January 6, 2009
Former Nash Finch CEO Takes Over at Borders
Some believed that George Jones was on the right track with changes he was
implementing at Borders Group. Others clearly were not satisfied with the
pace of change on the bookstore chain’s balance sheet even if they thought
Mr. Jones was on the right track with moves such as placing kiosks in stores
to enable consumers to burn their own CDs, self-publish books and make travel
reservations.
As of yesterday, Mr. Jones is out as CEO of Borders and he is being replaced
by "turnaround expert" Ron Marshall, the former top executive at
Nash Finch. Before joining Nash Finch, he was chief financial officer at
Pathmark.
Mr. Marshall is not entirely new to the book business after having served
in management roles at Barnes & Noble’s college bookstore unit and at
Crown Books.
"Borders is a powerful brand with millions of loyal customers who love
to shop in the stores," said Mr. Marshall in a press release to announce
his hiring. "These are tremendous assets that can be built upon once
the balance sheet is strengthened and the company is on more solid financial
footing. I’ve led turnarounds at other retail organizations and look forward
to leading a new management team at Borders to drive profitability and help
ensure lasting success for this great name in retail."
The chain announced a number of other personnel changes, as well. Mark Bierley
was named chief financial officer and executive vice president, finance,
replacing Ed Wilhelm. Anne Kubek takes over as executive vice president,
merchandising and marketing from Rob Gruen. Dan Smith was named to the newly
created position of chief administrative officer from his previous position
as executive vice president, human resources for Borders.
David Schick of Stifel Nicolaus & Co. told The Associated Press that
continuing turnover in Borders’ executive suite is likely to create more
problems than it solves.
"We believe such powerful macroeconomic factors are at work that a
management change could confuse the key constituents (vendors) and cause
incremental friction in the model. Borders has seen too much change in three
years, in our view," Mr. Schick wrote in a note to clients.
Discussion Questions: What do you think about Borders management changes?
What will Ron Marshall and his team need to do to turn Borders around?
BrainTrust
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Discussion Questions
Poll
Living and working in Borders’ hometown and headquarters of Ann Arbor, I’ve closely watched, with dismay, as a once solidly grounded retailer with a clear point of differentiation (store associates genuinely passionate about books and offering an intimate customer experience) has lost its way.
The likelihood of continued sustainability diminishes in light of a constantly shifting strategic plan and executive team unable to clearly articulate and execute a solid brand vision.
Accelerated changes in recent years have resulted in a significant loss within Borders’ internal ranks of brand champions, and most importantly, depth of industry experience and insight. Even so, I continue to hold out hope for a positive turnaround and will loyally support my hometown underdog.
I would echo Gene’s comments. B&N is simply a better retailer, and clearly dominates the retail book segment; a segment where units sold at retail is declining. Given those realities, as well as the current economic environment, it’s hard to envision an approach which would lead Borders to sustainable success.
Got to agree with Gene. Ron Marshall left Nash amidst scandal, walking away with millions under the guise of salary, severance, stock options, etc. To his credit the stock price when up although I’m not so sure about the actual health of the company.
I never understood the concept of a book store. You can get basically any book, video, or magazine sold in a book store for free at the library.
I think that the old school brick & mortars concept is a dying breed for some segments of the market. Many consumers are too busy and find shopping online easier. In addition, many online retailers such an Amazon can offer very competitive pricing and free shipping. Therefore, the customer can get what he wants cheaper and the product is delivered to his door in a few days.
Currently brick & mortars are better suited to larger products. Most customers that are buying large items like major appliances want to see them person before purchasing. In addition, shipping costs are too high on a per item basis for them to absorb it or past on to the customer.
The bottom line is, companies like Amazon are demonstrating that small, easy-to-ship items can be sold online effectively. Often at better retail prices, higher quality (See what “Consumer Reports” says about small appliance reliability based where it is purchased [Amazon vs. Walmart] you might be surprised) and delivered to your door.
Unless Borders can drive customers to their stores by being cheaper, customers have no reason to make a special trip to their store; which I doubt they can do since their overhead is much greater than Amazon’s. With a down economy, the shift of business to internet purchases will be accelerated as consumers look for better deals. Therefore, I highly doubt a change in leadership is going to stop the erosion of their business.
Having the world’s best book store is increasingly akin to having the world’s best typewriter repair shop. Sigh.
Borders is a poor second to Barnes & Noble. They are a poor second in every way, from the mainline book business, to the internet, to delivery, to cafes to store design and convenience.
Yes, it will take new management, but more than that, it will take new thinking. Bringing a retail guy in may not be what they need, despite his very solid track record.
The changes Borders will need are not a list of small fixes. There must be a major change and innovation in Borders’ positioning and differentiation. Borders’ objective should not be to be a stronger second to Barnes & Noble. They must be thinking of changes in the business model that make them incomparable–in the consumer’s mind–to B&N.
