Robot 6

Borders bookstore chain to shut down

Borders

As expected, the bankrupt Borders Group will be liquidated after it failed to find a last-minute suitor to save the 40-year-old bookseller, The Wall Street Journal reports.

The company announced this afternoon that it will ask a federal judge on Thursday to approve the previously announced sale to liquidators led by Hilco Merchant Resources and Gordon Brothers Group. Liquidation of Borders’ 399 remaining stores could begin by Friday, leading to the loss of about 10,700 jobs. What was the second-largest book chain in the United States will no longer exist by the end of September.

“Following the best efforts of all parties, we are saddened by this development,” Borders Group President Mike Edwards said in a statement. “We were all working hard towards a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, eReader revolution, and turbulent economy, have brought us to where we are now.”

Liquidation comes five months after Borders filed for Chapter 11 bankruptcy protection following unsuccessful attempts by the foundering chain to convince publishers and distributors to convert late payments into loans as part of an improbable reorganization plan. Late payments led some distributors, including Diamond Book Distributors, to stop shipping to the company. As Borders closed stores it continued to hemorrhage money — $132 million in April alone — and executives — 47 in the two months following the bankruptcy filing — while industry watchers started the death clock.

Early this month Najafi Cos., a private-equity firm that owns the Book of the Month Club, emerged as a potential buyer, submitting a proposal that included $215.1 million for nearly all of the bookseller’s assets, and the assumption of about $220 million in liabilities. However, creditors objected to the plan last week, setting Borders on a course for liquidation. Edwards held out hope for a last-minute suitor by Sunday’s bidding deadline — there were reports this morning of interest from Books-A-Million — but none materialized.

News From Our Partners

Comments

32 Comments

Looks like I’ve got to find a new place to shop. Damn.

and i will continue to shop at my local comic shop. business as usual.

Well at least my Borders friends who were laid off in March had a head start on finding new jobs.

Looks like I’ve got to find a new place to work. Damn.

Dark Leviathan

July 18, 2011 at 4:03 pm

There goes my library/reading room.

Now is a good time to invest in BARNS & NOBLE!

Don’t be surprised if they don’t pick up a few of BORDERS good locations not near and B&N Store!

I would not invest in Barnes & Noble either, they’re next.

@ Dark Leviathan– Not funny. Not that I am a loyal Boarders customer. In fact I buy my books and comics from my local comic book/book store. It is a half and half deal. I get good discounts on my comics, any where from 15% to 25%, and sometimes 30% when they submit special coupons in a coupon booklet I got.

Boarders had shoddy material anyway, and it’s because of “customers” like you who use it as a “library/reading room.” Two thirds of the comic products are heavily worn by “customers” reading the material and NOT buying the product, and the other 1/3rd is because Boarders has no problem putting out damaged Graphic Novel hardcovers on sale.

A case in point was I discovered an oversize Ultimate Spider-Man Hardcover in its unopened plastic wrap, but the dust jacket was put on wrong and horribly bent and warped. I brought it to the attention of the nearest worker. He asked if I wanted to buy it on Clearance, and I explained to him that placing shoddy and damage products on the shelves is not good business as it makes customers adverse to buying things from them. In addition, all of their DVDs were insanely overpriced compared to a Target, Walmart, or even a grocery store like Vons.

So if it wasn’t halfassed business stadards, it’s people like you using a business as your own “library/reading room.” Go to a REAL Library for that, they need people like you to check out books and read them, and you would be surprised to know many Libraries carry a great selection of new and old comics and manga donated by people.

that sucks

@fod_xp

Completely agree! I had the same thought. It’s a shame really. My brother has to drive 25 minutes out of the way just to get to a book store when he wants to. Online is good too, but being able to go to the bookstore at the end of a night to pick up something for the moment is necessary sometimes. I can’t believe people who openly admit to reading trades at the store instead of buying or checking it out at the library. Libraries stock a good amount of comic books as well. PLEASE go to your local library. Or support you local comic book stores.

Actually, Barnes & Noble is doing really, really well. Speaking as a former employee of Borders and now an employee at B&N. Saying that a store is not doing well and not investing time/money/whatever in the store because you *think* a store is doing bad is a self-fulfilling prophecy.

The end of an era.

