February 15, 2008
Borders Seeks Technological Difference and Advantage
Borders has developed a bookstore for the 21st century and it goes well beyond simply selling books.
The company’s new concept store blends the standard Borders experience of books, music and in-store café with various technologies that consumers can use to burn custom CDs, self-publish books, track down their ancestors and share photos.
Borders is also refining its cross-merchandising act by, for example, bringing magazines dealing with cooking in-line with the section of the store selling cookbooks. Yoga mats and other fitness items can be found in the same area of the store as health and wellness titles.
The chain intends to open 14 of the new concept stores in markets around the country to see how well they perform and make necessary tweaks before moving ahead at other locations.
Borders CEO George Jones told the Detroit Free Press, “This is a completely new shopping experience that sets Borders apart from every other store. We’ve stayed true to what our customers have always loved about Borders — deep and intelligent selection, knowledgeable staff, and a comfortable, welcoming atmosphere.”
One of the ways Borders is looking to improve the in-store environment is with original programming on its in-store Borders TV network. Consumers will be able to watch interviews with authors and recording artists in concert.
The company also plans to use the Borders TV programming on its website. The site is currently being revamped for an April launch.
“Once we’ve launched the new Borders.com, we’ll be able to deliver on our cross-channel retail strategy,” Mr. Jones said.
Discussion Questions: Is the new Borders concept described in the Detroit Free Press piece what consumers are looking for in a modern bookstore? What elements do you find particularly attractive in the new format?
BrainTrust
Recent Discussions
Discussion Questions
Poll
It’s pretty funny that Borders, of all firms, is behind this. They completely missed the Internet revolution by outsourcing all of their e-commerce activities to Amazon for years–what a colossal mistake!
This concept sounds nice, but what evidence do we have that they can pull it off? It may be easier for a true technology firm (like Amazon) to move into the bricks-and-mortar retail space than for an old-school firm like Borders to move into the technology space….
Borders is evolving with consumer trends and technology. This will bode well in their favor but they must continue to evolve and create an interactive marketing/merchandising team that will stay on top of trends and technologies.
YouTube has been a popular site for awhile. Why? Consumers want to customize their experience but we don’t have years to react we only have months.
Borders’ decision to reorient their stores towards consumers lifestyles and entertainment value makes sense. Consumers have different expectations and shopping habits in book stores than other retail environments. I look forward to learning more about the concept and consumer reaction to it.
I love book stores and if the execution is as good as the plan then they are going to have a real winner. The best way to increase sales is to sell more to your best customers. This ideas is surely focused on doing that.
This is a definite “thumbs up” from our perspective. What Borders is tapping into is the fact that consumers are looking for ways to extend an experience–one that, more than most, is driven by intellectual curiosity. People tend to be driven by an interest (music, sports, gaming) more than any one technology or content delivery system. By giving consumers access to multiple channels of content delivery in one place–and by making them interactive and self-directed–Borders is going to be an even more addictive experience for some.
But now come the hard business questions. First, will the increased dwell time of the devotees sure to love this result in a commensurate revenue increase? Is the business model there? And second, will the added features draw new customers? That’s a much tougher business model. Giving existing customers who love the current experience already even more of the same is a great way to drive loyalty and retention–but it seldom draws new users.
What that store is doing is merely the appetizer. This will get interesting in a few months when they launch their new Web site and then try tying the two together.
Borders has some very aggressive plans for that integration and it will be interesting to watch. Will e-Commerce work within the store? Will consumers go for it, after the novelty wears off? Will information-sharing truly be complete and seamless?
This is likely to be one of the most interesting merged channel experiments this year. Books is the space to watch, with this Borders experiment and Amazon toying around with its own business model.
I give Borders credit for trying. Barnes and Noble has certainly become the leader in the bookseller business, with Borders operating more and more like a tired also-ran. Borders needs to do something, so they must be given credit for trying this new concept store. But is it truly a new concept?
The Musicland Group had a similar concept under the banner of Media Play. They combined all types of media (books, music, videos, software) under one roof, and tried to cross promote between departments. Musicland is gone, and the few Media Plays that are left (if any) are on their last legs.
