buy books not only to read but also as a statement of who they are, Riggio said. Barnes' big picture

That formula has helped Barnes &; Noble to swell in size. On Jan. 29, the end of the 1993 fiscal year, the company operated 203 superstores. But two years ago, Barnes &; Noble had only 58 superstores nationwide.

The New York-based corporation also operated 754 ``mall'' bookstores, led by B. Dalton Bookseller chain, which maintains a store at Apache Mall. They are typically smaller in size and are more oriented toward impulse shoppers than superstores. Their numbers have shrunk about 9 percent since early 1992.

The same pattern is true for sales. Barnes &; Noble's revenues have increased 45 percent over the past two years, reaching $1.34 billion. But the real drive is in the expanding superstore division, which has quadrupled in sales. The mall network of stores has slipped about 4 percent.

Barnes &; Noble turned up $7.8 million in earnings in 1993. But losses in each of the previous two years apparently didn't diminish the public's appetite for an initial issue of Barnes &; Noble stock. The company went public in October, giving it almost $170 million in new cash to continue its headlong expansion into new markets, such as Rochester. During the current year, Barnes &; Noble plans to open 70 new superstores and to insert literary cafes into other existing Barnes &; Noble units. Giant in the field

In some major metropolitan markets, Barnes &; Noble runs into superstore competitors such as Borders Inc., which is Kmart Corp.'s super-book-chain. Barnes &; Noble already is in the Twin Cities market with seven stores. In fact, the suburb of Roseville was the site of Barnes &; Noble's first superstore, which opened in September 1990, Hejny says.

But in smaller metro areas such as Rochester and Duluth, Barnes &; Noble arrives as a giant among smaller competitors.

``I'm sure we'll have a small impact on our competitors,'' says Hejny. But a Barnes &; Noble study found that 70 percent to 80 percent of its sales were new book business, he says.

``There's an assumption that the book business pie is so big and, if we come in and do business, our slice of the pie will reduce the business of others. But, in reality, we make the pie bigger,'' Hejny says.

Nonetheless, in places such as Duluth, small booksellers have felt compelled to defend their market niches. Five Duluth booksellers organized a joint marketing group to counter Barnes &; Noble's arrival in May. The members of the Duluth Independent Booksellers Association have joined forces to advertise together and to offer discounts on hard-to-find books.

In Rochester, the proprietors of the Little Professor Book Center have a highly trafficked location on the city's skyway system. But it's also only a block away from Barnes &; Noble at the Chateau.

Dennis Lynch, who owns the store with his wife, Rita, says he has checked with general bookstores like his own in other markets where Barnes &; Noble has opened. ``Our book sales are bound to go down,'' he says. ``People (Store owners) typically find between a 25 percent and 35 percent drop in their sales initially. Within 4 to 6 months, if they're going to survive, they rebound.''

The Lynches are going to stand and face the giant. But they also are modifying their approach in several ways. First, they are dropping the Little Professor franchise. On Friday, the store becomes ``Books Etc.''

``Our new name is going to reflect that we're going to be more than just books,'' Lynch says. Books Etc. will diversify into Minnesota souvenirs and gifts. That niche has been open since a Minnesota gifts store pulled out of the Centerplace Galleria shopping center last year. The bookstore also will expand into greeting cards and similar items.

Finally, the Lynches plan to take on Barnes &; Noble at its own game. ``We're going to match their discounts or beat them,'' Lynch says with conviction.

Other major bookstores in the Rochester market are at shopping centers. Kay Hocker, general manager for Waldenbooks, which is owned by Kmart Corp., declined to comment on the entry of Barnes &; Noble.

But the B. Dalton store at Apache Mall could feel effects in upcoming months, if its experience tracks that of its counterparts in other markets. In its annual report, Barnes &; Noble attributes flat sales from stores in its mall division partially to ``increased competition from superstores, which affected 25 percent of our mall stores.''

In fact, Hejny says, even the company's superstore in Burnsville, Minn., ``is concerned about the opening of Rochester.'' Preserving a landmark

Still, there is little doubt among civic officials that the arrival of Barnes &; Noble will strengthen the downtown core. It has turned a deteriorating eyesore into a distinctive, working business.

Local developer Gus Chafoulias purchased the building, did major renovation and attracted Barnes &; Noble. The book chain leases the building from Chafoulias.

``I expect the Barnes &; Noble Chateau Theater will draw thousands of book lovers from the surrounding area, which will ultimately be a boost to the entire Rochester economy,'' Chafoulias said.

Barnes &; Noble executive vice president Steve Riggio says the company wants to play a role in Rochester's future. ``We hope our bookstore becomes an important contributor to the rich, cultural community in Rochester,'' he said in a news release.

Hejny also expects financial success. ``There's just an untapped market for the kind of selection that we bring to the city,'' he said.@et

BARNES AND NOBEL BOOKSTORE FACTS AND EVENTS Barnes &; Noble Superstore, Chateau Theater

Location: Peace Plaza, 15 First St. S.W., downtown Rochester.

Opening: Ribbon-cutting, noon Friday; open for business, 8 a.m. Friday.

Size: 20,000 square feet on two levels.

Inventory: 100,000 book titles; 200,000 total volumes for sale; 750 periodicals, including newspapers and magazines.

Featured subject areas: Medicine, computers, business, fiction, literature, cooking and entertaining, reference, bargain books.

Decor: Restoration of Chateau Theater. Ornate lobby with mosaic painting and gold Art Deco box office. Interior walls depict 14th-century village. Furnishings include walnut-stained shelves, wooden chairs for reading, and hunter green decor. Library atmosphere.

Historical significance: Opened in 1927. Operated as a vaudeville theater and movie house until 1983. The building is listed on the National Register of Historic Places.

Food service: Barnes &; Noble Cafe, with seating for 25. Serves coffees, espresso, teas, variety of pastries.

Staff: 30 to 40 full- and part-time employees.

Store manager: Bill Pritchard.

Business hours: 8 a.m. to 10 p.m. Monday through Saturday; 10 a.m. to 8 p.m. Sunday.@et

The Barnes &; Noble Superstore will open with a series of events, store manager Bill Pritchard says.

The public gets its first look at the remodeling of the Chateau Theater into a bookstore on Thursday evening, when the bookselling chain throws a 1930s-style party. Nearly 1,300 community and business leaders have been invited to the preview, store Manager Bill Pritchard said. Admission is by invitation only.

The store actually opens for business at 8 a.m. Friday. Barnes &; Noble is donating a portion of the bookstore's proceeds on Friday to benefit Rochester Civic Music, the parent organization of the Rochester Symphony Orchestra.

The Rochester Chamber of Commerce will host a ribbon-cutting ceremony at noon at the new store. Mayor Chuck Hazama and several town dignitaries are expected to attend.

Finally, a large, grand opening is scheduled for July 15. Details are towill be announced later.@etp