Borders No More
This is not a story with a happy ending. Borders’ struggle for survival is over. The bookstore chain is going to liquidate.
The company will seek permission on Thursday to sell its remaining assets to liquidators Hilco Merchant Resources and Gordon Brothers Group. The chain’s remaining 399 stores could begin closing as early as Friday.
"We were all working hard towards a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, eReader revolution, and turbulent economy, have brought us to where we are now," said Mike Edwards, president of Borders Group, in a press release.
In a piece lamenting the demise of the American bookstore, Mitch Albom, a columnist at the Detroit Free Press, wrote, "The problem is people don’t love books the way they once did, nor do they read them the same way. Cheaper electronic versions undermine the need for shelf-space. Younger audiences who haven’t grown up with rainy afternoons spent inside book pages, don’t snap up the latest great read — unless there’s a certain vampire or wizard attached. The backlists of mid-level authors are not lucrative for the balance sheet."
So what will happen with the vacuum created by Borders’ closing?
"When you lose literally miles of bookshelves, it’s going to have an impact," David Young, chief executive of Lagardère SCA’s Hachette Book Group, told The Wall Street Journal. "I hope other retailers will now step up and make offers for what they consider to be the prime sites. It’s a tragedy Borders didn’t make it through."
Discussion Questions
Discussion Questions: What will Borders’ demise mean for the book retailing industry and related businesses? Do you expect other book retailers to rush in for the 399 store locations that are closing?
Dumping another 399 locations onto an already littered landscape of recently closed A&Ps in the Mid Atlantic and locations still vacant when Linens ‘n Things and others closed several years ago, will definitely make for a buyers market. Just how many Borders locations will be leased by B&N and Books-A-Million is anyone’s guess.
While this is not beneficial for the book-buying public, Borders’ demise can only be good for Barnes & Noble and Amazon. It also could prove helpful to indie bookstores, who will not draw in casual readers but may gain traction from more dedicated readers who were lured into Borders by lower prices but likely disappointed by the selection. Barnes & Noble will probably cherry pick some choice Borders locations, but most will probably remain vacant or become other big box stores.
It is always tragic when a once successful retailer must close its doors. While there are obvious changes in the business of book retailing these are not the only reasons for the demise of Borders. In recent years company management made an increasing number of poor decisions including changes in their frequent buyer/rewards program that angered some of their most loyal customers. Other poor decisions were simply closing all of their music and video departments rather than looking at their viability on a store by store basis. But among the most damaging was hiring people to work in the stores who had little or no interest in books, authors or literature.
Among the great characteristics of the best book stores is the ability to talk with associates who love and know books as well as authors. While there has been a great deal of attrition among bookstores, there are still many great ones including Powell’s in Portland, Oregon, Tattered Cover in Denver, Colorado and Warwick’s in La Jolla, California.
Barnes & Noble may cherry-pick some of the remaining sites where they have an opportunity to fill in a market or enter another one. And it’s also possible that an independent bookseller might find a suitable location and a ready-made audience. But the writing was on the wall when Borders began its Chapter 11 proceedings and went through its first wave of store closings. It left Borders with little “critical mass” to support its remaining infrastructure and less relevance to the book publishing industry.
Of course, the underlying issue is the change in technology that made most traditional booksellers about as relevant as record stores. The advent first of e-commerce and then of e-books changed the marketplace and left little room for “second best.”
Borders and the book retailing industry is now showing its age as technology continues to bring “youth” to the world and its marketplaces.
As Borders expires, new enterprises will evolve to take book retailing’s place. Those new enterprises won’t be conventional book retailers but companies that are on the leading edge of what current customers are responding to.
That’s a pity for some — those people who enjoyed reading hard copies in a quiet environment surrounded by an ocean of conventional books. Thus I do not expect many other book retailers to rush in to where today’s technology alerts them “not to tread.”
Holding a book is a spiritual thing. The feel of good cotton fibre, the joy of space, font and design. The scribbles, underlines, crudely-drawn stars to mark particularly brilliant insights, margin comments in your own hand giving proof that this book changed your life and of course the obligatory turned-down corners so you can relive a page faster. Technology or no, it doesn’t get any better than a ‘real’ book.
Vacant retail space is spread across the US. As a side note, this is not typically the situation overseas. There is plenty of prime, inexpensive space available without these additional locations coming on the market. Bottom line, the industry, in all segments is very wary of opening new stores in this fragile market. There is no longer any truth to the mantra, “build it and they will come.”
Here in Los Angeles, there are not only still vacant properties from Circuit City, Mervyns Department Stores and others, but also brand new, never leased space available. The market is flooded with space right now.