This seems so similar to the Best Buy/Circuit City situation. Best Buy beat out Circuit City as the leader, and with Amazon sales continuing to increase in both electronics and books (and yoga mats, etc.), it seems that consumers are happy with one strong bricks and mortar option, along with increasingly stronger online retailers.
Sounds like a good innovation to try–making the store a destination as a multi-use store.
Depending upon the demographics in the area, this certainly has potential and will be interesting to watch.
One of my laws of Retailativity(TM) states: “A service standard that may be obtained in any channel will be expected in every channel.” For Borders, this means that some store shoppers will desire instant access to services like online-ordering and media downloads. This could be especially true for products further out on the “long tail” of assortment, since a physical store simply can’t stock every obscure blues album or reference book.
Another example of special hardware you can’t get at home is the Long Pen device (check http://www.longpen.com, it’s quite remarkable). It will permit virtual book signings in more locations. This may be a gimmick, but it provides bibliophiles with an extra reason to come in and will at minimum add some novelty to the store environment.
Is this new concept store an automatic win for Borders? Hardly. But it could make shopping a little more fun and satisfying. And it sounds like the type of place I’d like to hang out in once in a while.
This isn’t quite as simple as it seems. The core market for the retail book industry is a tad harder to define than the conversation suggests.
For example, one might look at it in generational terms–a sort of print reader versus digital scanner debate. If you buy this argument, the Borders strategy is flawed insofar as it won’t be able to hold younger audiences while older shoppers will begin gradually dying off.
You could also say the book business is driven by a handful of specialized categories, specifically religion/religious fiction; cookbooks; self-help and popular fiction. Orienting against this view is equally problematic since the popular fiction market is now a commodity with 20-50 percent discounts expected by consumers and the remaining three (or four depending on how you define them) categories aren’t enough to pay for a large brick and mortar plant.
One could also argue that blending a website with a physical store is a good idea. This makes sense in terms of your ability to potentially reduce inventory and satisfy the needs of the physical bookstore shopper, but it probably won’t siphon off many sales from Amazon.
Then there is the “burn your own CD” idea–a great one if we were still living in the pre-download world but one that doesn’t seem to have too much traction with anyone today except possibly technologically-challenged Baby Boomers who don’t have children or grandchildren around to help them download tunes and burn CDs at home.
Ah, then there’s the famous “integrate the yoga mats into the exercise aisle” idea. My guess is that what it costs in terms of dissatisfied “pure” readers it won’t make up for in additional impulse sales.
Finally, about readers, if they aren’t the core of the bookstore business then who is? If people want to go to a Starbucks let them go to a Starbucks. The Media Play analogy Joel used may be frighteningly apt here. When you try to be all things to all people you end up being nothing to anyone.
I personally like Borders better than Barnes & Noble. I find a broader range of the kind of books I like; can access new and/or more obscure fiction titles more easily; and they definitely have a vastly better music selection. The problem is, while I’m sure I grossly overindex in terms of book purchases, you’d probably go broke operating bookstores just for folks like me.
Borders needs to settle down a bit. The gyrations of their loyalty card program are a great case in point. They used to have a good loyalty program that allowed cardholders to bank dollars until Christmas. Now you get more promotions (a staggering number between email coupons and register-generated discount slips, but they are a pain to redeem. You can have five coupons and–if you have the “wrong” i.e. rule-following clerk at the register, you might have to literally walk through the line five times to use them. Also, getting $25 a month off in bonus bucks is nice but it doesn’t have the same psychological impact as learning you have $300 in your holiday account–even though it’s obviously the same amount of money.
In all fairness, as an author, Borders has been great to me. That’s why I’m so anxious to see it survive. I guess I just don’t find enough here that will help Borders prosper in the face of the diffuse competitive set it’s fighting. The enemy isn’t just Barnes & Noble, it’s Starbucks, iTunes, eBay, Alibris, Amazon, Christian bookstores and the Food Network (for starters) not to mention Best Buy, etc., etc.
Rather than try to build superstores maybe Borders needs to think about a more niched approach. I’m not sure. It’s a tough problem. But, I’m pretty sure that the superstore concept isn’t going to be the final answer.
Mel is certainly right that the best way to increase sales is to sell more to your best customers. And a time-honored way to do that is to expand the time your best customers spend in the store.