Barnes & Noble, you may be the “last man standing”, but you’re NEXT. :-O

What’s ironic is that people will flock to get armfuls of stuff on liquidation for 10% or 20% off. And they’ll not realize that, until last week, Borders sent out regular coupons by e-mail for 30% or more off items, so they’re actually spending more than they would have.

I’ll miss Borders. But I won’t deny that I’ll wait until the markdowns are decent and take my chances with what’s left.

the local borders has been my hangout for years. i’m going to miss it.

*expletive deleted*
*expletive deleted*
*expletive deleted*
CRAAAAAAAAAP! I go to Borders every week and hang out! Seriously, WTF???

Barnes and Noble is doing well. Their eReader has done substantially better than the Kobo, and because it’s such a big ticket item that has led to some truly impressive numbers in the last little while, especially after a lot of “experts” had used the collapse of Borders as an opportunity to sound the death knell for the brick-and-mortar bookstore. Will its time come? Probably–but it’s not as soon as some of the vultures here and elsewhere would like to think.

@that Girl

Not every library has books in stock nor in their database. They are going to get books that they know will attract more than one person to check it out. I’ve had to buy books that I wanted to read because my public and even school district libraries don’t have certain books. And I live in one of the larger cities in Texas.

Before someone say folks can donate books and comics-sorry not everyoen does that. We have a company in Texas tha buys use books and sells them. So no one is donating books anymore at not in my city.

That who is kiling Borders-used bookstores and other places like Wal-Mart that sell things cheaper.

Darth Eradicus

July 18, 2011 at 11:04 pm

It was pretty much over for me when my local Waldenbooks store closed up shop–they had an awesome selection of manga, graphic novels, sci-fi, etc–it wasn’t unusual for me to go there every other week. The nearest Borders store was too far away for me to go on a regular basis, so I wound up going to Barnes & Noble.

Stll, I’m sad to see Borders go because it ‘s a blow to brick and mortar bookstores. The way things are going, local grocery stores may wind up being the biggest retail bookseller.

Autobot Hot Shot

July 18, 2011 at 11:11 pm

As sad as this is, there is a bright side: Liquidation sales!

SpankyChidington

July 18, 2011 at 11:26 pm

I really and truly went to take a leak one time in Border’s at Memphis, and there was COME all over a toilet seat in the men’s room (urinals were occupied). Come. I was told the store was a popular gay-sex spot.

What an absolute shame. I’m curious to see just how good the liquidation sale really is. ‘Nark is absolutely correct. I was getting 30-40% coupons weekly. As for the guy who said he’ll miss a library/hangout.. that’s the WHOLE problem. People treat these stores as their personal libraries, instead of actually buying anything. Barnes and Noble may not be next, but just bc they’re the last ones standing doesn’t mean they’re in great shape either. They’re up for sale too you know.

The Borders in Glasgow closed months ago and I miss it, but not nearly as much as the people who had jobs there.

For all the people saying how terrible the customers who just hung out at Borders not buying any books were, maybe you should have pointed this out to the store which was filled with chairs, tables, sometimes couches, in every section of the store, a coffee shop, and live musical acts.

I may wait a couple of weeks and then look – our local Borders closed in the last round so the nearest is about 30 miles.

We still have a BAM, though – and they make better coffee with less attitude than Borders did.

I hope there is a liquidation sale. My tastes are much more boring than most people, so perhaps I can get a good deal.

For comics you should support your local brick and mortar comics shops. You know the one’s that support the Free Comic Book Day every year at great expense. (And no I’m not a store owner.) Borders comics and graphic novels were nice for those that don’t have access to local comic shops. Barnes and Noble is the last big book store out there. We should support it for our book purchases. Last I heard they weren’t doing well financially and maybe this will save them for a while. Imagine a world where you had to order every book. Or that doesn’t have paper books. Digital distribution is nice, but give me a cheap paperback while sitting in the pool any day.

