October 9, 2007
Turning Over a New Leaf At Borders
By Bernice Hurst, Managing Director, Fine Food Network
For people who love books – and there are many new ones coming along every year to replenish the numbers as older ones fade away – nothing can replace the opportunity to browse. Picking up something new, feeling and even smelling it, reading the first (and sometimes the last) page, flicking through it, discovering an author or story for the first time, is a joy difficult to describe. But for those who understand, and believe, as Luke Johnson does, the experience is well worth the £20 million (U.S. $40 million) he may ultimately pay (contingent on future performance) for Borders’s U.K. and Ireland subsidiaries.
A serial entrepreneur whose previous businesses include a restaurant chain and a television channel, not to mention his own private equity firm, Mr. Johnson has an enduring passion for books. He is now Britain’s third biggest bookseller, with 42 Borders outlets and 28 Books Etc stores in his portfolio. He believes books “are a cornerstone of civilization…fundamental to intellectual development” according to an interview in Britain’s The Observer. He went on to say that “if you can’t read and don’t enjoy reading it’s a major disadvantage. I think a home that doesn’t have books is a bit of a sad place, really.”
Mr. Johnson acknowledges that much needs to be done to turn the business around in the face of competition from internet retailers. Also, deep discounting of best sellers by supermarket chains such as Asda and Tesco have bitten into the bottom line of book retailers.
To enact a turnaround, Mr. Johnson tells The Observer he plans to make better use of the selling floor, improve inventory stocking, and boost publicity. He also sees greater opportunity in online selling as a Borders’ retail website is launched next year. Currently, Amazon handles Borders’ online sales.
CDs and DVDs may eventually be phased from the mix, but Borders is open to expanding its stationery section and trying new products such as computer games.
“We’ve got already some children’s educational areas in a few branches and a range of products for children including toys, which might be an area for growth,” said Mr. Johnson.
But he realizes Border’s turnaround has to be driven by books. With some 120,000 titles published annually, there is plenty from which customers can choose. He also points out that only 30 to 40 percent of people ever buy a book, which means that there is a pretty big audience still to tackle. Borders is aimed at “people who like to spend time in a bookstore…customer dwell times are over an hour on average. So it is more of an experience than just popping in quickly to buy the latest Harry Potter.”
He sounds confident and inspires confidence. He recognizes the competitive market but has defined a USP (unique selling position). If anyone is going to turn over a new leaf in Borders books, it could well be Luke Johnson.
Discussion Questions: What will it take for book retailers to remain vital in today’s competitive environment? What advantages can book retailers exploit over internet retailers and mass market stores? Do you think Luke Johnson should focus equally (or more) on expanding into games, stationery and toys?
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Borders and other bookselling chains have to offer something much more than the mass merchant or online retailer. This can be done by providing an outstanding customer shopping experience. Store personnel need to have a true love of reading to convey passion for books to the customer. As with all products, excitement and momentum can only be built by the people selling them. Books and bookselling is a business that requires a huge amount of product knowledge and enthusiasm. Not an area where a warm body by the register will do well. As for focusing on books an direct related accessories, I believe that is a good move for Borders. Layouts and stores are looking good now, they just need to work on the customer experience side of the equation.
With all due respect to Mr. Johnson, I don’t think that the website opportunity with Borders is terribly significant. Next to Amazon and Barnes & Noble, Borders is an “also also” ran — the proverbial third nostril of the book industry. Instead, I’d suggest that he focus — and quickly! — on improving Borders’ in-store customer experience.
The Borders stores that I’ve been to are completely uninviting to customers; they are drab, unexciting, and poorly merchandised. Some low cost/high value places to start: optimizing the assortments (narrower), improving signage, improving adjacencies/ layouts, and, frankly, increasing the stores’ overall cleanliness standards should help current customers locate the titles they’re looking for and entice them to visit the stores more frequently.
I have always found Borders to carry more specialty books than its major competitors…especially in the fields of architecture, design, art, and photography. Borders always did lack in the mix of CDs and a variety of music. Their prices are sky high compared to what you can buy them from on Amazon or at the Best Buy across the street.
