“Customers didn’t notice our larger assortment of books,” Evans laments. Mark Evans, a director of merchandising strategy and analytics at Borders until 2009, says that surveyed customers to understand why Barnes & Noble, with its slimmer selection, continued to clobber them in terms of year-over-year growth, average sales per store, and even the number of books sold at each location. Maybe more crucially for Borders, the assortment of titles that provided the key to its identity didn’t give it a competitive edge over Barnes & Noble. An average Borders superstore stocked around 140,000 titles at immense cost, but if a customer craves selection, no store can compete with the long tail of the Internet. The one thing Borders did have going for it was its huge selection, yet even that wasn’t worth as much as the company thought. (Barnes & Noble did purchase the remainder of Borders’s Web business.) But so far Barnes & Noble is holding on to its stores, focusing on e-books and filling its outlets with high-profit-margin nonbook items, such as educational toys and games.
As the company’s fortunes turned, it was difficult for Borders to buy its way out of leases that still had seven and eight years remaining on them.Īnalysts predict that Barnes & Noble will have to shrink the number and size of its stores, and it hasn’t tried to gobble up many of the vacated Borders locations-70 percent of which, Barnes & Noble says, were within five miles of one of its outlets. It had a policy of picking “B locations,” says Fox, and trying to turn these sites into “A economics.” Leases on its stores were also “unproductively long,” adds CEO Edwards. Many of the profitable Borders stores were also centrally located, but numerous industry observers characterized the company as grasping for growth. During the superstore boom of the 1990s, Barnes & Noble paid close attention to where it put its outlets, which were usually in prime locations.
A short piece in Business Week provides some clues:īorders’s demise, though, has as much to do with real estate as any metaphysical market shift.
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