Specifically around book stores, I believe the segment is definitely in transition. Just like old vinyl record stores still thrive in small numbers, so will independent book stores, especially used book stores. This will not be a large enough volume to move the industry needle, however, there is a role for them.
I don’t think that Border’s demise will mean much to the book-selling industry. Amazon and other outlets will pick up the sales, and consumers for the most part, won’t notice the difference. If Borders was so relevant, it would not have gone out of business. There are many choices for places to buy books, many of them offer a bigger selection and lower prices than Borders. Other book retailers may pick up some of the space, but most of it will go to different uses.
Borders closing reflects on several issues but among the possibilities:
1 – Fewer consumers are buying hard copy books.
2 – Borders failed to keep up with changing trends.
3 – Borders didn’t keep up with new technology.
4 – The business model is becoming antiquated.
The demise of Borders won’t have an impact on the book retailing industry, the retailing industry had an impact on Borders.
The industry is experiencing a rapid change in the way consumers purchase and read their choices (online purchasing, e-book readers and e-titles). The number of brick and mortar stores exceeds the number that can be supported by a shrinking clientele. The fact that no one offered a penny for the Borders locations is significant.
Borders was the weakest link of the Brick and Mortar operations and was first to fall. B&N is probably overstored in total though it might find a vacuum in a market or two that Borders has exited.
Oddly enough, I believe that the last man standing operations won’t be a chain, rather they will be very localized stores that combine book exchange with new titles to serve a local population.
Borders was mismanaged over the past few years but even managed well it was, at best, fighting a holding action.
Borders forgot how to be a bookstore and wanted to become a cafe experience center; entertainment retailer; and — at the end — a flea market for over-priced toys and candy.
What got lost were the books and, when they were lost, stores had to become larger, labor costs soared and inventory costs went completely out of line. Finally Borders started becoming a faux Barnes & Noble trying to out remainder the remainder king.
You can blame e-readers if you want but the truth is the faster e-readers gain acceptance the faster traditional bookstores will close. Being the best at selling tickets to your own execution isn’t a sustainable retail strategy.
No…the answer lay in the books and the books were forgotten.
What does this mean for the book industry? It means Barnes & Noble wins the honor of being the last man standing — on quicksand. They never had the inventor depth or style of Borders (which appealed to the true “bookie”) so they are stuck flogging yesterday’s best sellers and the New York Times Top Ten list.
For people still looking for a physical book (new titles at least) the answer seems to be Amazon where you get whatever book you want at a discount. For the children of Mitch Albom’s Literary Digital Doomsday it will be e-readers.
Retailers might rush in to buy those stores but they probably aren’t going to be book retailers. In fact, some of the stores, like the one in my neighborhood, are so large it’s hard to imagine what will move into them.
It’s a sad day.
This is a huge loss to the book selling industry and retailing in general. To have one of the two largest book retailers close through bankruptcy is a sad commentary on life as we know it today. I read Mitch Albom’s column and agree. Much is lost when you don’t have the pages of a book to leaf through. Yes, the Kindle and Nook are good and a sign of today’s time; but they do not replace what was a beautiful piece of our history. Too much emphasis is being placed on the speed of technology. And too little emphasis is centered on simply relaxing with a good book, not an electronic device housing it.
The loss of so much retail square footage, much of it prime space, will hurt and put us back close to where real estate was months ago. The recovery will be hurt. Certainly the space is too much for a bank or a coffee shop, and is not a prime location for a grocery chain. Barnes & Noble does not appear to have the financial strength to pick up many of the locations. It is a mystery to me. We will know the answer in due time. Meanwhile, property owners and managers begin to scurry to find prospects.
This is a cautionary tale for those retail companies who don’t value their IT staffs. Borders’ decision to do some high-level IT layoffs several years ago (no need for a CIO, apparently) signaled its pending demise. Retailers, fund your IT staff sufficiently so that it can innovate!
What’s going to happen to Grand Rapids, MI based independent Schuler Books and Music, who directly bought all their books and merchandise through Borders in Ann Arbor? They were one of the original customers of Borders Inventory management system…along with John Rollins Books in Kalamazoo/Battle Creek. Schulers has 5 stores in Mid Michigan that closely resemble the Borders layout and concept. They never did cut customer service the way Borders did, though.
There’s a reason that Borders went out of business. The landscape is changing, altered by a major change in technology. This landscape does not appear to include big-box book stores. Even one of the country’s finest brands, Barnes & Noble, is searching for “strategic alternatives.”
While there will no doubt be a bump in demand at other book stores, my sense is that it will be the smaller independents and, ironically, e-commerce.