But I also see Ben’s point about business model–how will Borders be sure it can monetize its new customer experiences, both in-store and online? What new services will it be able to charge for, and will it be able to get a premium for any of them? Or will the chain be able to sell enough extra merchandise at current margins to finance the initial investment in upgrading each store as well as any extra operating costs in labor and infrastructure maintenance?
I realize these comments are out of character for me–I’m usually the one railing against management taking too much money out of an organization. But there’s a happy medium. in this case, I think Borders has to watch the financials very carefully, and make sure they’re going to get back what they put into the new concept.
I’d like to address Peter’s observations. This is a great example of “just because you can doesn’t mean you should.”
Of course Borders can move into the technology space but should they? If I go to Borders only to find that–too often–I need to order a book online, why wouldn’t I just order it from Amazon in the first place?
My experience with Barnes & Noble, for example, isn’t that they tell me they can have a book to me the next day but that they can get it to me in one to two weeks. If I need it immediately (or just want it badly enough) I’m already sending an email to Amazon.
The same holds true with my earlier observations about music. Why wouldn’t I download from iTunes, or LimeWire, etc., etc. and burn my own CDs in the comfort of my home? It isn’t that Borders can’t catch up, it’s that there’s no reason (in terms of a large enough market to justify the expense) to even start running.
I think this is a great opportunity for Borders to try to make up a portion of the gap between number one in this market space and the rest of the group. By having innovation and technology as a forefront to their revamp, Borders will capture a certain part of the market that is geared toward this marketing solution.
However, when they incorporate Borders TV with Branding awareness in their stores, then and only then, will they see the gap lessen and their brand gain steam. In today’s marketplace, it is not about size and reach, it is about brand and loyalty. That is what makes a retailer successful.
First, I applaud Borders’ management for having the vision and taking the lead on what will be an increasingly important retail slot. The success of what Borders is doing – creating the bookstore of the future – will in the end key on just a handful of factors and, of course, Borders’ ability to deliver.
1. Quality of the experience – Will the shopper’s experience on their first visit exceed their expectations? Or, will the shopper feel lost in the technology? The “First Adapters” will be technically sophisticated – will Borders have products and services they have not seen before and cannot get directly from the Internet? If Borders will focus on the customer experience AND if they can find products (or services) that they will be able to provide and offer exclusivity on, that would go a very long way towards not just capturing a niche, but securing a vast, long range market, and at the same time, reposition their brand in a such a way as to leap ahead of Barnes & Noble and other competitors.
2. Ability to focus on a few key markets. A Forrester Research study shows that over the past 15 years – since the widespread use of the Internet – genealogy has ranked second only to gardening as a popular pastime or hobby for Americans. The rationale is that we all have ancestors, and have a natural curiosity about our roots. So, having targeted that area is a very sage decision. But, will Borders be able to offer something that is really unique or exclusive? That will be an important key to their success.
3. Positioning – this will give Borders the currently popular “Green Card” for marketing? What they have come up with can save a lot of trees. This can be utilized to give Borders a very clear marketing advantage – if they play it correctly – they will be the bookstore of the future and the competitors with shelves filled with “dead trees.” (Think of conventional books as “buggy whips” – the classic example of an industry that went away almost instantly with the introduction of new technology: automobiles.) And, Borders, by being first in their category to “go green” in the bricks and mortar environment – means they will automatically own that growing segment. I suggest this greening of the bookstore can (and should) be fully used to revamp their brand identity – and will attract a lot of first time customers who relate to issues concerning the environment.
4. How well their staff interacts with customers. The front line of employees will need to assess the technical savvy of the customer quickly and correctly – and provide service that is jargon free for some. For example those who will visit a store to learn what they can offer in the way of adding to their family tree may or may not have knowledge of the technologies involved. And they may not care to know. They just want to find out if they will be able to add to their personal collection some new ancestral history information for less money than is charged online by subscription providers. Borders needs to have information this shopper cannot get anywhere else – at a price that is less than subscription prices to download data.
5. Store location.
Best idea from the new Borders concept: they’re testing it before rollout. All too many retailers don’t test their new ideas so they waste capital, time and effort. Worst idea from the new Borders concept: they only have 1 new concept. Why not test several new concepts simultaneously?
