Borders was Slow to Adapt, Responsible for it’s own Demise
On July 18, bookstore chain Borders announced that it will liquidate, after a last-ditch takeover deal fell apart last week. The Ann Arbor, MI based company has been in bankruptcy for 5 months and reached the end of its rope. 10,700 employees will be laid off (400 in their Ann Arbor HQ & flagship store) and the remaining 399 stores will shutter. I read the news first on my Amazon Kindle e-reader, a striking irony, and have spent the last few days digesting the news. It hits me hard; Borders is an international company that gave me pride every time a news report mentioned that the company began and grew out of its first stories in Michigan – in my second home of Ann Arbor, no less. But, at the end of the day, I must insist: my Kindle and I didn’t kill Borders.
The most-cited reason for Borders downfall will certainly be technological change. The Nook & Kindle e-readers both will be portrayed as the grim reapers for Borders, and bookstores in general. That may contain a kernel of truth, and is even more convincing when you throw in competition from online booksellers like Amazon and big box stores like Costco (their selection is always surprisingly robust). Detroit Free Press writer Mitch Album spent his Sunday column listing other factors, including the decline of books as an essential part of our culture. Absent Twilight & the Harry Potter series, and excluding homework assignments, how many American kids are devouring books? For that matter, how many of their parents use time after work to wind down with a book? Not many, it seems.
But I didn’t kill Borders, and neither did my Kindle-loving brethren – bad business decisions did. In 1992, Borders was sold to Kmart, which then merged it with Kmart’s Waldenbooks and started franchise expansion. Borders became a public company in 1995 and reached its sales per square foot peak in 1997 – at 204 stores – but kept opening new stores. It expanded overseas and failed to capitalize on growing (non-expansion) revenue streams, most notably in 2001 when it gave Amazon all of its online book sales. Instead of being conservative with expansions – even downsizing – as the market landscape changed, Borders kept pumping revenue up with store openings. On April 18, 2011 the truth was clear: Borders hasn’t been a truly healthy company since the late 1990s and now nothing can save it.
In the mid 1970s, Tom & Louis Borders – students at the University of Michigan – decided to take a risk and rent some space in Ann Arbor to start their bookstore. As a Michigan alumnus, as a Michigander born-and-raised, I am inspired by the Borders success story. This weeks news gives us reason to ponder the role books have in our lives. The news this summer, rife with Washington irresponsibility in handling America’s debt crisis, has given us reason to question America’s economic future.
But, saying goodbye to Borders doesn’t have to be about feeling sorry for ourselves, lamenting the bad economy and the decline of the physical book. The story of two college kids chasing a crazy business idea – that’s the lead! If two dreamers could start a worldwide enterprise before college graduation, so can the college students of today! I didn’t kill Borders, technology didn’t kill Borders, and it doesn’t really matter what killed Borders. Our next question should be: who’s the next kid that’ll step up and change the face of an industry – book-selling or any other?
Just curious, how come you feel compelled to hold yourself and technological change blameless? What’s that all about? You’re overthinking it.
Seems much more accurate to me to acknowledge that while bad business decisions harmed the company and hastened its demise, the evolution of the market away from bricks and mortar retailing were still the killer.
After all, it’s not really anyone’s “fault,” because consumers have no inherent responsibility to support some enduring unchanging model of what a good bookstore is supposed to be. Consumers are supposed to respond to offerings of cost savings and convenience, add that’s what online delivery and digital formatting have delivered.
In the 21st century, bricks and mortar bookstores are an inefficient way to deliver words, plain and simple. They consume too much labor, too much paper, too much energy, and too much retail space. So they have way too much overhead to compete with competitors who don’t pay nearly as much for retail space, clerks, ink, paper, etc.
If that weren’t true, if it were only a case of bad management, then someone else would have bought Borders and kept it going, But no one did, because the current business model has failed, and there’s no proven replacement model that involves continuing to fill huge retail spaces with printed books while trying to attract foot traffic with coffee, sofas, and free wifi. That mostly attracted laptopping freeloaders who didn’t buy books, ironically, they continued to cater to the group that used to be their best customers but whose evolutions in preference brought about their demise. Sort of liking bringing your own food to a restaurant and asking, “can I cook my dinner here for free, and then you can clean up after me?”
The industry of matching written words with eyeballs for profit is going to continue to change. I expect that eventually there will be only a small subset of written words for sale that get printed on paper with ink. Outside of romantic luddites, almost no one else will mind.
And I say that as publishing professional who has been largely out of work for over 2 years. This evolution doesn’t bother me. It makes far, far too much sense.
Anyone know where a Person can buy a buggywhip? A service station that sells old regular leaded gasoline? or find an old fashioned brick and mortar bookstore?