On the contrary, something that personally irks me about Borders is the fact that they seem to be spending too much money on peripherals such as replacing their telephone paging system with headsets. Borders officials have told me that they thought the paging was annoying to customers, but they are WRONG, the unique ways Borders taught their employees to speak announcements and the liveliness they created in the store made Borders not seem like a dumpy old library with a quiet atmosphere. Now we have a bunch of employees walking around the store talking to themselves on the headsets…which is more annoying amongst the silence than overhead paging. Maybe they should have spent the money on lowering their prices than investing in a headset two way radio system in each store.
I find that when companies look for ways to spend their money on new systems, when they already have one in place–shows there is a sense of disorganization in the company. Now they have 2 redundant systems in place. Why buy a $10,000 phone system for every store with intercoms and paging if you don’t use it? Why spend additional capital investment when something already works and adds character to your store? This money should surely have been spent on better things.
If this kind of frivolous spending keeps occurring with Borders, they surely won’t be in business a few years from now.
Books generate community: book clubs, pass-along, recommendations from friends, readings, book signings, etc. Brick and mortar bookstores should focus on tapping into those community-building efforts both online and offline. Create space for book clubs to meet, special deals on group buys even for groups of 10 or less, more social opportunities online as well as off. Make the bookstore and its website the hub of the reading community.
Luke Johnson is a good negotiator. The price for Borders he negotiated is 10 million pounds up front. The rest of the price (another 10 million pounds) is based on the chain’s financial performance.
There is a group of categories for any given consumer where their level of interest and involvement warrants physical exploration. In the same vein, those same consumers will have different purchase occasions for those high involvement categories, and their need for physical interaction will range from 100% to zero for any given one of them.
Said another way, sometimes you just want to buy something and sometimes you want to browse around. Entertainment categories tend to have a higher “browse factor” than others–especially for enthusiasts. People who still go to the movies also have a Netflix subscription and a Blockbuster card–plus they subscribe to HBO and have already figured out how to use those new DVD rental kiosks in front of the supermarket. Each delivery system meets a different need for physical interaction.
Books are very much one of these categories where a range of physical interaction is appreciated. If it is a business book I need for a client project–Amazon has the business. But that doesn’t mean I can walk past a Borders without stopping and flipping through at least one book….
To remain vital in today’s competitive book selling environment Borders must become the “Book Club” of the everyday household. Book club members should get special preview opportunities, discounts, private party invites; make it fun, exclusive and entertaining…creating experiences for all. Strategic targeting of database marketing is instrumental in helping them become the source for their clients and their consumers’ children. They need to know and target every member of the household, much like Amazon does online (You bought this book, others who have bought this book enjoy this, this and this…). Create mini-seminars for all areas of interest targeting the relevant consumers. Becoming the perfect experience and place to go when a book is desired will make increase their value and gain loyalty from their consumers. Should Mr. Johnson focus on games, toys and other items? When it is relevant to carrying out the experience, yes. For instance, the baby boomers are aging and if they’re not becoming grandparents, they have special nieces and nephews. Most want to give educational opportunities such as Baby Einstein, etc. Expanding the line beyond books to other relevant areas that challenge the mind with creative disguises as toys will become a hit. Also, bridging over to the high tech world and creating a mini computer lab for the young to learn may be an idea.
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Borders and other bookselling chains have to offer something much more than the mass merchant or online retailer. This can be done by providing an outstanding customer shopping experience. Store personnel need to have a true love of reading to convey passion for books to the customer. As with all products, excitement and momentum can only be built by the people selling them. Books and bookselling is a business that requires a huge amount of product knowledge and enthusiasm. Not an area where a warm body by the register will do well. As for focusing on books an direct related accessories, I believe that is a good move for Borders. Layouts and stores are looking good now, they just need to work on the customer experience side of the equation.
With all due respect to Mr. Johnson, I don’t think that the website opportunity with Borders is terribly significant. Next to Amazon and Barnes & Noble, Borders is an “also also” ran — the proverbial third nostril of the book industry. Instead, I’d suggest that he focus — and quickly! — on improving Borders’ in-store customer experience.
