Is Borders Books Going Out of Business?

Borders BooksAs recently reported, Borders book stores may be for sale after securing $42.5 million in financing to continue operations. However, the terms of the financing (12.5%!) may make it unappealing to prospective suitors. I’m not saying I could get $42.5 million, but 12.5% interest seems excessive in this setting, even amid the credit crisis.

So what’s going on at Borders and what does this really mean? As someone who lived and breathed this industry for three years I think this is, in some ways, a positive sign. However, it might be too little, too late. So how did we get here?

Borders had an astounding lack of vision, strategy and execution. They rested on their laurels and didn’t see the train rumbling down the track at high speed, high beams on and whistle shrieking.

I remember walking into Borders for the first time (longer ago than I’d like to admit) and being overwhelmed. It was big and it had books and music. That’s right, there was a time when Borders was a cut above Barnes and Noble, when you sought out the Borders location nearest you. It was cool and cutting edge. You wanted to buy books there.

Not so today.

Barnes and Noble responded with bigger stores, added music and partnered with powerhouse Starbucks for their cafe implementation. They made their stores inviting and implemented programs (author readings, expanded children’s sections) that would encourage people to stay longer. Their strategy is simple. The longer you’re in the store, the better chance you’re buying something. Trust me, as a new parent, the children’s section and train table in particular is a massive draw. And yes, I spend plenty on impulse purchases.

Barnes and Noble evolved and surpassed Borders in the offline market. At the same time, mass market retailers like Target, Wal-Mart and Costco began selling books and ate into the traditional bookstore market. And then there was this little thing called the Internet and the rise of Amazon.

Barnes and Noble may have been slow to fully realize their position on the web, but they understood the need to be a stand-alone entity. Borders on the other hand decided to ‘partner’ with Amazon. I don’t know the details of the arrangement but Amazon made out like a bandit and Borders was slow to realize they were getting massacred online. Amazon essentially swallowed the Borders brand online. (In some ways it would make more sense to put an Amazon.com logo on all the Borders stores.)

Our business development team at Alibris was often flummoxed by the lack of clarity at Borders and the glacial speed of their decision making process. Visits to the Ann Arbor offices were gloomy and depressing because of the inertia and vise-like grip on status quo displayed. Yet, there were signs of life, of rebirth. New blood with new ideas fighting to turn the company around.

The decision to sever their relationship with Amazon and build their own ecommerce destination was a turning point and the right move – just 8+ years late. They’re also launching a new concept store in the hopes of, once again, leap-frogging Barnes and Noble.

The financing comes from a hedge fund who also happens to be the largest stakeholder in Borders. Off the cuff, it seems a backhanded vote of confidence in the new direction. At a minimum they want to see the impact of a new website and the new concept stores. They want to see if Borders can catch up, though admittedly in the stiff headwind of a rocky industry and economic climate.

Last call! It’s time for Borders to put up, or be shut down.

43 thoughts on “Is Borders Books Going Out of Business?

  1. I can’t recall the last time I was in either a Borders or Barnes and Noble. Their prices are too inflated, and it’s much easier and affordable for me just to buy via Amazon.

  2. I found this article very interesting because of its broad presentation of the history of Border’s stores. I do not know all of the details of the stores in your area, but here in the Houston, the Borders bookstores are notably less dreary, dirty, etc. than most of the Barnes and Noble stores. Also, considering the problems I have had ordering online from both Barnes and Noble and Alibris (unenforced condition description standards and mail packaging standards), I am not as certain as the author that Barnes and Noble or Alibris have any better of a take on what is the best bookselling envoronment online either.

  3. Steven,

    Well, I think your experience will vary from store to store and clearly some areas are given more attention by one chain versus another. I too have been at some great Borders stores and dreary Barnes and Noble stores.

    However I do think the Barnes and Noble store strategy leapfrogged them over Borders. Borders now has the Cafe which helps but their children’s section just doesn’t match Barnes and Noble.

    And as an aside, why would you put near porn on the bottom shelf near check out. (Yes, it happened at the Pleasant Hill Borders and I complained since my 3 year old had grabbed a copy of Lusty Desires or some such variant.) Whether this is isolated or not, it leads me to believe that Borders hadn’t fully grasped the idea of bookstore as a hub – a hangout, not a purely transactional venue.

    Do I think Barnes and Noble know how to sell online? Sort of. They could do a lot more, and should have FAR earlier. Imagine if they’d truly responded to Amazon when they first came on the scene? But what they’re doing is satisfactory given the structure of that company.

