Fall from grace: From Number 2 to a memory in less than 50 years - Borders Bookstore
For nearly forty-years, Borders
Bookstores, also known as Borders Group, Inc., were a hometown anchor in the brick-and-mortar
space of book retailers. Borders Bookstore was founded in 1971 in Ann Arbor,
Michigan, by recent graduates of the University of Michigan and brothers Thomas
and Louis Borders. The Borders Brothers innovated a retail space for booksellers
never seen before their first store opening. At their height of greatness in
1998, they were the second-largest book retailer in the United States, only to
Barnes and Noble Booksellers, with nearly 1,200 stores, 20,000 employees, and $3 billion in sales, $4.7 billion adjusted for
inflation (Ton & Raman, 2003).
A series of serious miss-steps
spiraled out of control for Borders. Culminating in 2011, where Borders Goup,
Inc. filed for Chapter 11 Bankruptcy and converted to Chapter 7 when investors
were not able to be located during liquidation (Hooper & Rawls, 2014). Societal shifts in
how consumers were looking to participate in the online economy were changing
the retail space. New challengers to Borders' physical storefront business model
were beginning to shake up the traditional business model for the retail business.
By the mid 1990's Amazon.com had started to be a significant player in the online
bookstore retailer space. Jeff Bezos,
CEO of Amazon.com, was an early adopter
of the online-only storefront model. Many executives across many retail companies
were either too slow or did not recognize the shift in the consumers' desire to
move to online storefronts. Little attention was given to their online e-commerce
presence at Borders.
Borders executives doubled down
with their physical presence with international expansion into Europe, Asia,
and Australia. Their major competitor did just the opposite and limited
expansion to only the US market, fine-tuned their online marketplace, and
developed a competitor to Amazon's digital e-reader technology. Borders' also purchased
competitor Waldenbooks. The purchase of
Waldenbooks increased the physical presence Borders in America's shopping mall
but was another miscalculated step by executives. They did not correctly anticipate
the decline of the modern shopping mall.
Sales decline of physical books (Trachtenberg, 2011)
Another substantial failure in
terms of business decisions was to use Amazon Web Services for its digital
marketplace. They had to share part of every sale with Amazon, significantly
impacted Border's ability to be profitable. Also, Barnes and Noble and Amazon
created a new technology to allow readers digital access to thousands of books
via e-readers. Borders took several years to partner with vendors to make
sub-par e-readers and did not make an impact on their profitability.
As an outsider looking in, complacency
played a significant role in the demise of Borders Group, Inc. Focusing on what
has worked in the past, not scenario planning for the future, and being inflexible
due to the structure of pre-dot com industries are the factors that have led to
many retailers closing their doors over the last two decades. Scenario planning
has its merits in the success of looking at the future. Scenario planning, when
conducted properly, needs to take into account the impact on the social effects
of change. Change at the social level, seems to be an area that may be taking
for granted or even ignored. The past several generations have seen dramatic shifts
in how technology has changed seemingly overnight. These changes are not slowing
down and the need for quick and adaptive planning to stay ahead of the curve. Alan
Lakein once said, "Planning is bringing the future into the present so
that you can do something about it now." These words summarize the power
and the need to plan to avoid potential mistakes that plagued the Boroders Goup,
Inc., in their last decades of existence. Whereas Barnes and Noble, with over
100 years of experience, have continued to stay positioned to serve their customers
due to proper planning and execution.
References
Hooper, Will and Rawls, Mary Katherine, "Borders Group, Inc.'s Final Chapter: How A Bookstore Giant Failed In The Digital Age" (2014). Chapter 11 Bankruptcy Case Studies. http://trace.tennessee.edu/utk_studlawbankruptcy/38
Trachtenberg, J. A. (2011, July 20). Barnes & Noble Focuses on E-Books. Wall Street Journal. Retrieved from https://www.wsj.com/articles/SB10001424052702303795304576453882840821172
Ton, Z., & Raman, A. (2003). Borders Group, Inc. Harvard Business Review, 9(601–037). Retrieved from https://hbsp.harvard.edu/product/601037-PDF-ENG?Ntt=Borders&itemFindingMethod=Search
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