Borders may have a new Field Marshall in Ron but in a year or two, who’ll be the biggest benefactor, Borders or Mr. Marshall?
Between the hope and the selection, between the emotion and the response, falls the shadow cast by the revolving front office door at Borders.
George Jones is a solid retail executive with a great track record, solid disciplines and someone who was trying to find a path towards differentiation and success. This could be step 1 in the end game.
Clearly Borders has huge challenges ahead – hiring Ron Marshall as CEO is a very major positive step towards saving the company. Having worked with him for a number of years at Pathmark, Ron brings strong financial and operating skills to the job. His no-nonsense approach to problem solving will be put to good use at Borders.
Over the last number of months we have seen numerous turnaround “experts” in various industries who have done little if any good in the end. Regretfully, most investors and shareholders tend to look for quick fixes that produce quick results, rather than what is good for the long-term growth of a company.
Only time will tell if Ron Marshall can walk the walk.
If not, perhaps they can get some new management ideas from the wide selection of business titles they currently carry.
The current financial crunch is hampering many retailers who were shaky to begin with (see yesterday’s comments), and Borders is no exception. A management shakeup is unlikely to address the systemic problems with the business quickly enough. There is still a large appetite for books and related merchandise, but online retailers and digital delivery continue to erode the market share of traditional retailers. It’s not unlike the revolution that overturned traditional sellers of music, such as Sam Goody and others.
Full disclosure: I’m a frequent shopper at the Borders in my neighborhood, but I don’t see a lot of the innovations that were put into place at the Ann Arbor prototype and elsewhere. (In fact, the kiosks and other developments require the sort of capital investment that may be difficult on a national scale.) What I did see in the past year were some minor tweaks that made categories like best-sellers and new releases more difficult to navigate, as well as a drastically over-spaced recorded music area considering the collapse of this business elsewhere.
I hope the new team has the time and the financial acumen to save Borders, but they have a lot of work to do.
Mr. Marshall was correct in his news release that Borders has a foundation to build on. For bookstores, Borders has some of the best locations that I’ve seen. The layouts are okay but need refreshing.
I was speaking to a Borders manager in South Florida as a customer and her concerns were around the quality of service she could provide for her customer in light of payroll and scheduling cuts.
The new team at Borders has a really strong infrastructure to work with and I hope they can take it to the next level and capture more market share. Technology has really created new and profitable opportunities for book sellers.
The musical chairs of the “suits” are not accomplishing what needs to happen to turn-around these companies. Too many companies are looking at resumes and too few are looking for great intuitors who can lead with ideas.
Funny how a fast economy creates geniuses and a bad economy creates underachievers. The struggle for anyone at Borders will continue to be competing with Amazon and innovating with cross-channel customers. I think they’ve done as well as can be expected.
What makes the difference between a “so-so” competitor and the front-runner is the quality of its sales associates – the “grunts on the ground” who, as far as the customer is concerned, ARE the company. In my experience, Borders associates are better than those at Barnes & Noble, Hastings or other booksellers in our market.
Their prices are also not that much greater than what you actually end up paying at Amazon, Powells or other online booksellers, and returns and adjustments are so much easier. The Borders Rewards program, from what I have seen, is very good at building both brand loyalty and store traffic.
Change takes time, and too often our caffeinated equity markets cannot wait for the process to work. This may be one of those instances.
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Living and working in Borders’ hometown and headquarters of Ann Arbor, I’ve closely watched, with dismay, as a once solidly grounded retailer with a clear point of differentiation (store associates genuinely passionate about books and offering an intimate customer experience) has lost its way.
The likelihood of continued sustainability diminishes in light of a constantly shifting strategic plan and executive team unable to clearly articulate and execute a solid brand vision.
Accelerated changes in recent years have resulted in a significant loss within Borders’ internal ranks of brand champions, and most importantly, depth of industry experience and insight. Even so, I continue to hold out hope for a positive turnaround and will loyally support my hometown underdog.
I would echo Gene’s comments. B&N is simply a better retailer, and clearly dominates the retail book segment; a segment where units sold at retail is declining. Given those realities, as well as the current economic environment, it’s hard to envision an approach which would lead Borders to sustainable success.
Got to agree with Gene. Ron Marshall left Nash amidst scandal, walking away with millions under the guise of salary, severance, stock options, etc. To his credit the stock price when up although I’m not so sure about the actual health of the company.
I never understood the concept of a book store. You can get basically any book, video, or magazine sold in a book store for free at the library.
I think that the old school brick & mortars concept is a dying breed for some segments of the market. Many consumers are too busy and find shopping online easier. In addition, many online retailers such an Amazon can offer very competitive pricing and free shipping. Therefore, the customer can get what he wants cheaper and the product is delivered to his door in a few days.