    And Alibris? I think they’ve missed a few opportunities but have as good a grasp on the online space as any of the other players. They’re in more parts of the online space than nearly any other competitor and that’s a competitive advantage.

    Which is why Border’s is partnering with Alibris for their new online marketplace. Here’s the excerpt from a May 6, 2008 Alibris newsletter.

    As you may have heard, the launch of Borders’s new retail site, Borders.com, is imminent. The upcoming launch will include links to another Borders site, called Borders Marketplace. This site was built by Alibris for Borders. Your used inventory, including books, music, and movies, will be available to Borders customers who visit the Borders Marketplace site online, as well as Borders stores. What does this mean for you? More exposure and more sales!

    Here’s what Kevin Ertell, Vice President of e-business at Borders Group Inc, had to say about the partnership:

    We’re thrilled to be partnering with Alibris to launch the Borders Marketplace for used books, movies, and music—not just because of the incredible selection Alibris can offer to our customers, but because of Alibris’s strong, reliable seller community. Bringing 25 million loyal Borders Rewards customers and thousands of Alibris sellers together will increase sales and customer satisfaction across the board.

  4. Expanded Childrens Section? Cafes for sipping Starbucks? For Cripes sake, why not add some beds and cozy comforters, along with a fireplace and you can just move in?

    Do people EVER take their kids to the library anymore? Does anyone involve their kid in storytelling anymore? Why would anyone spend four bucks on a cup of java? What a waste of money.

    Shopping has become “family time” , which is just total bullXO@)@. Go out in the garden and teach those kids to grow some food, they will need to know those things down the road.

    Used books are fabulous, pass ‘em around, so everyone can read ‘em. Ask for copies of what you want on Freecycle. Go to the Salvation Army, let those kids see how old stuff can be re-used by others less fortunate. Alibris rocks, so does any used, or free book.

    There should be laws forcing books to be made of bamboo, hemp or other sustainable materials. Why? Read up people.

  5. Our family “shops” at Borders once a week. We are all avid readers and all four of us enjoy a good cup of coffee or hot cocoa and a book. Our Borders also has a movie trivia night on Friday evenings, which we enjoy listening to and guessing the answers as a family. We did the storytelling thing at home, but our kids are now teenagers and this is a great way to keep reading a family event. Sadly, our Borders pulled the music listening equipment from its store. This did put a damper on our evenings out and we’re hoping they bring some of that equipment back. No Barnes and Noble in our town, so we have nothing close by for competition, but we do hope Borders stays in business and keeps trying to attract families.

  6. Pingback: Is Borders Books for Sale? Not Anymore! | Used Books Blog

  7. I disagree with this article. I do not think that Borders has fallen behind Barnes & Noble. In terms of sale, I do not know the statistics, but I can say that I only go to Barnes when I can not find something at Borders. Barnes prices are marked up way too high and the music selection is not that great. Book wise I can not tell. Borders near daily coupon offers can not be matched by other similar retailers. They might mark up their prices higher than retailers such best buy or walmart, but with coupons and seasonal sales their prices mostly match their competitors’ and also their music and video selection is much bigger and more select, besides that it feels good to be in a more relaxed atmosphere than in the big chains.

  8. I only buy books from bargain rack or used from Amazon’s web site. Books are terribly overpriced today. The library is even cheaper. All you get at Border’s in Long Beach, Ca. is a bunch of college kids filling up the tables with their computers and latte…

  9. I totally disagree with this article. The Barnes and Noble bookstore in Ann Arbor is very cold and uninviting to me. The only Barnes and Noble store I like is the old store in NYC. The Borders flagship store in downtown A2 is friendly and warm and inviting. They have treats for dogs, who are allowed in the store, at the front desk. My dog knows “lets go to Borders” and when we go he goes up to the desk and starts doing tricks for a treat! The people are nice and friendly and willing to do anything to help. By the time you have a coupon and don’t have to pay Amazon postage, I would say Borders is more reasonable, besides there is nothing like browsing for books in a store. Amazon is OK sometimes if you are looking for something specific, but I don’t find it any less expensive.

    I don’t think books are overpriced compared to everything else in the world. If we don’t support books, they will be gone and it is not much fun to read a book online.

  10. I have noticed Borders getting rid of more and more of their CDs and (surprisingly) DVDs….plus, last week they had 40 percent off half their items….now this week 50 percent off….and they keep using the word “clearance” – Are they going out of business? Are they planning on just selling books and nothing else? I love the fact that I’m getting these great deals…but I have been going to Borders for about 13 years now and I would hate to see it go out of business. I used to work for Barnes & Noble back then…but once Borders came around, I rarely went to B&N anymore…but now, Borders seems to have less & less of a selection. I know less people are buying CDs and all that (and probably DVDs I guess)…and the economy is bad for everyone…but I’m starting to worry that Borders will be gone soon…like Circuit City.