The Borders stores that I’ve been to are completely uninviting to customers; they are drab, unexciting, and poorly merchandised. Some low cost/high value places to start: optimizing the assortments (narrower), improving signage, improving adjacencies/ layouts, and, frankly, increasing the stores’ overall cleanliness standards should help current customers locate the titles they’re looking for and entice them to visit the stores more frequently.
I have always found Borders to carry more specialty books than its major competitors…especially in the fields of architecture, design, art, and photography. Borders always did lack in the mix of CDs and a variety of music. Their prices are sky high compared to what you can buy them from on Amazon or at the Best Buy across the street.
On the contrary, something that personally irks me about Borders is the fact that they seem to be spending too much money on peripherals such as replacing their telephone paging system with headsets. Borders officials have told me that they thought the paging was annoying to customers, but they are WRONG, the unique ways Borders taught their employees to speak announcements and the liveliness they created in the store made Borders not seem like a dumpy old library with a quiet atmosphere. Now we have a bunch of employees walking around the store talking to themselves on the headsets…which is more annoying amongst the silence than overhead paging. Maybe they should have spent the money on lowering their prices than investing in a headset two way radio system in each store.
I find that when companies look for ways to spend their money on new systems, when they already have one in place–shows there is a sense of disorganization in the company. Now they have 2 redundant systems in place. Why buy a $10,000 phone system for every store with intercoms and paging if you don’t use it? Why spend additional capital investment when something already works and adds character to your store? This money should surely have been spent on better things.
If this kind of frivolous spending keeps occurring with Borders, they surely won’t be in business a few years from now.
Books generate community: book clubs, pass-along, recommendations from friends, readings, book signings, etc. Brick and mortar bookstores should focus on tapping into those community-building efforts both online and offline. Create space for book clubs to meet, special deals on group buys even for groups of 10 or less, more social opportunities online as well as off. Make the bookstore and its website the hub of the reading community.
Luke Johnson is a good negotiator. The price for Borders he negotiated is 10 million pounds up front. The rest of the price (another 10 million pounds) is based on the chain’s financial performance.
There is a group of categories for any given consumer where their level of interest and involvement warrants physical exploration. In the same vein, those same consumers will have different purchase occasions for those high involvement categories, and their need for physical interaction will range from 100% to zero for any given one of them.
Said another way, sometimes you just want to buy something and sometimes you want to browse around. Entertainment categories tend to have a higher “browse factor” than others–especially for enthusiasts. People who still go to the movies also have a Netflix subscription and a Blockbuster card–plus they subscribe to HBO and have already figured out how to use those new DVD rental kiosks in front of the supermarket. Each delivery system meets a different need for physical interaction.
Books are very much one of these categories where a range of physical interaction is appreciated. If it is a business book I need for a client project–Amazon has the business. But that doesn’t mean I can walk past a Borders without stopping and flipping through at least one book….
To remain vital in today’s competitive book selling environment Borders must become the “Book Club” of the everyday household. Book club members should get special preview opportunities, discounts, private party invites; make it fun, exclusive and entertaining…creating experiences for all. Strategic targeting of database marketing is instrumental in helping them become the source for their clients and their consumers’ children. They need to know and target every member of the household, much like Amazon does online (You bought this book, others who have bought this book enjoy this, this and this…). Create mini-seminars for all areas of interest targeting the relevant consumers. Becoming the perfect experience and place to go when a book is desired will make increase their value and gain loyalty from their consumers. Should Mr. Johnson focus on games, toys and other items? When it is relevant to carrying out the experience, yes. For instance, the baby boomers are aging and if they’re not becoming grandparents, they have special nieces and nephews. Most want to give educational opportunities such as Baby Einstein, etc. Expanding the line beyond books to other relevant areas that challenge the mind with creative disguises as toys will become a hit. Also, bridging over to the high tech world and creating a mini computer lab for the young to learn may be an idea.