Does Borders Demise Signal the Death of Bookstores?
Way back in 2003, Borders Books and Music was at the top of its game, with more than 1,200 active locations in the United States alone (the chain also had stores in Australia, New Zealand, and Singapore). By January of 2010, the bookselling giant had shrunk to about half its size, boasting a measly 511 stores worldwide. On February 16th, 2011, Borders applied for Chapter 11 bankruptcy protection, and by September 18th, the last 399 outlets closed for good.
The many failings of the once prosperous Borders Group, Inc. have been closely scrutinized, but what does the disintegration of one of the largest brick and mortar booksellers in the world mean for the industry as a whole? After a little research, and catching up with several old friends who used to slave away in the book mines, a pattern began to emerge. A disconnection from the world of technological innovation has been making ripples in bookselling and publishing for quite some time. Only now are we beginning to see the full impact of these advancements, and if I were a betting man, I’d say this is only the beginning.
For the sake of posterity, it should be noted that betting on technology is always a risky prospect. The head honchos at Borders made a mistake no one ever could have anticipated back in the early 1990s. No less than Mark Evans, former Director of Merchandise Planning and Analysis, cited over-investment in music as one of the key reasons behind Borders collapse (you can read Mark’s entire essay at www.quora.com):
…stores were sized and modeled to provide a large music CD business which largely disappeared. In addition, infrastructure was sized to support this business, including a dedicated warehouse distribution facility.
Back in 1994, it may have seemed like a no-brainer to devote 45% of your retail space to selling CDs, a decision which seems tragically laughable today. In light of this, it has to be said that all my trumpeting of eReaders and eBooks should be taken with a grain of salt, but the core lesson remains the same: as a business, books are not immune to the dictations of a marketplace made fickle by the rapid advancement of technology.
I have an old friend, Amy, who works in Sacramento, California as a librarian. Way back in the summer of 2005, she worked at two Borders locations in Dallas, Texas after graduating from Rice University. In our discussion, the moment that made my jaw drop came when she informed me that at the time she was employed there, the catalog system could only be updated a few times per day. Obviously, this limitation made the system virtually useless to customers who were trying to locate anything that wasn’t stocked in large quantities or being heavily promoted, and a trip across town to find that “last copy” at another store was always a crapshoot. Borders' technophobia ran so deep that they outsourced their own online sales to Amazon.com. In his essay, Mark Evans also writes that by the time this decision was made, Borders.com was costing the company approximately $20 million dollars in losses.
They also dropped the ball on eReaders, but by the time this became an issue they were just trying to figure out how to keep the whole house from burning down around them…
It goes without saying that the Nook is a huge part of what has allowed Barnes & Noble to remain competitive while Borders has imploded, and Barnes & Noble's online site has always dovetailed well with in-store business: reserving copies of books, movies, and music for in-store pickup is easy and simple, and allows employees to soft-peddle “looking around.” which leads to more purchases (an ex-employee guessed that “If every store closed tomorrow [the website] would still do very well.”). But the degree to which Borders (poorly) ran its stores like any other retail location may have had something to do with its demise as well. Amy, who, at the time she worked at Borders, was earning a graduate degree in Library Sciences, was employed as a cashier, told she would be switched out to the position of bookseller after the holiday rush, and was then given excuses until she left the chain. By contrast, Allison, who worked for Barnes & Noble both in Mississippi and California, clocked hours as a barista, bookseller, cashier, and at the Nook counter. While there may not be a direct correlation between employee actualization and corporate profitability (though there is a relationship between morale and productivity) this example of Borders blindly mismanaging their available personnel speaks volumes about the mindset of the corporation.
Another chain that has done well in the “post eReader depression” is Half Price Books. Founded in Dallas, Texas back in 1972, the used bookstore now does business in fourteen other states. Ajai Raj, a writer and journalism student who I met back in college, worked at one of the Dallas stores for over a year before moving to New York City. I was unable to get a hold of any higher-ups at Half Price, but according to Ajai, the company has only seen a slightly narrowing profit margin. The reason? Part of it has to do with company culture: “If I was going to work for one corporation until I died, Half Price would be the one I would go to.” He’s not the first person I’ve heard rave about the store’s fair wages, hour paid lunches, full benefits, and insane employee discounts (the flagship location even has an electric car charger, for whatever that’s worth). However, even humble (not-so) little Half Price has a decent web presence that is somewhat similar to Amazon Marketplace. Frankly, if a chain a fraction the size of a giant like Borders had a better website and was well-known for treating their employees like human beings, the writing should have been on the wall decades ago.
It might be that the future of bookstores (and publishers, for that matter) depends not so much on the “imminent” displacement of printed material by digital distribution, but in the old guard recognizing what is becoming a thriving share of their customer base. According to Amy, the librarian, there are only two publishers (two!) out of the big six that have digital distribution agreements with the branch she works at. Like any other industry, the world of books is undergoing a transition in the face of new technology, which will serve as a sort of Darwinian weed-out process. For all you movie buffs out there, consider this: how different a place would Hollywood be right now if three of the “big five” studios decided that HD was a fad?
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