The Death of Borders

Josh Getzler

It came as little surprise yesterday that Borders announced that it was liquidating its stores and laying off all 11,000 of its workers. It’s been a company in death throes for a couple of years, and the question  was really when it was going to go, not as much if.

The press releases, and indeed much of the reportage about the cause of Borders’ decline, as been the all encompassing “because of ebooks.” And while certainly the growing market penetration of electronic distribution of books cost Borders market share, it’s not the only reason.  It also has to do with the price of real estate, and the fact that Borders decided to hitch its wagon to three forms of entertainment that would all be slammed by alternative distribution methods: Books AND video AND music. The trifecta.

Every time I went to the Borders near my parents’ home in New Jersey over the last 10 years or so, I was struck by how…empty the store seemed. There were large swaths of empty space between the three unintegrated sections of the store. It didn’t lend itself to shopping for multiple media—If I wanted a CD, I could go into the store, go to the music section, pick out my album, and go to the front and pay with a minimal need to pass a book or a DVD. On one hand, it led to an efficient purchase (when they actually had the album in stock, which was rarer and rarer). But they lost out, oftentimes, on the impulse book purchase. Now it’s not that I’m saying that they needed to put comedy DVDs next to rock CDs next to thrillers. But integrating the display tables, not the general racks, would have been useful.

But that, of course, is only part of it. As first the music industry, then the video market, became progressively more digital, both in its distribution forms with mp3’s and streaming video; and in its retail outlets, with itunes and Amazon in particular grabbing market share; the tripartite superstore became less efficient. When Borders didn’t really adjust, but rather simply made the other sections more barren while not contracting, their ultimate failure was assured. And this is where real estate came in—they simply couldn’t sell enough books to justify rent in superstores that were intended for revenue on books to only make up 1/3 of the total. And when you combine that with the fact that their in-store sales had plummeted because of the online distribution outlets (whether physical or digital), it was really over.

So what are the lessons? There will clearly be multitudes of articles about this, ranging from “forget it—first it was indies, then Borders, next it’ll be Barnes and Noble and you won’t be able to go anywhere but Target and WalMart to buy a book;” to “bookstores can survive if they play to niches—whether children’s stores, or outlets dealing with crime fiction or fantasy or romance.”

What’ll be correct? Too soon to tell. But one thing that appears certain is that the bricks-and-mortar businesses will need to integrate themselves with electronic distribution. That could mean, as some outlets are starting to do, that you can look through their books, then download right there through them onto your Kindle or iPad, with the store getting credit for the sale. Or perhaps they need to expand the “neighborhood bookstore” feel (particularly regarding children’s books) in order to drive greater foot traffic into perhaps somewhat smaller spaces. Or in fact it could mean a return to the indie model, if publishers will be willing to give smaller stores favorable rates (which could have an impact on royalties to authors, but which many authors I know would be willing to sacrifice if it meant the overall survival of bookstores). I had lunch last week with an editor at one of the biggest houses in New York, and he was saying “look, times are hard, but that’s partly because we haven’t figured it all out. We’re in an industry in flux. But it’s not a dead industry. Not as long as authors are still writing and people are still reading. We haven’t figured out how to deal with a new business paradigm that will take us more efficiently into the next 10 or 20 or 50 years. But that doesn’t mean that the world is coming to an end.”

That’s not a lot of comfort to the 11,000 laid-off Borders workers. But they’re not out of work because of publishers any more than the folks who worked for Blockbuster Video are out of work because of Warner Brothers. They are the victims of innovation, which is inexorable.

 

Comments

[Brenda B. in Maine]

Thanks for this insightful post, Josh. A lot to chew on here.

Brenda Buchanan