Posted on Wed, Feb 16, 2011 : 7:46 a.m.
What was Borders' biggest mistake?
By AnnArbor.com Staff
Borders Group Inc.'s slide into bankruptcy has come with a steady stream of analysis from industry experts, restructuring attorneys and book aficionados.
But what do you think went wrong? Tell us below.
Comments
Nick
Wed, Feb 16, 2011 : 11:19 p.m.
? It's Chapter 11 for Borders, and gift cards are still good, folks
Elaine F. Owsley
Wed, Feb 16, 2011 : 10:48 p.m.
It isn't just Amazon that's the competition. There are a dozen or more on-line book sellers, any one of which will quickly search their stock and find a book for you by author, genre, whatever. I used to shop at Borders when it was a book store, but when it became something else, I went where the books are.
scorned vendor
Wed, Feb 16, 2011 : 10:41 p.m.
It is unfortunate for the employees that actually cared. However I saw this coming 8 years ago first hand. As a vendor to top executives and middle management for 5 years it was obvious that many/most were more worried about their rise and $ than to their own employees and vendors. Relationships with those who were committed and provided quality services meant nothing to the ladder climbers. I saw disgruntled employees feeling completely unappreciated everywhere I looked, Including higher up decision makers. It was a time of prosperity that seemed endless in their new huge growth. Senior management made bad hiring decisions and didn't have their finger on the pulse. When your people don't like that you don't care about them they will leave or worse they will stay and collect the check without giving their best or even close. Doesn't it tell you something when companies who are voted best to work for are also very prosperous.
timeatwork
Wed, Feb 16, 2011 : 8:30 p.m.
the fact that the three times i ever entered a boarders bookstore I had trouble finding what I wanted and trouble finding a person to help me. then when I find what i want, its at a higher than expected price. 200 stores now....the rest will follow.
AlwaysLate
Wed, Feb 16, 2011 : 6:14 p.m.
As a former employee I can add a few other reasons... - The purchase of the Waldenbooks chain. - Seasonal Kiosk blunders such as "All Wound Up". - Expansion for expansions sake. - Signing unbreakable, long term leases. - CEO Josefowitz. - Arrogance. - Borders.com development & implementation blunders. - CEO Jones!!! - Consistently higher prices on all items…especially media. Just to name a few reasons!
John B.
Wed, Feb 16, 2011 : 6:33 p.m.
Most of those things are probably good reasons, but K-Mart already owned Waldenbooks when it purchased Borders, right? Also, I would personally move the too-rapid expansion and the accompanying too-long leases to the top two reasons, I think. When your rent becomes fifty-percent of your gross sales, and your gross margin is less than that percentage, that's 'non-sustainable.' Then you can never dig out of the resulting hole without bankruptcy, basically. I mean, the big losses began well before the crash of '08....
tim
Wed, Feb 16, 2011 : 5:54 p.m.
I seldom enter any book store, it's just easier to buy online at amazon. I agree with tater times have changed, if I'm going to "hang out and read books" I'll do it at the library, and if I buy I'll do it online.
Michael
Wed, Feb 16, 2011 : 5:26 p.m.
Don't underestimate the impact of Borders not owning or competing in the online space for 7 years. If they would have just stuck it out from 2001-2005, they probably would have found themselves in a position to offer up a Kindle-type device sooner. Instead, they shutter the online division and cede the Internet to Amazon without a fight. When you take the corporate focus away from the digital channel, there was simply no way from Borders to come back from that strategic debacle.
townie1
Wed, Feb 16, 2011 : 3:35 p.m.
A string of CEO's (6 in 10 years) none of whom had a fire in his belly about books or the bookstore experience. These "seasoned retail executives" just didn't get it, and cut the heart out of the stores.
Dcam
Wed, Feb 16, 2011 : 5:22 p.m.
Professional, seasoned executives have cut the heart out of many innovative, thriving companies. Those kinds of executives manage 'products', without knowing what the 'products' are they're managing. A Fortune 500 survey of managers and business executives from about '88, indicated that CEO's bring no discernible value to a company, but they can do considerable damage. The finding is obvious - a CEO taking over an established, well-run company can not add much to its value, but since a new regime requires new staff and personal imprints - things often change rapidly to fit the new CEO's ego.
david nacht
Wed, Feb 16, 2011 : 3:02 p.m.
landes has it right. None of the above. Borders hired people to expand the operation that didn't get the real value of the bookstore experience. Contrast Starbucks, another "elitist" retail experience (coffee used to cost a buck in most places) that was expanded. They kept their core value and remain viable. I spend lots on books and wish I could do it at shaman drum or a real old fashioned Borders instead of Amazon.
