Saturday, June 10, 2017

Borders Closed the Books, For Good


        On February 16, 2011, Borders Group filed for bankruptcy after 40 years of being in the book retail business [5]. Borders was at some point a pioneer in selling books, music CDs and other media and bookstore good. Borders had an innovative and unprecedented inventory tracking system, which gave Borders a competitive advantage. Borders also put many small and independent bookstores out of business by being one of the largest bookstores with a huge variety of books and other literary formats. 

Borders enjoyed positive growth and success in the ‘70s and the ‘80s until the mid ‘90s, when the market and consumer behavior showed signs of change. That is when Borders fell into the “Pseudo Adjacency” trap that Carroll and Mui list in their “Seven Ways to Fail Big” summary. Borders put heavy investments in selling music CDs and DVDs to their existing customer base, instead of just focusing on what they were good at, which is selling books [3]. At a time when the Internet and the digital age was overtaking hard copies of media or even books, Borders made poor investments in that dimension. It expanded its geographical reach by opening hundreds more stores that were costly, excessive in real estate space, and had little returns [2].
In a more shocking strategic decision, Borders decided to “Stay the Course” [1] by practically dismissing the online market potential for book sales. In 2001, Borders missed the boat and handed its online sales to be managed, for nearly a decade, by their competitor Amazon. Their intent was to focus more on their brick-and-mortar sales channel. This strategy backfired when Amazon saw huge growth in online book sales over physical bookstores in the 2000s [4].
Moreover, wrong betting on technology that Carroll and Mui talk about is also clearly exhibited in Borders’ case [1]. They failed to recognize the change in readers’ habits and literary consumption mediums. Borders had no alternative solutions for e-reader devices in order to compete against Barnes and Noble’s Nook, or Amazon’s Kindle. The rise and affordability of e-books as a new literary format, instead of print books, was a clear sign of the direction of the book industry [4].
Borders was a niche store, even with its big-box outlook. It had an escapist-like vibe that gave it a unique indie feel. It curated some quality content from lesser-known publishers, according to its loyal customers. Yet Borders made a series of bad strategic decisions, which, ultimately, led to their demise. Lack of diversification, and failure to bet on e-reader devices like Nooks and iPads, and the shift to online book sales were detrimental to its downfall.
References
[1] Carroll, Paul. Mui, Chunka. “Seven Ways to Fail Big.” Harvard Business Review. September, 2008.
[2] “10 Businesses That Failed to Adapt.” BusinessPundit. November 3, 2014. Accessed June 10, 2017. http://www.businesspundit.com/10-businesses-that-failed-to-adapt/4/
[3] Noguchi, Yuki.  “Why Borders Failed While Barnes & Noble Survived.” NPR, All Things Considered. July 19, 2011. Accessed June 10, 2017. http://www.npr.org/2011/07/19/138514209/why-borders-failed-while-barnes-and-noble-survived
[4] Lowrey, Annie. “Readers Without Borders. What killed the big-box retailer? Hint: It wasn't the Internet.”  Slate. July 20, 2011. Accessed June 10, 2017.  http://www.slate.com/articles/business/moneybox/2011/07/readers_without_borders.html 

[5] Bomey, Nathan. “Borders' rise and fall: a timeline of the bookstore chain's 40-year history.” The Ann Arbor News. July 18, 2011. Accessed June 10, 2017. http://www.annarbor.com/business-review/borders-rise-and-fall-a-timeline-of-the-bookstore-chains-40-year-history/

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