The Noon Report

So on the tennis-related front, the #6 seed Robin Soderling withdrew from the US Open with an undisclosed illness, and his spot in the draw was taken as a "lucky loser" by Rogerio Dutra Da Silva. This would appear to be good news for Soderling's opponent, qualifer Louk Sorensen from Ireland, who goes from playing a top 10 player in his first round match to playing essentially another qualifying round match. However, Sorensen lost the first set 6-0 and has just taken a game to start the 2nd set, he couldn't be doing any worse against Soderling. Sorensen looked pleasant enough in the qualifying, but Da Silva is clearly the better player of these two. That said, I would expect the match will tighten up a little. It's a great opportunity for either player since the second round match will be winnable at least. The 3rd round match with Isner or Baghdatis less so, but one of these players has a good shot to be in the 3rd round of the Open.

And Vasek Pospisil is just demolishing Lukas Rosol, that match is at 6-1, 5-1, the first set took all of 19 minutes and the second set will likely be under 25 as well.

To interrupt this tennis post with some actual business news, we are told via publisherslunch.com that Waterstone's in the UK is ending the "3 for 2" book promos that have been a fixture of UK bookselling for years and years. Here in the office, Eddie's first reaction is that this is an awful decision being made by the new owners, since this has been such a fixture of the trade. I'm not so sure. I've found UK bookselling to be generally in a very boring state in recent years, with the plethora of endless 3-for-2 tables all stocking all the same books at all the same stores to just be deathly dull In any event doing the same thing for years and years can get boring and should sometimes be changed for the sake of it. But then again, if they'll just be replacing endless tables of 3-for-2 with endless boring same-everywhere tables of books being promoted in some different way, it ends up making no real difference. I guess we'll see how it shakes out.

For those not so good at math a 3-for-2 discount is the same as Buy 1-Get 1 50% Off promo that we've had on a lot of trade paperbacks in the US, and which in fact Borders might have imported as a variation from their UK stores.

As I typed those last two paragraphs, Pospisil took the 2nd set 6-2 and Sorensen and Da Silva are on serve after three games of their second set.

And here is a post from the NY Times Straight Sets blog about Malek Jaziri, the Tunisian qualifier who is facing top-rated American Mardy Fish in a 2nd round match tomorrow.

A Dozen Eggs Breaking

Publishers Lunch links to the updated Borders closing list, with another 28 stores scheduled to close by the end of May, 12 of those stores that I have visited. As with the original list it includes stores of all shapes and sizes. Hollywood & Vine that did business but I doubt ever enough for the rent at that location. Milpitas CA which I will miss, because it was one of the nicest stores in the country for selling sf/fantasy on the day I visited. Fairfield CT, which I was surprised to see wasn't on the original list and which I'd visited on opening day and occasionally since as a quick on/off Metro North. Stamford CT is a somewhat historic site, as it had been put up by Waldenbooks prior to its purchase by Borders as part of their budding "Bassett Books" chain of superstores, the original location in Towson of Borders #44 that is now in Lutherville MD had been another. Braintree MA and Tacoma WA had both once been extremely prosperous, and I don't know if their demise reflects high rent or half of their business going elsewhere over the past several years. Federal Way, WA and Cranston, RI are both stores that had relocated to supposedly better locations. The store in downtown Philadelphia PA is another surprise because that store sold a lot of books and was still doing so at my last visit, but it was also a big store in a high rent location designed for selling books, music and movies (in fact, a relocation of an older smaller location that may have been books only) and likely has too big a rent bill for a time when there isn't much of a music and movie business any more. You think on these relocations and you realize how miserable the Borders strategists were at forecasting the demise of hard copy content sales.

In its bankruptcy filing, Borders reserved the right to close up to 75 more stores, so the additional 28 suggests that at least some stores were given rent concessions to help keep afloat. The very un-busy Glendale Queens store as an example gets to enjoy life still. Stores like Hollywood & Vine or in downtown Philly, there's not much of a chance the landlord will do Borders any favors because locations like that can almost certainly find new tenants.

I visited one ongoing Borders in Manhattan this week and one that is closing. Even a going out of business sale with 30% off and an extra 10% off for Borders Rewards (around 36% total discount) doesn't seem to move sf/fantasy at the Park Ave. Borders, which has many depleted sections but sf/f looking like it was hardly touched, and overall still has a surprising amount of inventory four weeks after the liquidation sale started. They're about ready to bring down the remaining merchandise on the 3rd floor music/movie area, and part of the 2nd floor was closed off. I was undercharged for my purchase, pointed it out, waited around while they re-rang, gave them an extra $10, and was given $18 in change. I didn't point out that they had now made a bad situation for them worse.