Borders is in trouble. Digital content is going to smash them big. The new SSD (high speed low power storage) enabled devices and better displays finally make it possible to replace books.(*Sony Reader, Kindle Reader, Asus Eee, the OLPC XO, Iphone, more and more coming out.)
I don’t know the solution myself but I do know it isn’t going to be as easy as developing a new product placement scheme.
I have always found Borders to be extremely customer oriented in staff accessibility, layout, helpfulness and overall convenience. The new concept stores sound like they will add even more to the shopping experience. I also like the changes proposed for the website.
More Discussions
Has Same-Day Delivery Become an Expectation Across Retail?
Are expectations around retail delivery speed in flux?OpenAI Names the Infrastructure Standard for Agentic Commerce
Will OpenAI or Google (or another entity) set the gold standard for agentic commerce?Is Five Below Poised For Even Greater Growth?
Five Below is hitting serious growth numbers. Can this trend continue?
It’s pretty funny that Borders, of all firms, is behind this. They completely missed the Internet revolution by outsourcing all of their e-commerce activities to Amazon for years–what a colossal mistake!
This concept sounds nice, but what evidence do we have that they can pull it off? It may be easier for a true technology firm (like Amazon) to move into the bricks-and-mortar retail space than for an old-school firm like Borders to move into the technology space….
Borders is evolving with consumer trends and technology. This will bode well in their favor but they must continue to evolve and create an interactive marketing/merchandising team that will stay on top of trends and technologies.
YouTube has been a popular site for awhile. Why? Consumers want to customize their experience but we don’t have years to react we only have months.
Borders’ decision to reorient their stores towards consumers lifestyles and entertainment value makes sense. Consumers have different expectations and shopping habits in book stores than other retail environments. I look forward to learning more about the concept and consumer reaction to it.
I love book stores and if the execution is as good as the plan then they are going to have a real winner. The best way to increase sales is to sell more to your best customers. This ideas is surely focused on doing that.
This is a definite “thumbs up” from our perspective. What Borders is tapping into is the fact that consumers are looking for ways to extend an experience–one that, more than most, is driven by intellectual curiosity. People tend to be driven by an interest (music, sports, gaming) more than any one technology or content delivery system. By giving consumers access to multiple channels of content delivery in one place–and by making them interactive and self-directed–Borders is going to be an even more addictive experience for some.
But now come the hard business questions. First, will the increased dwell time of the devotees sure to love this result in a commensurate revenue increase? Is the business model there? And second, will the added features draw new customers? That’s a much tougher business model. Giving existing customers who love the current experience already even more of the same is a great way to drive loyalty and retention–but it seldom draws new users.
What that store is doing is merely the appetizer. This will get interesting in a few months when they launch their new Web site and then try tying the two together.
Borders has some very aggressive plans for that integration and it will be interesting to watch. Will e-Commerce work within the store? Will consumers go for it, after the novelty wears off? Will information-sharing truly be complete and seamless?
This is likely to be one of the most interesting merged channel experiments this year. Books is the space to watch, with this Borders experiment and Amazon toying around with its own business model.
I give Borders credit for trying. Barnes and Noble has certainly become the leader in the bookseller business, with Borders operating more and more like a tired also-ran. Borders needs to do something, so they must be given credit for trying this new concept store. But is it truly a new concept?
The Musicland Group had a similar concept under the banner of Media Play. They combined all types of media (books, music, videos, software) under one roof, and tried to cross promote between departments. Musicland is gone, and the few Media Plays that are left (if any) are on their last legs.
This seems so similar to the Best Buy/Circuit City situation. Best Buy beat out Circuit City as the leader, and with Amazon sales continuing to increase in both electronics and books (and yoga mats, etc.), it seems that consumers are happy with one strong bricks and mortar option, along with increasingly stronger online retailers.
Sounds like a good innovation to try–making the store a destination as a multi-use store.
Depending upon the demographics in the area, this certainly has potential and will be interesting to watch.
One of my laws of Retailativity(TM) states: “A service standard that may be obtained in any channel will be expected in every channel.” For Borders, this means that some store shoppers will desire instant access to services like online-ordering and media downloads. This could be especially true for products further out on the “long tail” of assortment, since a physical store simply can’t stock every obscure blues album or reference book.
