Earlier this week the Borders bookstore chain announced its earnings for the quarter ending July 31 and the results were weak, as expected. Sales fell 11.5%, to $526.1 million, with a $51.6 million loss.
The deep declines in total sales and comp sales at Borders compared to a sales decline of 2.6% at Barnes & Noble’s retail stores in the quarter with comps down 0.9%. In its official release, Borders had little to say about its financial performance, choosing instead to focus on the various initiatives it says will better position it to perform in the digital marketplace and for the holiday season. The company did not breakout results between its Walden specialty group and superstores. During the quarter, Borders opened one store and closed two, but previous closings in its Walden unit resulted in the company operating 679 stores at the end of the quarter compared to 886 outlets one year ago. In its conference call, Borders executives said the sales decline at its stores was due to a poor performance by its core trade book category, while bargain books and cafe segments rose.
Sales were up at Borders.com, however, mostly from actual book sales.
Today PW’s Jim Milliot interviews Borders CEO Mike Edwards and interim CFO Glen Tomasczewski on changes they hope to make in order to survive. With digital books taking over the future model, the stores are redefining their product mix:
Edwards said that since there is little chance that sales of print books will increase through its bricks-and-mortar stores, the retailer “needs to redeploy the space” that it has dedicated to trade books. While transforming the stores will take time, Tomasczewski said that the Borders that customers walk into this fall will be much different than the store of fall 2009. The retailer’s Area e digital section will be in all stores by the end of October, more bargain books will be available and the layout is being remade to make it easier to find books, Tomasczewski said. The makeover will include adding approximately 900 new signs per story to help customers navigate their way in the stores. And as reported yesterday, Borders is adding more children’s educational toys and games, adult games and puzzles and more stationery. In addition, Borders will add more open space to create a more relaxed atmosphere, Tomasczewski said.
The average Borders shopper is a woman, which defines the chain as “a family- and community-based destination,” said Edwards.
Borders’ teetering state has been a huge drain on the graphic novel industry this year. It was, arguably, Borders’ aggressive investment in manga, led by then buyer Kurt Hassler, that set the stage for a lot of the expansion of the graphic novel market in the last decade. While publishers have already been preparing for a Border-less world, a huge round of book returns from the chain earlier this year sent many comics publishers into maintenance mode for all of 2010. GIN general, graphic novel sales were one of the few bright spots in bookstore sales over the last decade, with steady growth while other categories remained flat. However, the dwindling of the bookstore environment itself is forcing big changes to every publisher.
But, see also.
According to Publishers Lunch, this quarter’s loss is a repeat from the past four years. That is, comparing each quarter to the previous year, they keep repeating loses.
I hope they survive. But there’s a revolving door in Ann Arbor, Michigan, and the debt is troublesome.
B&N is doing similar relays of their stores, promoting toys and games and educational titles for homeschooling or parents, as well as adding e-reader boutiques. It’s marketing 101… emphasize what sells, shrink or drop what doesn’t.
“…which defines the chain as “a family- and community-based destination,” said Edwards.”
It’s a shame to see book stores struggling, and as a writer, I certainly want Borders to survive and thrive. However, the above quote points to a very big disconnect between what Borders management may say/believe, and the reality of how the stores operate.
When my first graphic novel was coming out in January 2008 (Lifelike, from IDW) I contacted the 2 Borders stores in my city to see if they were interested in setting up a signing. You’d figure local creator + popular graphic novel medium + supposed “community-based” focus would make this a somewhat simple decision, right?
Wrong.
Despite the book coming out from a major publisher (i.e. not a self-published book), and despite a free online preview of about 90% of the book, and despite my success in getting coverage from local media for my other words, Borders made it so difficult to even consider setting up a signing that I gave up in disgust. They wanted 2 copies of the book in advance, plus I had to fill out a 3-page questionnaire/application, and then they’d evaluate it for some number of months, etc.
For a simple book signing by a local creator.
Here’s an event that a) won’t cost them a dime, b) provides ample publicity and marketing opportunities, c) plays up to their supposed “community-based” focus, and d) will ultimately help them sell a few more books.
But that’s not what a corporate chain is set up to do, no matter how much they want to pretend their store managers have autonomy over decisions related to the “community” they’re in.
(Mind you, I’m not implying that I was/am such a name talent that they should have jumped at the chance of doing a signing. Just pointing out that their corporate policies need to be seriously revisited and revised if they hope to survive the tumultuous sea change of print retailing)
Borders and B & N to me are like the record stores and video-rental stores before them; dinosaurs whose days are numbered…
“The average Borders shopper is a woman”
Well, mathematics has several different forms of “average”, so we should be more precise. The median shopper is a woman. The mode shopper is a woman. But the mean shopper is probably 60% woman, 40% man… and you can understand how they ended up so mean, constantly having to face such a conflicted decision every time they have to choose which Borders restroom to use.