@fod_xp – don’t hate the player, hate the game. Dark Leviathan used Borders as a library/reading room because that is the atmosphere Borders sold itself as. It was the way they marketed themselves. It was why when they did away with the standing room only cramped quarters of their subsidiary Waldenbooks. They recognized that by marking up an 18 cent cup of coffee to $4, they could make more money (though apparently not enough) by essentially renting the merchandise to people. It only takes a handful of people to buy a coffee or a cruller while they spend a couple hours reading to earn Borders more money than selling the book outright. The increasingly shelfworn copy of Scott Pilgrim v1 is just as readable to the grazers as a new copy, but in exchange for possibly, POSSIBLY having to clearance, throw out or return the book for credit (incidentally, the book only costs them half what they charge you for it) if only a handful of people have bought a drink, or purchased an impulse item after an afternoon reading the book it was still a profitable experience because it drives sales to their other profit centers. Borders doesn’t have a cafe in basically every location because they’re hoping to spin-off a bakery or a coffee shop. They don’t expect a lot of people coming in just for their peppermint chai latte.

Did some people ignore their end of the unspoken social contract by not buying an over-priced bottle of water during their visit? Absolutely. And Borders knows that there are those people out there. And as a business, they need to factor that into their projected income and expenses and either take steps to minimize the loss (removing the ample reading areas and seating to discourage grazers), or encourage profits (drive volume sales at a lower profit margin) and incentivize the process of converting grazers and readers (for instance, by offering discounts on merchandise with the purchase of the snackables). If they thought Leviathan (as a representative of all the customers that just read and don’t buy) was a threat to their bottom line, they would have shut them down a long time ago.

Instead, Borders just made continuous mis-steps. Using stealth data collection practices instead of overt ones like customer discount cards might have increased customer sales satisfaction at the register. Some customers like myself, are discouraged from buying when you tell us we can only get slight discounts if we provide you with customer data. Stores like Target have greater success by simply collecting and mining your debit and credit card data for purchase trends and targeted coupons without ever telling you they track you. I purchased a gallon of milk and some odds and ends last week at Target and their register printer shot out a coupon for the brand of diapers I’d purchased for my baby previously (at Target). Nothing in my cart suggested I had a child (other than the roll of duct tape. Too soon?) but my information had been used in enough transactions to tell Target what I might like, all against my will and without my knowledge.

And constantly shifting practices for those customer satisfaction cards was another key error. At one time, they were free, encouraging signups. Then they charged a fee to generate revenue (for only $8, you would have saved $6 with this transaction, and more with every transaction going forward), which offended some buyers who hate upfronting a store money in exchange for theoretical future discounts, as well as those that had signed up earlier, for free, and now had to “renew”. Then they went back to free. But they’d already convinced many shoppers to instantly decline offers to sign up for the card. Then it was collecting emails for coupons. Only for people to learn, after signing up, they needed the card to use the coupons.

And an inability to offer blanket discounts (I can wait X number of weeks for a coupon to Borders to buy a book that they may have in stock, or I can get it cheaper on Amazon now, or if I’m on good terms with my local comic book shop they may also offer me a discount just for being a good customer) also hurt. I pointed this out to one person who said I was wrong because he never felt like he had to wait long for a good sale at Borders. Everything he bought, however, was always on sale, often cheaper than Borders’ coupon could get the item, online or just having a local comic shop guy willing to give you a 20-30% customer appreciation discount. And these sale prices were predictable and just as “instant” as waiting on pins and needles for a Borders coupon to arrive for a discount amount chosen by slot machine and often good for just one item.

And over charging for DVDs and CDs, as you point out.

And failing to really move clearance and overstock materials, which came to take up an ever larger section of many stores with the same cookbooks, remaindered Nora Roberts hardcovers and Sylvia Brown books about psychic phenomena. When 1/3 of your store is dedicated to the same bargain crap you’ve been holding on to for years, it gives your store the illusion of stale inventory and takes up space from stuff that could be selling, or broadening the back catalogue for increased depth.

And asking people to “donate” books to charity by purchasing them at the register was just predatory and desperate. If people understood that 50% of their “charitable donation” was just a subsidy to keep Borders alive, would they still do it, or would they rather donate books they have previously purchased to the needy, or make a charitable donation where a higher percentage of their “donation” goes to a worthy cause, for instance, many charities covered by Charity Navigator feature charities where up to 93% of your donation is used directly to help intended beneficiaries.

Just saying, Borders made a lot of bad business decisions. A lot of them. Dark Leviathan’s decision to use them as a library is really not the reason Borders is closing. It’s a convenient scapegoat. It’s like blaming people who only shopped at Circuit City or Ultimate Electronics during Black Friday sales for the failure of the business. Or blaming people who shopped at early Walmarts for the death of Woolworths.