Currently brick & mortars are better suited to larger products. Most customers that are buying large items like major appliances want to see them person before purchasing. In addition, shipping costs are too high on a per item basis for them to absorb it or past on to the customer.
The bottom line is, companies like Amazon are demonstrating that small, easy-to-ship items can be sold online effectively. Often at better retail prices, higher quality (See what “Consumer Reports” says about small appliance reliability based where it is purchased [Amazon vs. Walmart] you might be surprised) and delivered to your door.
Unless Borders can drive customers to their stores by being cheaper, customers have no reason to make a special trip to their store; which I doubt they can do since their overhead is much greater than Amazon’s. With a down economy, the shift of business to internet purchases will be accelerated as consumers look for better deals. Therefore, I highly doubt a change in leadership is going to stop the erosion of their business.
Having the world’s best book store is increasingly akin to having the world’s best typewriter repair shop. Sigh.
Borders is a poor second to Barnes & Noble. They are a poor second in every way, from the mainline book business, to the internet, to delivery, to cafes to store design and convenience.
Yes, it will take new management, but more than that, it will take new thinking. Bringing a retail guy in may not be what they need, despite his very solid track record.
The changes Borders will need are not a list of small fixes. There must be a major change and innovation in Borders’ positioning and differentiation. Borders’ objective should not be to be a stronger second to Barnes & Noble. They must be thinking of changes in the business model that make them incomparable–in the consumer’s mind–to B&N.
Borders may have a new Field Marshall in Ron but in a year or two, who’ll be the biggest benefactor, Borders or Mr. Marshall?
Between the hope and the selection, between the emotion and the response, falls the shadow cast by the revolving front office door at Borders.
George Jones is a solid retail executive with a great track record, solid disciplines and someone who was trying to find a path towards differentiation and success. This could be step 1 in the end game.
Clearly Borders has huge challenges ahead – hiring Ron Marshall as CEO is a very major positive step towards saving the company. Having worked with him for a number of years at Pathmark, Ron brings strong financial and operating skills to the job. His no-nonsense approach to problem solving will be put to good use at Borders.
Over the last number of months we have seen numerous turnaround “experts” in various industries who have done little if any good in the end. Regretfully, most investors and shareholders tend to look for quick fixes that produce quick results, rather than what is good for the long-term growth of a company.
Only time will tell if Ron Marshall can walk the walk.
If not, perhaps they can get some new management ideas from the wide selection of business titles they currently carry.
The current financial crunch is hampering many retailers who were shaky to begin with (see yesterday’s comments), and Borders is no exception. A management shakeup is unlikely to address the systemic problems with the business quickly enough. There is still a large appetite for books and related merchandise, but online retailers and digital delivery continue to erode the market share of traditional retailers. It’s not unlike the revolution that overturned traditional sellers of music, such as Sam Goody and others.
Full disclosure: I’m a frequent shopper at the Borders in my neighborhood, but I don’t see a lot of the innovations that were put into place at the Ann Arbor prototype and elsewhere. (In fact, the kiosks and other developments require the sort of capital investment that may be difficult on a national scale.) What I did see in the past year were some minor tweaks that made categories like best-sellers and new releases more difficult to navigate, as well as a drastically over-spaced recorded music area considering the collapse of this business elsewhere.
I hope the new team has the time and the financial acumen to save Borders, but they have a lot of work to do.
Mr. Marshall was correct in his news release that Borders has a foundation to build on. For bookstores, Borders has some of the best locations that I’ve seen. The layouts are okay but need refreshing.
I was speaking to a Borders manager in South Florida as a customer and her concerns were around the quality of service she could provide for her customer in light of payroll and scheduling cuts.
The new team at Borders has a really strong infrastructure to work with and I hope they can take it to the next level and capture more market share. Technology has really created new and profitable opportunities for book sellers.
The musical chairs of the “suits” are not accomplishing what needs to happen to turn-around these companies. Too many companies are looking at resumes and too few are looking for great intuitors who can lead with ideas.
Funny how a fast economy creates geniuses and a bad economy creates underachievers. The struggle for anyone at Borders will continue to be competing with Amazon and innovating with cross-channel customers. I think they’ve done as well as can be expected.
What makes the difference between a “so-so” competitor and the front-runner is the quality of its sales associates – the “grunts on the ground” who, as far as the customer is concerned, ARE the company. In my experience, Borders associates are better than those at Barnes & Noble, Hastings or other booksellers in our market.
Their prices are also not that much greater than what you actually end up paying at Amazon, Powells or other online booksellers, and returns and adjustments are so much easier. The Borders Rewards program, from what I have seen, is very good at building both brand loyalty and store traffic.
Change takes time, and too often our caffeinated equity markets cannot wait for the process to work. This may be one of those instances.