  11. I’ve been working at Barnes & Noble for about 2 years and have been watching both chains, financial news, etc. B&N stock-wise is doing well, while Broders is barely able to keep their listing. I see that several people have complained about B&N “inflating” book prices. Neither B&N nor Borders set the prices of books, the publishers do. B&N offers deep discounts, bargain books and a membership that discounts EVERYTHING in the store (even the Starbucks coffee). Borders offers reward points and coupons. Libraries are very important and currently the bookstores in our area are having a book drive to help the libraries in collecting books for the children’s summer reading program. There is more than enough books for everyone, buyer and library goer alike.

  12. I actually googled this title and found this article, asking this due to the amount of advertisements they are constantly displaying. Unless they find that people do not want to (and do not have to) pay the MSRP for books and music that they base their pricing on, Borders will be out of business, regardless of the economy.

    I am fortunate enough to live in the city of Florida’s largest used bookstore (Haslam’s) and can spend literally hours in this museum of text. And if I can’t find a book in there (used or new), I use Amazon. Borders is only useful with a coupon.

  13. Borders is simply a better store. Here’s why:
    1) Membership. I became a Borders Rewards member for free. About once a week, they send me discount coupons for purchases (some as great as 50% off). B&N charges you $40.00(?) to become a member to get 10% off purchases. Books are cheaper at the nearby Costco.
    2) Cafe. Seattle’s Best doesn’t attempt to rip you off when you simply want a coffee or hot chocolate like $tarbuck$ does.
    3) Overall Experience. Borders is a cleaner and better appointed store.

    I’ll continue to shop at Borders as long as I don’t have to buy $400 worth of books at full price to recover my original membership investment

  14. I feel the need to correct you, Book Worm. The Membership program at B&N is $25.00 and it works everyday, on everything in the store. There is no point system, nor is there a limitation on when or how you can use your discount card. Also, it gives you 40% off on bestsellers, 20% off on hardcovers and 10% off everything else! And, atm, they are also giving their new members a package of coupons with a value of $50!

    B&N is leaps and bounds ahead of Borders and will be around for many years to come!

  15. Book Worm, your Borders Rewards card isn’t “free”. It’s free to sign up, but as I’m sure you know, you have to spend $150 before you see any of their Borders Bucks. And as far as coupons go, any one can sign up for free coupons and offers from Barnes and Noble. Just give your email address to the cashier when you check out. No membership needed.

    I tend to prefer Barnes and Noble as the store in my location is far better than the Borders. Such things simply depend on the staffing and leadership in individual stores. In company terms B&N is far superior. Just compare their financial situations.

  16. I don’t see how any of that makes the card not free. As you said its a free sign up, the e-mails with coupons are free. as for the $150 per 5 Borders Bucks they’re just keeping track of what you would potentially spend there anyways. If you’re going to spend the 150$ over the course of time anyways whats the problem with getting 5 borders bucks when you do?

  17. I much prefer Borders to B&N — especially the periodicals. I don’t like B&N’s Wall o’ Magazines and the hard benches. There’s almost no where to sit in B&N unless you go to Starbucks. Much prefer Borders cafe too.
    I was really disheartened when I went to Borders Sunday and it looked half empty. Almost everything seemed to be on sale. Just makes you wonder. I’m afraid we’re about to lose our nearest Borders.

  18. Marc, yes it is free. Sign up is free, membership is free, and the coupons (some very deep discounts you don’t get from B&N even after having paid the $25 membership) are free. At B&N, you have to spend $250 paying for books at full price just to recoup your original investment. The local Costco sells books much cheaper – some as much as 50% off. I have NEVER seen B&N match either Borders or Costco for such deep discounts.

  19. Let’s face it, Borders is clearly fading away – rather quickly, I might add – into a mere shadow of its former self. With the recent release of B&N’s new e-book program and free wi-fi, Borders will never regain its footing now. And, what the heck happened to their music & dvd departments? They’re either nearly non-existent or altogether gone! They may as well call it a day and bow out gracefully. Rumor has it that they’re thinking of adding toys to their merch mix, which failed them several years ago, when they tried it in their mall division. Now that sounds like a winning solution! Talk about trying to slap a band-aid on a freely-flowing wound. Good luck, Borders, good luck.