It’s also a little like blaming people who only purchase the discount books for Borders’s death. With overhead, Borders can’t really make any profit on these books when customers only buy them on discount. Therefore, everyone that shopped at Borders with the coupons: you are the ones that killed Borders. See how easy that is to blame the customer for the company’s failing?

When the public takes advantage of a company’s offerings, you can’t blame them for the company’s failing.

Nobody is under any obligation to keep your favorite stores alive and as long as you’re not doing anything illegal like intentionally shredding the books to build a nest, it’s up to the store to protect itself and its interests. If they think grazers are damaging their books, making them sell for less, then they need to set policies capping the amount of time you can loiter, or prohibiting merchandise in certain areas, or prohibit readers from reading.

My area has never had a Borders but it has a BAM and appears to be doing very well. I split my business between them Amazon, and my local comic shop. It seems to me from everything I’ve read is that Borders was poorly run and operated from the begining.

FormerBookstoreEmployee

July 19, 2011 at 4:51 pm

Newcomicsday: As a former manager for a large bookstore/music company, Borders coupons were great deals for consumers – but they did not bankrupt the company. The markup on books is anywhere from 40 to 50% – which means that if you had a coupon for 30% off, they were still making a profit of at least 10%. Markups will vary by publisher, but on average they were 40% or greater in most cases. Some publishers and distributors dropped that markup down to 35%, but not every publisher and distributor did, which means that while you may loose money on one or two items, you make up for it on others. You were right that Borders made bad business decisions, but discounting books with coupons was not one of them, like you rightly pointed out.

Also, it should be pointed out that those coupons were only good for ONE item, which means that any other item a customer bought – Borders made money on it (if they lost money on the coupon item), and that’s how it’s done. Retailers have been following this formula for decades, that includes mega-retailers such as Walmart.
Walmart may not use e-mail coupons like Borders did, but they do use loss leaders such as the heavy discounting of Pepsi or Coke around any holiday. They draw you into the store, and make money on any other thing you might buy. It’s RETAILING 101.

The demise of Borders on it’s own wouldn’t be such a big thing except for the fact that in many parts of the country, including my hometown of Buffalo, NY – BORDERS WAS THE ONLY PLACE YOU COULD BUY COMICS ON A NEWSSTAND for miles. That is, there isn’t another store that sells comics on a newsstand within 20 miles of that particular Borders location. The nearest place to buy comics is either one of two local comic book stores. The implication of this is HUGE. This means that unless someone is specifically driving to either one of these two comic books stores – they can’t buy a comic book. ANYWHERE. There are no drugstores, convenience stores, grocery stores, book stores, or discount stores anywhere within that 20 mile radius which sell comics or graphic novels.

It’s a big deal because publishers wether big or small will be adversely affected by this. And it’s not just comic book publishers who will be adversely affected. Book and magazine publishers will also be affected, as will music companies. Our area has also lost all it’s music stores – which means that now if I want a new CD which is not a “popular” top hit or a current flavor of the month (which is what’s generally available at Walmart Target and Best Buy), MY ONLY OPTION IS AMAZON.COM. Borders at least mitigated some of my online ordering, but now with it gone my only choice is Amazon.

The nearest Barnes & Noble is outside that 20 mile radius, and neither location (one north and one south of where I live) sells individual comics. This is a HUGE ISSUE. If comics aren’t anywhere to be found – how is the industry going to survive? How are publishers going to lure new and younger readers? Especially a publisher like Archie – which is heavily dependent upon IMPULSE purchases by parents for their kids. If their comics can’t be found where people are shopping – how are they going to stay in business? These are very serious questions, the answers to which could very well determine the entire future of what really has been a truly American art form.

There’s no doubt in my my mind that comics will survive in some digital form – but will that form be convenient?
Will it be mass market, or will it end up being some weird sort of specialty thing kept alive by those of us who remembered the original paper comics? These are very important questions, the answers to which nobody knows just yet how this will all play out.

Borders demise is not a good thing, not in the least.