“Capital expenditures in the quarter increased to $7.7 million from $1.2 million as the company invested in digital programs and Borders said its “Area-e” digital section will be opened in all stores by the end of October. The section will sell an array of (low price) dedicated e-readers. Earlier this week, Borders lowered the price of the Kobo e-reader to $129.99 and on the Libre Pro to $99.99.
To improve the customer experience at its physical stores, Borders said it is adding more non-book product in an effort it said to differentiate itself in the market. “We are taking steps to transform our retail model, in part through high-impact strategic partnerships, like Build-A-Bear Workshop, that enable us to offer a compelling mix of lifestyle focused products,” said CEO Mike Edwards in a statement. “By offering a rich and relevant selection of product – both book and non-book – together with an exceptional customer experience, we will differentiate Borders from others in the marketplace.”
This is horrifying to me. I spent 7 years installing, repairing, removing, and replacing bullshit digital crap, merchandising and nonsense for Borders when they should have just let us sell books. They are just chasing after gimmicks they will never be any good at and can never compete with. They need to fire everyone in Ann Arbor and just let the book sellers sell books and the baristas sell coffee.
They have been talking about the digital sections for at least 8 years. If they have them up and running by October they will be defective and abandoned by Thanksgiving.
If I was 60% woman, 40% man, I’d be a pretty mean shopper myself. I’d be downright nasty.
The Borders near my work is closing, after five years’ operation. During that time the count of books has steadily shrunk, while everything else (toys, puzzles, stationery, novelties, gifts, etc.) has grown. It definitely turned me off as a customer: what I’m looking for is a good selection of genre fiction in various shapes and flavors, and that seemed to be the first to go.
I just want to clarify a few things about the expansion of graphic novels at Borders. Most people don’t know that for many years the buying responsibilities for all categories were split – there was a Waldenbooks buyer and there was a Borders buyer. For many years Kurt bought only for Waldenbooks, and before him it was Stuart Carter (now at Diamond) and Kurt was his assistant buyer.
Stu was really the first book buyer for graphic novels at Waldenbooks and kept the category alive when no one cared about it. He was the “regional” buyer – which meant he bought travels guides, maps and books on various cities and regions of the country. I beeged him to take over the graphic novel category and he did. Before Stu the books were bought by the magazine buyer and DC Comics had four pockets on the comic book rack for graphic novels – that’s it.
On the Borders side, the first buyer I ever met with was a man named Rick Adler. Rick nurtured the category and fought management and built it from the ground up – luckily he was a fan an knew the books. I remember meeting with him when he was looking to buy books for the first time from Diamond Comics. He held knew his stuff and had to juggle the grahic novel category all the time he bought his main categories – history, political science and current events.
After him came Bridget Mason a romance buyer who learned the category as best she could in a short time. After Bridget there was Micha Herschman – who is now a VP of Marketing at Dark Horse and even became head of the department, replacing Allison Elsby who for years was both Micha’s and Kurts’s boss and who championed graphic novels to management for years. Kurt then took over the category for both outlets when management consolidated buying responsibilities all across the board in all categories.
My point is, there were many people who contributed to the expansion of graphic novels at Border Group Inc. and they should be recognized. Someday in my column I’ll mention all the buyers at the other chains and distributors who went out of their way to support graphic novels.Thank god for all of them, they played an important part in expanding the reach of the medium and building the business for everyone.
It’s not just Borders. I went to Barnes & Noble, the closest bookstore to my home, last night, and the whole store has been rearranged—and not in a good way. Every category I am interested in (graphic novels, fiction and literature) has been shrunk. At first I couldn’t figure out why; then I realized that a huge portion of the sales floor has been turned over to a new overpriced-toys department.
Bad move, B&N. I’m not buying those toys. Being a woman, I love a bargain, and I can tell just by looking at that section that those toys will be expensive and not particularly attractive to actual kids. I come to buy *books* and if the books get squeezed out by stuffed Velveteen Rabbits, I’ll drive up the road to Borders—or just go to the library.
Rich: just wanted to say I always find your behind-the-scenes posts fascinating and insightful. Thanks for sharing them here.
After I got hooked on Spidey’s new costume (summer 1984), Waldenbooks became one of my regular stops when buying comics (before I began to hike uphill, both ways, a mile to the local comics shop). That spinner rack was plastic, and designed to hold DC’s graphic ALBUMS. Of course, I didn’t become a fan of DC until Superman’s reboot a few years later.
A few years later, I picked up a few copies of those beautiful leatherbound Frank Miller Batman collections on remainder… were those Border/Waldens exclusives?
The Complete Frank Miller Batman was exclusive in the book market to Waldenbooks (this was before KMart, who owned Waldenbooks, bought Borders), but they were offered to the direct market as well. Because they were effectively a Waldenbooks exclusive, I’m not sure one could ever say they were remaindered, although they may have been discounted.
The Complete Frank Miller – because it was a Waldenbooks/Longmeadow Press book was remaindered “in place” meaning the price was reduced at the store level. When I was a store manager I brought in maybe 50 of them and stacked them up with the bestsellers of the day and they blew out (even bought a few copies for myself).
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