Another example of special hardware you can’t get at home is the Long Pen device (check http://www.longpen.com, it’s quite remarkable). It will permit virtual book signings in more locations. This may be a gimmick, but it provides bibliophiles with an extra reason to come in and will at minimum add some novelty to the store environment.
Is this new concept store an automatic win for Borders? Hardly. But it could make shopping a little more fun and satisfying. And it sounds like the type of place I’d like to hang out in once in a while.
This isn’t quite as simple as it seems. The core market for the retail book industry is a tad harder to define than the conversation suggests.
For example, one might look at it in generational terms–a sort of print reader versus digital scanner debate. If you buy this argument, the Borders strategy is flawed insofar as it won’t be able to hold younger audiences while older shoppers will begin gradually dying off.
You could also say the book business is driven by a handful of specialized categories, specifically religion/religious fiction; cookbooks; self-help and popular fiction. Orienting against this view is equally problematic since the popular fiction market is now a commodity with 20-50 percent discounts expected by consumers and the remaining three (or four depending on how you define them) categories aren’t enough to pay for a large brick and mortar plant.
One could also argue that blending a website with a physical store is a good idea. This makes sense in terms of your ability to potentially reduce inventory and satisfy the needs of the physical bookstore shopper, but it probably won’t siphon off many sales from Amazon.
Then there is the “burn your own CD” idea–a great one if we were still living in the pre-download world but one that doesn’t seem to have too much traction with anyone today except possibly technologically-challenged Baby Boomers who don’t have children or grandchildren around to help them download tunes and burn CDs at home.
Ah, then there’s the famous “integrate the yoga mats into the exercise aisle” idea. My guess is that what it costs in terms of dissatisfied “pure” readers it won’t make up for in additional impulse sales.
Finally, about readers, if they aren’t the core of the bookstore business then who is? If people want to go to a Starbucks let them go to a Starbucks. The Media Play analogy Joel used may be frighteningly apt here. When you try to be all things to all people you end up being nothing to anyone.
I personally like Borders better than Barnes & Noble. I find a broader range of the kind of books I like; can access new and/or more obscure fiction titles more easily; and they definitely have a vastly better music selection. The problem is, while I’m sure I grossly overindex in terms of book purchases, you’d probably go broke operating bookstores just for folks like me.
Borders needs to settle down a bit. The gyrations of their loyalty card program are a great case in point. They used to have a good loyalty program that allowed cardholders to bank dollars until Christmas. Now you get more promotions (a staggering number between email coupons and register-generated discount slips, but they are a pain to redeem. You can have five coupons and–if you have the “wrong” i.e. rule-following clerk at the register, you might have to literally walk through the line five times to use them. Also, getting $25 a month off in bonus bucks is nice but it doesn’t have the same psychological impact as learning you have $300 in your holiday account–even though it’s obviously the same amount of money.
In all fairness, as an author, Borders has been great to me. That’s why I’m so anxious to see it survive. I guess I just don’t find enough here that will help Borders prosper in the face of the diffuse competitive set it’s fighting. The enemy isn’t just Barnes & Noble, it’s Starbucks, iTunes, eBay, Alibris, Amazon, Christian bookstores and the Food Network (for starters) not to mention Best Buy, etc., etc.
Rather than try to build superstores maybe Borders needs to think about a more niched approach. I’m not sure. It’s a tough problem. But, I’m pretty sure that the superstore concept isn’t going to be the final answer.
Mel is certainly right that the best way to increase sales is to sell more to your best customers. And a time-honored way to do that is to expand the time your best customers spend in the store.
But I also see Ben’s point about business model–how will Borders be sure it can monetize its new customer experiences, both in-store and online? What new services will it be able to charge for, and will it be able to get a premium for any of them? Or will the chain be able to sell enough extra merchandise at current margins to finance the initial investment in upgrading each store as well as any extra operating costs in labor and infrastructure maintenance?
I realize these comments are out of character for me–I’m usually the one railing against management taking too much money out of an organization. But there’s a happy medium. in this case, I think Borders has to watch the financials very carefully, and make sure they’re going to get back what they put into the new concept.