One possible solution for publishers – do what Apple did. If retailers won’t carry your products, then sell them yourself direct to the customers. This could be done by all publishers banding together to form a chain of retail newsstands in the form of kiosks located in all regional shopping malls across the country. The kiosks could sell new comics & magazines with select paperbacks. The start up costs would be huge in the beginning, but once the company is up and running, stock could be issued in it, and publishers could then recoup their investment. Doing this would save the industry, and compliment the already existing comic book stores. In effect you would be recreating the newsstand market – which right now is pretty much extinct.

On the subject of damaged books – Borders (or any chain bookstore) almost never loose money on those books, most publishers give retailers credit for damaged and “shopworn” books, as long as you followed their return policy. Even if they didn’t get credit for them, the amount of damaged books a store like Borders accumulated wasn’t as large as you might think, and the loss is not as large as you might think. In fact, they probably lost more money in shoplifting and employee theft than in damaged books.

Clearance Books – Those books did not ORIGINATE FROM BORDERS LEFTOVERS or unsold copies. In fact quite the opposite is true. Borders and any other large bookstore chains routinely RETURN THOSE BOOKS TO PUBLISHERS. This is usually done when the paperback version is released. Normally within 30 days of the paperback release of a hardcover book, the hardcover is returned to the publisher. The publisher then usually repackages them, and then resells them at a HUGE discount back to bookstores or anyone else whose willing to buy them. The only time bookstores don’t return copies of unsold books is if they bought them on a non-returnable basis, but this is usually very rare. Although Borders financial difficulties in the past couple of years may have forced them to buy some titles this way, that is not the normal way books are usually sold to bookstore chains.

Why would a bookstore chain buy such books? BECAUSE THEY SELL! Yes, they really do sell, and retailers make HUGE profits on clearance books. They may not be new, sexy, or hip -but they SELL. Random House has an entire division devoted to clearance and so called bargain books, because it makes them money – big money. Publishers and retailers profit hugely from clearance and bargain books. The markup on these types of books is even greater than the 40-50% markup on regular books. We’re talking 60% or greater – so don’t think for a minute that Borders having a large chuck of space devoted to clearance and bargain books was a big mistake – it actually was not. It was in fact, quite the opposite, a smart way to boost their bottom line.
Think I’m wrong about this? Just look at the amount of space Barnes & Noble has devoted to the same category – it’s just a large as the space Borders had. Do you think they would be devoting that much square footage of their store to such a category if it wasn’t selling?

Finally, I will miss Borders, because their selection varied greatly from Barnes and Noble, and because in many ways they were a much more friendlier place to shop. I didn’t have to pay an annual fee to join their customer loyalty program, and their music selection was much more diverse and eclectic than other retailers were. I found CD’s there that I never would’ve found anywhere else. I never would have heard of bands such as Nightwish, Bep Bop Deluxe, Tarja or Sunstorm had it not been for Borders. I was also able to buy obscure solo albums by acts like Timothy B. Schmidt (Eagles), Wetton/Downes (Asia), or Justin Currie (Del Amitri). They really were a fun place to shop, and it’s sad that yet another “fun” retailer is going out of business. The earlier demise of Media Play/Musicland, and FYE locally left a big hole in the retail environment. Now all that’s left are chains like Walmart, Target, and drugstores such as CVS and Riteaid.

The variety has left the retail scene leaving us with a bunch of BLAND megastores that all sell the same damn thing. Sixteen different sizes of the same TWO brands of toothpaste. TWO brands of shaving cream, both in the same small overpriced size – and neither one is your favorite brand. The same two or three brands of consumer electronic companies. Anyone seen an Aquos TV? Sharp advertises them all the time on TV, but none of the stores in my area carry Sharp! The demise of Borders is part of a greater trend – the slow but steady elimination of consumer choice. Soon there will only be Walmart and Target and nobody else! It’s a sad day all around.

This makes me sad. ‘Nuff said. Barnes and Noble is all I have left. :'(

I know I posted a monster post (but you did too) so you probably missed my point in the “coupons bankrupted Borders” thing. I was pointing out how easy it is to blame the customers for the failing of the company.

“Dark Leviathan’s decision to use them as a library is really not the reason Borders is closing. It’s a convenient scapegoat. It’s like blaming people who only shopped at Circuit City or Ultimate Electronics during Black Friday sales for the failure of the business. Or blaming people who shopped at early Walmarts for the death of Woolworths.

It’s also a little like blaming people who only purchase the discount books for Borders’s death.”