Amazon announced the Kindle reader about 4 years ago. Barnes & Noble brought an e-reader a couple of years later. Borders brought their e-reader out about a year after that, as well as offering other manufactures e-readers in advance of that. That is a big gap in a very competitive race. Amazon understood consumer preference for easy access and portability of books so it turned this into a technology play by creating an eBook distribution channel, a vast catalog of e-book offerings, and a market-leading device to download and enjoy these offerings. Amazon did this 3+ years in advance of Borders.
The book-seller playing field changed years ago but, unfortunately for those of us who liked Borders and who enjoy physical books and book stores, Borders reacted too slowly. Other retailers will pick up the business–both chains (online and off) and independents. As far as locations being snapped by other book retailers, a few locations with good traffic characteristics and a history of performance will go but with so much retail space available I don’t see a rush for these.
Rush in? No. Maybe stroll, nibble, or traipse, but definitely not RUSH in…we may all agree on nothing else but I think we can agree on that.
The opinions here are all over the place, divided between “it was management’s fault because they did/didn’t do this ___” and “they were doomed by a failing business model.” America seems to be heading toward a (virtual) monopoly in several formats–department store, electronics, and here, with bookstores. D-I-Y still seems competitive…for now.
I don’t see this helping Barnes & Noble any more than Circuit City’s demise helped Best Buy. In both instances market changes were as much a factor as poor management decisions. Those forces are buffeting B&N as much as they have Best Buy. In that regard, Amazon has already been the beneficiary.
I think Mitch Albom’s point is well taken. There are generational and cultural forces at work here. I once had a garden center owner tell me he was very concerned that we were raising a generation that spent far more time indoors than outdoors. At the time, he called it the Xbox generation. Today, we might call it the iPad generation. Or, perhaps, the Kindle generation.
That said, to George Whalin’s point, there is always room for exceptionally well executed, compelling niche independent book stores. For book lovers, these stores represent absolute treasures to be embraced and supported.
Borders’ announcement yesterday reminds me of the consumer electronics category so much, it’s eerie. Now Barnes & Noble will be the last book chain standing, much as Best Buy has become the sole survivor in CE.
Both survivors face intense price competition on cherry-picked assortments from Costco and Walmart and intense price competition on expanded assortments from Amazon.com. Shoppers are left with an disheartening absence of interesting places to discover and interact with merchandise.
B&N may pick up a few choice Borders locations, but I wouldn’t go too far if I were them. When you control an overwhelming share of a shrinking channel, there’s only one direction things can go.
Memo to Mike Edwards, CEO Boarders:
Mike,
With all due respect the so-called “headwinds” Borders faced were, in large measure, created by Borders executives.
The customer ‘experience’ that I’ve had each and every time I actually suspended my disbelief and ventured to your stores (and away from Amazon) was terrible. Invariably the (understaffed) staff couldn’t be helpful or exercise ‘common sense’ because of HQ-imposed decisions or policies.
V/R
A now even more fervent Amazon customer who buys lots (and lots and lots) of physical books.
RIP Borders
“Head winds”?
Retail ain’t for sissies.
The book business and reading both the printed word and online books are far from dead. Based on a elementary question in the December, 2010 BIGresearch semi-annual Simultaneous Media Usage Survey (SIMM), “What do you like to do in your Free & Leisure Time?”, 55.7% of respondents said that they enjoy reading books. That number compares to 55.1% of Adults responded in a similar fashion to the December, 2006 SIMM.
Patterns are remaining consistent across age groups of 18-34 and 35-64 Adults. The consumer is, to be sure, battling “time poverty” in their various lifestyles–particularly in free & leisure pursuits. They are still, however, reading books, surfing the net, and reading e-mails/instant messages/blogs at the same pace as 5 years ago.
What has declined in terms of reading interest during that 5 year period, however, are newspaper and magazine reading preference — dropping 3.4 percentage points for Adults 35-64, and 8.5 percentage points for 18-34 year olds.
The right niche plays in the reading business have a home–either in book stores, or in the convenient retail store that has space to devote to the opportunity.
This is the first of many such announcements unfortunately. We are undergoing the most major digital media revolution ever – much larger than the PC web revolution of the late 90s. On demand content delivery across fragmented devices is a critical component of this revolution. Some companies that we know and love–like Borders–will not survive into the next phase. While others like Pandora or Amazon may become new or bigger winners. The key elements of this fundamental sea change are: global audience/distribution; consumer in control and on the go; fragmented “internet” i.e. PCs, smartphones, tablets and connected TVs–so multichannel got a lot more complex.