The news just doesn't seem to get any better for Borders. In the wake of an announcement that they had been delaying payments to publishers, they ended the year being spotlighted on The Motley Fool's website (http://m.fool.com/investing/small-cap/2011/01/03/the-one-retailer-you-must-avoid#Articles) as "The One Retailer You Must Avoid". This past week, there was talk that Simon & Schuster was canceling author events at Borders. More fundamentally is the fact that the past couple years have seen them cut a shocking number of their most experienced employees, including many of my former colleagues in their buying/merchandising group. Having worked for Borders for seven years in the 1990s, followed by a few years calling on them as a vendor, I want them to pull through this, but it's hard to see how it's going to happen.
What I think about more is how Borders got to this point. I'm sure a lot of former Borders employees (and customers) have varying opinions on when the trouble started. Some might fixate on the 1992 opening of music stores, while others may see the advent of international stores in 1997 as the turning point. More recently, the media has been full of talk about the threat digital media poses to traditional book retailers. From my vantage, though, Borders' problems started long before the Kindle, with roots in an event many employees at the time (myself included) thought was a great thing - the company's initial public stock offering in 1995.
At the time, I think a lot of us thought that independence from the ownership by K-Mart would pave the way for better things. In retrospect, we probably were just tired of angry customers blaming things like being sold out of an obscure foreign newspaper on being owned by K-Mart as part of their so-called specialty retail group Looking back on it, K-Mart actually seems like the friendly giant in many ways. They provided the resources for the company to expand, improved employee benefits (whatever would-be union organizers claimed) and largely seemed to give the management latitude to do what they thought was best for the growing company.
At the time, though, it was much more appealing to fixate on the symbolism of one's employer being an independent bookseller again. The fact that the stock price kept going up, making the stock options given to encourage staying on seem likely to have real value, did little to dissuade me from that view. As it happened, "the street" turned out to be a bit more demanding than the K-Mart execs, and it's hard to shake the sense that the unavoidable focus on quarterly earnings reports was a factor in some ultimately unfortunate strategic decisions, especially with regard to the company's expansion.
In November of 1995, I helped train the staffs of two new Borders stores, one of them being the 100th to open. The company kept expanding its store count by dozens year after year. And while it seemed to help the bottom line in the short term, it wasn't necessarily a good thing in the long term, because that expansion led to the promotions of a lot of people to management positions before they were ready at the same time that stores were being pressured to keep payroll lower. Borders had always spoken of the importance of their company culture as one of the factors that differentiated them from other retailers. The relentless expansion compromised that culture by putting the responsibility for transmitting the Borders way of doing things in the hands of people who weren't themselves particularly versed in it. Over time, staff members increasingly seemed to know less about both the merchandise in the stores and the way it should be presented. Both of these factors made the stores more difficult and less appealing to shop as a customer.
It's understandable that online retailers like Amazon make it harder for a physical bookstore to compete on selection, especially as ebooks become more widespread, but there's still a place for good bookstores. The key is that the stores need to be a place you want to shop, and this is where Borders has given up so much ground to Barnes & Noble. Borders used to have the stores with the more appealing displays of books and other items, especially in the front of the store, while B&N's displays tended to look a little ragged. In the space of a decade, even the front areas of Borders (that should be appealing to browse) tend to look sloppy, while B&N seems much more interesting and inviting in comparison. I suppose that's why, aside from the financial aspects, the prospect of Borders buying Barnes & Noble seems wrong. Barnes & Noble, while not perfect and certainly facing some challenges, knows who they are. Borders used to have a clearer and frankly superior identity. However, as the stores become increasingly barren and so many of their best and brightest either jumped or got pushed out, that's just a fond memory for me and others who think more about the word "former" in the phrase "former Borders employee".
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