Borders Group, the struggling bookseller, has a new chairman of the board, Bennett LeBow. LeBow’s a member of Vector Group Ltd., the investor group that recently acquired 15 percent of Borders (35 percent if warrants are exercised).
According to interim Borders chief executive officer Mike Edwards, LeBow “will play an extremely important role in helping us redefine the Borders brand.” Will a new brand image change the landscape?Perhaps on the margin, but Borders needs more than marginal change.
Borders needs a new business model, not just a new brand. Otherwise, change will consist solely of the smoke and mirrors of advertising rather than the real transformation required to win a profitable share of the market. As a Borders lover, I’d hate to see LeBow follow in the footsteps of other leaders who foolishly and tragically banked their hopes on a new brand alone.
Let’s face it. Amazon.com owns on-line book sales, a position so strong that it has broadened its scope into all kinds of other categories sold on line beyond books. Barnes and Noble Booksellers won the retail store war. Which leaves Borders with higher relative costs per book sold, lower profits and therefore a new controlling investor.
Borders is stuck with a high-cost position in what has become a commodity market - the selling of books. While a book itself may be differentiated, when it’s available in all kinds of physical and virtual places, the seller of that book is essentially selling a commodity. No wonder on-line book sales are growing so rapidly (they have a lower cost structure) and Kindle, IPad, etc., are disrupting the printed book industry (by offering a lower cost structure and more convenient experience than the printed book).
My advice to Borders leaders is to redefine the business Borders is in, broadening far beyond bookseller while still remaining focused on book lovers. (In most commodity situations, expanding the scope of the business is a key way to remain in a market of one.)
How might this broadening play out over the next five years? Imagine…
- Borders librarians (vs. store clerks) help you locate the exact information you want, whether it’s a book that reads like those of another author you love, or takes you to the perfect hidden places in a faraway country because the author of the articles shares your tastes in travel. Media not available in the store arrives in your home on line or via express mail.
- To meet the needs of businesses, Borders acquires 800-CEO-Read, a service organization that selects and offers the best selection of books and videos to advance a business customer’s learning and development goals. Business coaches, corporate VPs of learning, professionals, entrepreneurs, sole proprietors, non-profits and business educators turn to this Borders’ subsidiary for advice and resources.
- Book lovers travel together on trips designed around a shared interest, be it an author, a period in time or a place. The synergy between pre-travel reading and discussions while traveling creates a winning combination that retirees love and come back to buy again and again.
- Borders stores are redesigned (with loads of customer input) to become the place where readers and authors convene or work in isolation. “I’m Bordering” today becomes codeword for a common shared experience that readers and writers highly value.
- Borders solves parents’ dilemma of raising children who love to read.
- Borders creates a tailored offering of books, courses and peer groups for educated immigrants who want to advance their mastery of English through reading and discussing US authors.
- Membership and event fees are growing shares of Borders’ revenue.
- Authors line up to be part of the Borders’ Tours (virtual and real), connecting authors to current and potential fans.
In essence, Borders’ purpose becomes infusing books and reading deeper into our lives, not just selling us books. In the process, Borders becomes a trusted and highly valued resource for individuals overwhelmed with information. Borders new value promise becomes better lives (better businesses) which would make for a great re-branding. Border’s new scope is far broader than a retail box store or an on-line marketer, yet still highly synergistic with books.
Creating these changes will require far more challenging work than developing communications for a new brand concept. Which path would you pursue as a leader - a new brand alone or a new business model that truly differentiates Borders from Amazon.com and Barnes and Noble?
Kay Plantes is a Madison-based consultant and author of “Beyond Price: Differentiate Your Company In Ways That Really Matter.” She is an expert in business model innovation and was the keynote speaker at the BizTimes CEO Strategies Breakfast in April.
3 Comments
What you mean is service. That take people which cost money. Most Borders store run on about 1/3 of the labor hours that they did 5 years ago and about half the inventory. All the staff has time to do any more is put out books and take your money. If you want service go to Amazon: recoments, reviews, assortment and fast shipping.
Excellent advice for Borders. They need to remember that they're not in the "book selling" business, they're in the "information distribution" business. Services such as aggregating and distilling the noise of data into concise, actionable information would be welcome by me, and something I would definitely pay for. This is my first exposure to your work. I'd be interested in your opinions about the music industry. I'll have a look at your web site... I've given this a lot of thought and I think the industry faces a similar problem. Their response to date of digital rights management, etc., is misguided. Music--in particular, its distribution--is a commodity. A change in business model as you describe here might be an answer.
Basically you are suggesting Borders become a consultancy that organizes travels, both online and actual. I think at one time Borders had the staff to make this happen, but over time they have shed their better book people, and do not have staff in place to do what you propose. I used to work there, and I know many former employees from Borders HQ and store #1. I was also a librarian, exactly the kind of aggregator and service professional you propose. Such services are already a crowded market, and unless you hire really good people at good pay with close ties to the industries you want to serve, it will not work. I would be shocked if the current team there is willing to invest that kind of money into Borders.
Here's a different model, and one that does not concede B&N won the retail war: Kill all the stores not in university towns, and downsize the ones that remain. Hire people who know books and readers, rather than just cheap labor, and make them subject specialists that work as part of a buying team combining customer contact with stock management. This will not be cheap, but far cheaper than hiring business folks with good ties to various Companies and CEOs. Trust your subject teams to know what to buy, and give them time to help create a market for those titles. Pay for the books in advance, and do not return them. Your discounts will be bigger, and your team wil move those titles for you. Improve web delivery and in-store orders. Let each shop have a specialty with depth that rivals Amazon in that subject, but matches the needs to the local educated community better. Make being in a shop an experience so that folks come in on a regular bases to see not just books, but events that tie the local book and books arts community to the shop. Forget WIFI - folks just look at their computers and not the books, and even get in the way of buyers trying to see the shelves. They can do that at home or in a coffee shop. Dump the cheap discounted titles - they make the shops look like Dollar Stores. Face out Kids books, and work closely with smaller publishers for more unusual books. But the key are the booksellers - the folks who know the books and community and can hand sell a $50.00 book all day long. You get that, and you can grow into some of the services you suggest in your article - people will again trust that Borders knows BEST books, not just the latest vampire NYT bestseller.