  20. We only have a Borders in our town of Salem, Oregon. It has had a music section seems likee forever. They have their own coffee shop with just as good of coffee as Starbucks, but 25cents cheaper per drink. But we have noticed lately that their inventory is shrinking. Sometimes we drive 1 hour north to Portland where there is both barnes & Noble and Powells.

  21. I liked the Borders bookstore, they have excellent customer service, and I have been with them for a while. I have went to Barnes and Nobles as well but never got the same service I got from the Borders store. Plus Borders Membership is way worth it because you don’t have to pay to get a damn card and renew every year like you do with Barnes and Nobles. Plus you get 2 to 3 coupons every week, and people easily spend a lot, not noticing to get up to 150 dollars. It is worth it in a sense.

    Now that being said it would bad if Borders went out of business, Why?? Who wants Barnes and Nobles to be a monopoly bookstore. The only thing that can compete with B&N is the etailer Amazon, and small mom and pop bookstores. Seriously, it wouldn’t be good to see that coming, but who knows what the future holds. I will be sad as many as others on here if Borders did try to give up now. It is too much of a risk to anyway.

  22. I worked at Borders in the mid 90′s and was very proud of my company then. Our store, in Houston by the way, was well stocked and we always carried a well stocked philosphy and even had a great literary criticism section. Our magazine section trocked and the management strove to make sure you had extensive book knowledge. For many reasons I had not stepped inside of a Borders in years but recently visited my old store. Wow! What a change. The great music section was gone. The mag section was in disarray and there was lots of section (like lit crit) that no longer existed or were really thin. Lots of dead space in the store and lots of tacky remainders. Also there were hardly any customers. I visited another store a few weeks later and it was a ghost town. I was literally the ONLY customer in the middle of the day.

  23. A lot of the talk on this site is hype.

    I frequent a couple of Borders locations and they have plenty of customers and plenty of people sitting in the cafe, no less than I see at Barnes and Noble.

    For Christmas they actually were stocked with some cool games. I bought some of the games for a local charity drive.

    They now offer free wifi just like Barnes and Noble. I will say that I am not a big fan of the Borders Rewards plan but then again, I’m not a big fan of paying 25 bucks a year for a membership either ;)

    I like Borders better because for one, Seattle’s Best is ten times better than putrid Starbucks and they actually clean the bathrooms.

    Amazon would love to put all bookstores out of business. I hope both Barnes and Noble AND Borders are able to make it.

  24. I have worked for Borders on-and-off for 4.5 years now. I still like it over Barnes & Noble, though I have their membership as well. I buy from Amazon, as well as Barnes & Noble, but if the book is at Borders, I will always buy it from them, even if it is $5-10 more expensive.

    I don’t think most people understand what will happen if Borders goes out of business. For those people who only read bestsellers and Oprah books, Costco & Wal-Mart will work for you. But for others who actually like to browse books, and “discover” authors, one needs to be in a physical bookstore which has more than the top 20 titles of the week. Amazon is simply not enough, even with the ability to preview a book. That’s probably why a lot of people will come in to a bookstore (Borders or B&N), thumb through a $40 book with their greasy fingers and decide they want it. However, they will go onto Amazon and buy it for $30 because Amazon does not have to pay property taxes, lighting, rent, salary to an employee in your community or sales tax to your state.

    Also, consider the number of Borders in the country. Barnes & Noble does not have the ability to expand to cover all of the closing Borders. I am not sure of the situation in other states, but the Borders in both Atlanta & Miami are swarmed bi-weekly with K-12 kids who have to buy books for school (with absolutely NO advance notice from the teachers), everything from the classics, to Shakespeare to biographies. While there are B&Ns in both cities, there is no way in hell they can handle the demand should all the Borders close down.

  25. Also, the B&N membership vs. Borders Rewards
    B&N: You pay $25 to get 10% off most items and 40% off best sellers. But that means you must spend $250 to break even. And then you begin your savings.

    Borders: Free to sign up. You do get tons of emails, but in this day and age, who doesn’t send you emails. The coupons in them however, can be worth it. It varies from 20% to 40% off one item. Also, for every $150 you spend, you get $5 in-store credit. This kind of program is similar to that of Best Buy.

    Now the thing with best-sellers is that neither Borders nor B&N is the place to buy them. You can get most new best-sellers for $9 either at Wal-Mart or Amazon. And don’t forget Costco & Sam’s Club. When you’re buying a book for 40% off, no one is really making money. They just want to get you in the store so you will buy something else as well. Wal-Mart can afford to do that, the bookstores cannot.

