Wednesday, August 11, 2010
Borders, Bookchains and Hard Times
Describe the state of US and UK bookchains today and you have to wonder where they are going to be tomorrow? Many think that these are institutions and that as institutions they just keep going but they aren’t and they don’t have a divine right to trade.
We have seen the demise of some and read many analysts column inches on the challenges facing others. Will Barnes and Noble be privatised and will its sale change anything? Will Waterstones become all things to all people and end up with HMV over the door and a cinema inside? Whatever the issues the greatest challenge is sustaining a physical presence in an increasingly digital world. It not about ebooks its about the Internet and consumer trends away from the High Street. It’s about competing with virtual inventories and stores who do not have the brick and motor cost overheads and are open all hours for self service. Its about competing with libraries fighting for digital virtual business and could change the model to one of lending for free. Finally, they now have to compete also with the likes of WalMart and Target in the US and Asda and Tesco in the UK.
Today Borders has laid off more employees at its Ann Arbor headquarters. Mary Davis, a spokeswoman for Borders, declined to specify the number of "job eliminations" at the company's headquarters, which had 650 workers before the cuts. As recent as January, Borders laid off 88 staff in Ann Arbor. Borders have also reported a net loss of $64.1 million in the fiscal quarter ended May 1 and although this was down from the $86.0 million in the first quarter in 2009, the company's total revenue has dropped from $650.2 million to $547.2 million.
Borders is heavily backing its digital strategy and is selling an e-reader developed by Kobo, which also created an e-book store for Borders. Although Borders claim that they hope to secure 17% of the e-books market within a year, this would seem to some highly ambitious. Kobo is not Borders and their reliance on a third party could be seen by some as being similar to when Barnes and Noble thought Amazon would be its internet store!.
Large chains are public companies and have large investment holders who demand a return and set performance targets and these are often not easy to achieve in the current climate, let alone in a market subjected to a high volume of digital ‘noise’ and radical change.
Some would suggest that one of the biggest problems the chains have is that they have forgotten how to be booksellers and have become glorified shop windows for publishers. Nothing wrong with that as long as the market is buoyant but when it isn’t and times are difficult they may find themselves exposed and with only one hand to play. Amazon taught everyone that bookselling is about selling new, used, old, rare, remainders, self publishing – BOOKS. It not about letting publishers ‘wallpaper’ or effectively merchandise bookshelves with low risk sale or return front list.