Thursday, March 20, 2008

Borders on the Block?

Although the press releases (and they were long and thorough) tried to spin it otherwise, the news today that Borders was exploring "all" possibilities to save itself was disturbing.

I was asked Thursday night if I had heard the news. Yup. You betcha! In fact, I received an industry alert early this morning, only to discover later that Barnes & Noble had told the press that they were not opposed to buying their major national competitor.

I told my staff that I didn't know whether to smile or throw up, and that was true. Borders was once one of the great independent bookstores, starting with its store in the Michigan college town of Ann Arbor, and then growing to become a major player in the books business. Many local people have ties to that original store and company, and even today many of your friends and neighbors say they are going to Hawley-Cooke when they mean Borders in Louisville.

One of the pieces of advice we received from the owners of Hawley-Cooke before we opened our own store was this: DO NOT OPEN A SECOND LOCATION.

That Louisville institution was strong enough to scare off other national players, like Borders, until their expansion became unmanageable. When the national chain decided they were going to join competitor Barnes & Noble in the Louisville market, they offered the owners of the two surviving local stores a buyout. The way we hear it, the owners of Hawley-Cooke understood that they could not maintain their size and scale if faced with two national chain competitors, so they sold the remaining stores.

For our colleagues at Carmichael's Bookstore, that was a small blessing. After almost 25 years as the "little brother" of the larger local store, they inherited an awful lot of loyal customers and a newly prominent position in the community.

The news from Wall Street today is merely recognition that a business model that relies on predatory pricing (or debilitating discounts) will not work. The scale and efficiencies of a national chain ought to allow them to build the best of bookstores. Instead, both the national chains decided to concentrate their investments in selling more copies of fewer books, and in my view, despite comfy chairs and gourmet coffee bars, they simply did not and do not cut it with true book lovers.

I sell books for a living, but before that I bought books for my own edification and pleasure. And I have to tell you that when I visited either of the national chains, I was always amazed that I couldn't find the books I was looking for. I very often had to settle for something less than I desired. And in all my years as a book consumer, I never once thought about asking a national chain store to order a book for me. Whether it was me or them, I never felt as if they were interested in selling me something they hadn't already decided to carry in case quantities.

Since we've opened in New Albany, I've discovered that the situation is worse. Instead of offering personal service, the chains treated their customers as pigeons, and they treated their employees even worse.

There's no schadenfreude here. It's a sad day for a proud chain, and it was not necessary.

The good news is that the number of independent bookstores continues to grow, if only slightly. Indies are gaining market share for the first time, and if you're reading this books blog, you know why.

We're growing slowly and we hope we're becoming an important asset to the community. We knew from the beginning that the first five years would be rough and we anticipated the recession we're all sharing in, even if we would have wished for a brighter 2008 economy.

Borders is unlikely to survive as a unique entity. But then, they weren't unique anymore. For a few years, consolidation will allow a single national chain to survive. Like their online competition, the remaining national chain will probably try to become all things to all people, while being run from (and by) Wall Street and concentrating on skimming only the cream from the books business Instead of specializing, they'll make the mistake of ignoring their core business to seek greater profits elsewhere. And then they'll grumble about how books are dragging them down. And then they'll fail.

Their business model is simply not sustainable. We believe ours is. Our customers' self interest will kick in and we believe they'll appreciate all the reasons a local independent bookstore is an asset to the community and not just a means for exporting dollars from the local economy.

But we'll see.

So long Borders. What might have been...

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