  26. I think Borders should try selling Dunkin Donuts in their cafes. I cannot stand the taste of Starbucks. Only go to Barnes as it is closest to me and the Borders is situated where coming from my area you need to drive all the way down the highway then back up. Still not sure what this hype is on Starbucks bringing in customers.
    Should really start using the library.

  27. I found the Borders in Simi Valley, California to be a disaster… very unclean and disorganized last time I stopped in. Driving around the town last weekend, I found a new little Used Book Shop called Oddfellow’s Books on Eileen St. Oddfellow’s Books reminded me of the used book shop I hung out in Boston while attending college. The owner is an East Coaster. Nice guy and very helpful. Lots of rare books at fair prices.
    No Coffee but he will make some tea for you and it’s Free.

  28. i worked for borders for seven years .as a company it was outstanding, how ever the in store supervison was not good and promos were given on socialism for lack of a better term.the store i worked in was run like a hippe cummne , the barnes and noble near our store was run like an enterprise

  29. Bottom line is Amazon.com’s business model is more adaptable to Ecommerce purchases and shifts in consumer tastes. Not only that, but it is a much more cost effective way to getting the consumer the product they need; it eliminates alot of overhead costs that both Borders and Barnes & Nobles have to pay. And besides, customer service in both Barnes and Noble and Borders sucks big fat cuddly koala bear balls.

  30. I hate going to Barns and Noble. It is always so loud there with everything going on. We go to Borders at least once if not more a week. We always find what we are looking for. The Barns and Noble by us is mostly music and magazines and yes there is a big kid’s play area but who takes their kids to play in a book store when others are trying to read and pick out books. No one wants to hear kids yelling or getting yelled at when they are looking for a good book to read. The people at Borders are always so nice and sweet and ready to help any one any time.

    Who wants to order their books online all the time? It totally takes the fun out of finding a new great book to read. We could spend hours in Borders when we go. In fact we do spend hours in there because it is the best bookstore.

  31. I worked a seasonal stocking position @ the local borders in Mt. Laurel, NJ this past winter. I was never formally trained. I was never taught how to work the store’s database system. The second week in I was told the company needed to cut back hours and only had me on one day a week. Weird I thought. Why hire seasonal help if there is not enough work? Then the week before Christmas they wanted me to work additional hours. The store’s phones seemed to constantly ring and never be answered. When I asked a manager if i should answer the phone, she asked me “Why? You do not know where anything is.” I would go in early mornings before the store opened to stock shelves. Ten minutes before the store would open the staff would meet for irrelevant meetings while some annoying chick read excerpts from books. Sometimes the meetings would go on longer than ten minutes and the staff would have customers waiting outside in the freezing cold while laughing at them. The general manager reminded me of a used cars salesperson. The week after Christmas I called in to see if was on the schedule. Some worker actually answered the phone and said no. I went to pick up my check and neither manager thanked me for working there over the holidays or told me my time was over. All in all, I have not set foot back in there and do not plan on it. However, the Mays Landing location is great. The Mt. Laurel store pales in comparison.

  32. Pingback: Planet Mut « No wonder Borders is going broke

  33. Borders Books is not going it’s JOB and the employees is just as bad because they tell you that YOUR book was shipped and order, then it’s not but remember I paid 4 the book and still can’t get the book what the —-. So now I have to go to another Book store so who need this book store anyway. I been waiting for a book for my niece and this is before the NEW YEAR and I’m still waiting. The child needed this book for her School and they playing a GAME.

  34. The Billings MT Borders is a heck of a lot better then the Barnes and Noble in that same town. You can find the books you want easily and no one bugs you to see if you have actually found the books you are looking for which is very nice and they have nice journals too! However the Barnes and Noble staff just seems rushed to me, always bugging me to see if I need help and sometimes they stock crappy too and you can’t find the books you want, not because they don’t have them, but because only they, the store associates, know where on the shelves they are located which totally sucks!

  35. Hi, Thanks for sharing such a wonderful information. I must say that while reading your post I found my thoughts in agreement with the topic that you have discussed, which happens very rare.

    I remember walking into Borders for the first time (longer ago than I’d like to admit) and being overwhelmed. It was big and it had books and music. That’s right, there was a time when Borders was a cut above Barnes and Noble, when you sought out the Borders location nearest you. It was cool and cutting edge. You wanted to buy books there.

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  37. Pingback: Borders Nixes Six Stores From Closing List – Anime Herald

  38. WOW
    buyer beware

    what a rip-off. ALL MOST NOTHING is 40% off. Most are 10-20%. TOTALLY MISSLEADING

    cCHECK FIRST AT THE CHECK OUT TO SEE IF IT IS A 40% ITEM OR NOT BEFOR BUYING

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