I’d like to address Peter’s observations. This is a great example of “just because you can doesn’t mean you should.”
Of course Borders can move into the technology space but should they? If I go to Borders only to find that–too often–I need to order a book online, why wouldn’t I just order it from Amazon in the first place?
My experience with Barnes & Noble, for example, isn’t that they tell me they can have a book to me the next day but that they can get it to me in one to two weeks. If I need it immediately (or just want it badly enough) I’m already sending an email to Amazon.
The same holds true with my earlier observations about music. Why wouldn’t I download from iTunes, or LimeWire, etc., etc. and burn my own CDs in the comfort of my home? It isn’t that Borders can’t catch up, it’s that there’s no reason (in terms of a large enough market to justify the expense) to even start running.
I think this is a great opportunity for Borders to try to make up a portion of the gap between number one in this market space and the rest of the group. By having innovation and technology as a forefront to their revamp, Borders will capture a certain part of the market that is geared toward this marketing solution.
However, when they incorporate Borders TV with Branding awareness in their stores, then and only then, will they see the gap lessen and their brand gain steam. In today’s marketplace, it is not about size and reach, it is about brand and loyalty. That is what makes a retailer successful.
First, I applaud Borders’ management for having the vision and taking the lead on what will be an increasingly important retail slot. The success of what Borders is doing – creating the bookstore of the future – will in the end key on just a handful of factors and, of course, Borders’ ability to deliver.
1. Quality of the experience – Will the shopper’s experience on their first visit exceed their expectations? Or, will the shopper feel lost in the technology? The “First Adapters” will be technically sophisticated – will Borders have products and services they have not seen before and cannot get directly from the Internet? If Borders will focus on the customer experience AND if they can find products (or services) that they will be able to provide and offer exclusivity on, that would go a very long way towards not just capturing a niche, but securing a vast, long range market, and at the same time, reposition their brand in a such a way as to leap ahead of Barnes & Noble and other competitors.
2. Ability to focus on a few key markets. A Forrester Research study shows that over the past 15 years – since the widespread use of the Internet – genealogy has ranked second only to gardening as a popular pastime or hobby for Americans. The rationale is that we all have ancestors, and have a natural curiosity about our roots. So, having targeted that area is a very sage decision. But, will Borders be able to offer something that is really unique or exclusive? That will be an important key to their success.
3. Positioning – this will give Borders the currently popular “Green Card” for marketing? What they have come up with can save a lot of trees. This can be utilized to give Borders a very clear marketing advantage – if they play it correctly – they will be the bookstore of the future and the competitors with shelves filled with “dead trees.” (Think of conventional books as “buggy whips” – the classic example of an industry that went away almost instantly with the introduction of new technology: automobiles.) And, Borders, by being first in their category to “go green” in the bricks and mortar environment – means they will automatically own that growing segment. I suggest this greening of the bookstore can (and should) be fully used to revamp their brand identity – and will attract a lot of first time customers who relate to issues concerning the environment.
4. How well their staff interacts with customers. The front line of employees will need to assess the technical savvy of the customer quickly and correctly – and provide service that is jargon free for some. For example those who will visit a store to learn what they can offer in the way of adding to their family tree may or may not have knowledge of the technologies involved. And they may not care to know. They just want to find out if they will be able to add to their personal collection some new ancestral history information for less money than is charged online by subscription providers. Borders needs to have information this shopper cannot get anywhere else – at a price that is less than subscription prices to download data.
5. Store location.
Best idea from the new Borders concept: they’re testing it before rollout. All too many retailers don’t test their new ideas so they waste capital, time and effort. Worst idea from the new Borders concept: they only have 1 new concept. Why not test several new concepts simultaneously?
Borders is in trouble. Digital content is going to smash them big. The new SSD (high speed low power storage) enabled devices and better displays finally make it possible to replace books.(*Sony Reader, Kindle Reader, Asus Eee, the OLPC XO, Iphone, more and more coming out.)
I don’t know the solution myself but I do know it isn’t going to be as easy as developing a new product placement scheme.
I have always found Borders to be extremely customer oriented in staff accessibility, layout, helpfulness and overall convenience. The new concept stores sound like they will add even more to the shopping experience. I also like the changes proposed for the website.