Like you said, the coupons were good for one item and one item only is what I was getting at with “blanket discounts.” I can get 40% off everything I want instantly at Amazon. Or I can get 15%-30% off one thing every X days/weeks at Borders, if I sign up and/or get a card. I can wait 3 days for shipping from Amazon, or 7 for a coupon to arrive or for a buy 2, get 1 free sale to happen.

Now, one thing about the death of newstand comics is that they ARE still available, but comic buyers don’t know where to look. We’re stuck with our own memories of finding them in drugstores and gas stations. But right now, at every Walmart, Target, Price Chopper and Hannaford (these are the bigger chains near me, also in NY though the eastern end) magazines featuring Marvel and Archie reprints are stocked. For $9-$10 you get 4 issues of reprints plus odds and ends like games and other similar distractions. This isn’t bad when a single issue of most video game magazines is 6-7, and regular comics are $4. The price also competes well with Manga.

Sometimes complete mini-series (Pet Avengers) are spread out over 4 issues, other times 2-3 part stories are included in one book. The Super Hero Squad book reprinted (IIRC) 4 consecutive issues of the series, plus a handful of strips, in a bright oversized format. Spider-Man runs through the Paul Tobin Marvel Adventures runs. It’s right next to other publications aimed at kids (video game magazines, some wrestling mags). During movie seasons, there’s often themed titles like Thor and Captain America. Sometimes there’s original content like a holiday X-Men story. And Archie digests are still available at every supermarket check-out I’ve been to, right next to Soap Opera Digest (another dying industry). DC, however, is notably absent from these magazine collections.

Also, many (most? I’ve been to 5 in NY and they all have them…) Toys R Us locations have installed well stocked comic racks near or in their superhero action figure locations. I don’t think the TRU express locations have them, but I could be wrong.

So while I haven’t been to Buffalo in a while, I wouldn’t be surprised that your inability to find books at the newstand within a 20 mile radius, and this impact on the children, might have something to do with you not looking where the kids are shopping, and THAT, is one of the mistakes many observing the comic industry make right now. They cry and bellow that there’s no access to younger readers, by ignoring places where the books accessible to younger readers. They think digital will encourage early/newer readers, but ignore that many parents are more willing to let their kid demolish a comic than sink time into reading comics on an iPad and find better value is cheap downloadable games for their kids than in 22 pretty pages that a kid can blow through in a few minutes.

As for damaged books… again, I think you may have lost a point in my ramble (as I’m sure I’ve lost some of your points too): “The increasingly shelfworn copy of Scott Pilgrim v1 is just as readable to the grazers as a new copy, but in exchange for possibly, POSSIBLY having to clearance, throw out or return the book for credit (incidentally, the book only costs them half what they charge you for it) if only a handful of people have bought a drink, or purchased an impulse item after an afternoon reading the book it was still a profitable experience because it drives sales to their other profit centers”. I suppose I should have acknowledged the fact that often, despite the shelf damage, someone will still purchase it, but the point was that the damage which fod_xp says makes the books less enticing to him doesn’t stop them from being profitable to Borders.

And as for the clearanced books… while you may be right about how ultimately the books end up at Borders and Barnes and Noble, I’ll disagree with you on sales. Your argument that of course they sell because otherwise the stores wouldn’t devote so much space to them is flawed. One of my local Borders devoted just as much space to computer programming and instruction manuals as it did for graphic novels. GNs were relatively well traveled. Programming was a wasteland. Maybe your bookstore was different.. the one I worked at never sold anything in that section. I never stocked a book in that area. I never rang up a sale for one. Even after I stopped working there, and in every bookstore I’ve ever been to, computers are a wasteland, GNs get some traffic. A Borders near my office has multiple boxes of Lego Series 2 minifigures… literally shelves of boxes, months after series 3 and 4 have sold through all the retail channels like Target and 2 has dried up everywhere else. And yet, here they are. Sitting. With one shelf of Series 3 and 4 next to them. By your logic they must be selling or else there wouldn’t be so much space dedicated to them. But common sense indicates that if they were selling, and with no supplies to replenish them, the stock would dwindle. There would be fewer shelves full of them. Fewer boxes on the shelves.