John B.
Wed, Feb 16, 2011 : 6:24 p.m.
Caffeine is physically addictive, books are not. Big difference! Also, Starbucks was expanding too fast at one point also, but slowed things down in order to remain viable. Bordes kept over-expanding. Lastly, books aren't 90% gross profit.
Dcam
Wed, Feb 16, 2011 : 4:50 p.m.
On State Street in Madison, a couple of blocks up from Wisconsin's Bascom Hall, there's a Starbucks storefront shop, right next to it is a Goodwill store. The ultimate dichotomy. I don't know if they sell books, however.
alan
Wed, Feb 16, 2011 : 2:34 p.m.
I think that their biggest mistake was their first, trying to become something more than the unique destination bookstore they originally were. Their model worked well in an educated college town but they had to change to appeal to the masses when they expanded and just became another bookstore. I stopped shopping there when I couldn't find the unusual books anymore.
Roaring_Chicken
Wed, Feb 16, 2011 : 2:24 p.m.
I remember, in the 80s, taking the bus or train to Ann Arbor specifically to shop at Borders and Eye of Agamotto (comic book). Borders made perfect sense as a unique "small business" in a university town. Urban planners know that malls on the suburban periphery will have a downtown at a competitive disadvantage, unless the downtown is of a certain unique character and level of activity. The Internet is the world's biggest mall. It was going to get to Borders at some point, as it did Shaman Drum. I'm hoping West Side and Dawn Treader don't fall, though their niche is a little more unique.
Stephen Landes
Wed, Feb 16, 2011 : 2:22 p.m.
I chose not to vote because I think their biggest mistake was forgetting what their core competency was -- knowledgable people with an excellent selection of books. There are reasons to have a bricks and mortar book store and Borders never figured out what it was about them that made the book buying experience different from and better than buying on line. Instead they tried to out do the online experience by becoming the be-all and end-all of shopping with electronics, stationery, and "stuff". Their best approach would have been to enhance the coffee shop within the store and promote it as a place to be and to discuss BOOKS; talk to real people who like and KNOW BOOKS; meet other people who love BOOKS. It's about BOOKS whether they are on paper or electrons.
Gene Alloway
Wed, Feb 16, 2011 : 5:01 p.m.
@Dcam Blackwell's in England have done this - stayed a moderate sized chain, focusing on university towns across the country with a higher end smart inventory. Border's end began by being sold to Kmart.
Dcam
Wed, Feb 16, 2011 : 4:40 p.m.
That's sounds good in a beatnik, coffee shop way, but it's incompatible with a nationwide retail marketing plan. They should have stayed within their niche and local or embraced the future more quickly, in fact lead it. I myself have gone to Kindle, and I've read more books in the past couple of months than I have in the past 10 years - and good ones that I'd have never picked up at a bookstore or library. But, for those who love the bookshops and binderies, there should be places to go that aren't contrived - but that's not going to be from a publicly traded retailer, whose main concern is shareholder value and profits.
WovenGems
Wed, Feb 16, 2011 : 1:56 p.m.
They started to fail the moment they went public. A corporation isn't in the book business it is in the profit business. They took their eye off the real ball and lost.
hyp0static
Wed, Feb 16, 2011 : 1:35 p.m.
I think another option should have been stopping online sales with Amazon in 2008 and taking it on themselves.
tater
Wed, Feb 16, 2011 : 1:34 p.m.
Borders' biggest mistake is not being Amazon. Amazon is changing the way things are done. They need to copy Amazon's business model and combine it with their physical locations. They will probably have to get rid of a few underperforming locations, too. They have been trying to compete with Barnes and Noble, when they should have been trying to compete with a "bigger fish."
glimmertwin
Wed, Feb 16, 2011 : 1:29 p.m.
Didn't years ago they invested in online bookselling, only to scrap it. Several years later they tried to revamp it, but it was too late. Imagine that. People buying books online. Who'da thunk it.