Action figure collectors will also know that what a store stocks, and what a store sells, are not the same. Stores order crap that nobody wants, but once it’s there, they hold it in hopes of selling through eventually. They get pieces of crap that are parts of larger assortment, parts of which immediately sell through leaving the rest sitting on the shelves.

So maybe you’re right. Maybe they really are selling through the 23 copies of a 1998 cookbook on baking 125 different cookies and the multiple cubic feet of learn-to-make-your-own-sushi kits that I have seen littering the same stores for years. I can literally see the dust on certain voluminous products at the Borders I visit. I’m sure that’s free with purchase. I highly doubt that the oodles and oodles of $6 copies of Paul of Dune are flying off shelves or are returnable.

No, not everything is a shelfwarmer, but just because Borders devotes space to it, does not make it a big seller. Ever been into a department store like Boscovs, where they have a toy section that’s littered with giant empty spaces that never fill, even during the holidays? It’s literally empty space that the store is paying for, which generates no revenue and which serves no purpose. Hell, keeping on the Boscov’s toy aisle example, the toys there clearly do not sell, like, ever. Maybe you’ll have someone snatch one or two parts of an action figure assortment when those figures become otherwise impossible to find absent inflated eBay prices, but no matter the time of year, the stock is the same. It doesn’t have the high profit per unit of other departments like furniture or luggage, or the volume sales of the clothing departments.

Everyone always has the chance to make a stupid decision. Somewhere in their corporate mindset, someone determined that the store has x feet of space, and that they want to keep that x feet of space as it is, regardless of sales.

Back to clearance sections at a bookstore, yes it generates dollars and sales, but even with a 60% profit on the book, the company still makes more money selling non-clearance stuff.

The hardcover/softcover dilemma: Selling a hardcover at $6 and making $3.6 is foolish when that book is competing, directly competing, with the new paperback edition you’ll sell for $12 and make $6. Devoting serious space to selling products that directly compete with, are often more desirable than, and earn you less than another version of that product is not great business. The mark-up percentage may be slightly higher, but the profit is toxic. It’s grasping at pennies at the expense of dollars. Those clearance sales aren’t bringing in new dollars from customers that weren’t going to buy anything. They’re taking away dollars from customers that were going to buy a more expensive version and give you more profit. If Borders only wanted to earn $3.6 a unit for the book, they’d be better off selling the paperback at 20% off (to everyone, not just preferred members or coupon getters, for a longer period, and not just during the three weeks it’s on a particular table at a particular part of the store before the price shoots back up to full price).

As for the bit about not liking B&N’s annual customer loyalty fee… Borders used to charge. Then they didn’t. Now, they charge $5 less than B&N for the “plus” card, which, lets be honest, other than the one-time use email coupons you’ll periodically receive is the only membership there worth having (unless you’re really that swayed by the notion of spending $150 to receive a coupon for $5 off, and an opportunity to have one day where you take 10% off everything you buy)

And the retail landscape will be just fine. Maybe your area is a little more depressed than others, but new stores are cropping up. Target and Walmart aren’t going anywhere, but Meijers is spreading in certain spots of the US. “Value” stores like Christmas Tree Shops, 5 Below, Family Dollar and Ocean State Job Lots are expanding throughout the North East. Books a Million has a huge number of stores (though none in NY as far as I know so we’re out of luck) and continues plans to expand. FYE still exists in some places, though it has to compete with Best Buy.

Go to http://retailindustry.about.com/od/storeclosingsandopenings/a/2011-Store-Openings-Complete-List-Of-U-S-Retail-Industry-Domestic-Expansion.htm and you’ll see that amidst a number of food locations that are rapidly expanding, there’s significant growth in the “value” retailers and some like Dollar General have been using their increasing market share (and the 625 new stores they plan on launching apparently) to really pull themselves out of the “value” category and into “real” retail through a focus on brand name products at prices competitive with Walmart and Target.

And unfortunately, I’m not sure where to go with the whole toothpaste/Aquos thing. My bland mega store Walmart has Crest, Colgate, Sensodyne, Rembrant, Aquafresh and Arm and Hammer… with multiple different flavors for each, and the different types such as sensitive, whitening, etc. Yes, it would be spectacular if every Joe that makes a toothpaste could get a spot on Walmart’s shelves, but just as your comic book store (if you had one) can’t stock every comic ever made, there are limits.

Leave a Comment

 


Browse the Robot 6 Archives