The front of store at the Columbus Circle store that is to remain open still had lots of books and looked very full. To give Borders credit for something, they've done a decent job of scrounging and scraping for inventory to give a good initial impression of things when you walk in the front door, and that is important. The store still had customers going in and out, but when you got into the actual section shelving you did notice that things were a little lighter inventory wise than usual. A theoretical order for 4 copies of Kings of the North by Elizabeth Moon had turned into an actual order of 2 copies coming from Ingram, this goes on sale Tuesday and at least they'll have some. There were some books being reordered and on the way from one source or another, and 120 copies on order for the mass market of Charlaine Harris' Dead in the Family that is on sale in a couple of weeks. At the same time, there was supposed to be a promotion for the new Mark Hodder book in FOS Bay 4 from 15 March for 2 weeks, but no Borders stores have actually gotten the book, and who knows when or how or from who because the publisher can't be entirely pleased to have some money owing as a result of the bankruptcy. So it's a very mixed bag, the stores are there and open and at some level getting the titles they need to have to look that way, but they're going to suffer if they can't start to get back to ordering and restocking in the usual way.

A funny store I'm told third-hand. The closing stores are essentially managed by the liquidation company at this point, and as the romance section was being relocated and consolidated at Borders Wall St., management decreed that books should be arranged by price because people would be coming in to hunt for bargains. The employees did say that this was not such a good idea, and then did what they were told. Well, I'm looking for a bargain too, but if I'm going to find my bargains they better still have a semblance of alphabetization because I'm not that kind of a bargain hunter.

In other book news from Publishers Lunch, indie chain Joseph Beth is putting it up for sale and closing an additional store. They haven't been able to come up with a reorg plan that everyone likes since filing for bankruptcy in the fall, and the sale process now seems like the only way to keep any of the business ongoing.

And if you're interested in UK book news, here is an article from The Bookseller where the head of Waterstone's says the UK may have as much as 3 million excess square feet devoted to book distribution (not stores, but distribution facilities) and that he'd like to bring return rates down below 10%. A competitor says this would be too low because you then aren't taking enough chances, and this is in fact correct. Since it's impossible to tell in content business what will or won't work when it actually confronts the public, you need to be able to take a few uncertain bets in order to find the things that will work.

Borders UK

While I'm cautiously optimistic that Borders is having an OK holiday season (it seems to me they've been less promotional with the Borders Reward coupons, which is a good sign), Borders UK is officially dead, a few years after being sold off to local management in a leveraged buyout.

Other than for some lease guarantees and damage to the brand equity, this doesn't directly impact Borders US, but it's a very sad day nonetheless.

When Borders decided to open up stores internationally in the late 1990s, I was a big fan of the idea. In the UK, it seemed smart that Borders purchased a local retailer Books Etc. which had some nice stores, mostly mall, but ranging from a tiny closet on Holborn St. to a huge flagship at their Charing Cross HQ. And it was exciting to me to visit the very happening Jam Factory Borders in Melbourne Australia in 1999 or the flagship UK store on Oxford St. when I went over for London Book Fair. While start-up costs led to some large losses, sales trends seemed OK as more stores opened enabling the company to leverage its fixed costs over more stores and bigger sales.

But something odd happened to the international operations after 9/11. With diminishing tourism, it was to be expected some that sales at an Oxford St. or Charing Cross road store and other flagship locations like that would flag. But while most of the world recovered with time, the bad trends that emerged at international Borders locations after 9/11 never really reversed. Kind of like how the Toronto Blue Jays seem to be one baseball franchise that never totally recovered from the 1994 baseball work stoppage, 9/11 seemed to have an outsized effect on Borders overseas.

And after that, things snowballed. The challenges in getting a reversal of sales trends led management to slow down on expansion and do some disinvestment. Ultimately, the decision was made to sell, and the Australian and the UK operations were sold off in separate fire sales to separate owners. The buyers of the UK operation seemed to struggle almost from the very start, parceling off this piece of Books Etc., later selling off five leases including the Oxford St. store to a fashion retailer.

Macro, the UK bookselling market was not in good shape. The large big box retailers like Tesco started to heavily discount books. The chains reacted by becoming heavily and boringly promotional themselves; one London Book Fair spring even I got bored walking into another bookstore because the front of every store whatever the chain looked exactly like the front of every other.

But micro, I can't explain why 9/11 had such an outsize effect on Borders internationally, or why Borders UK ended up running into the ground way more than other book retailers. I can tell you why Borders US has had troubled times and how the new CEO here is doing good things to turn around, but even with decent enough experience wandering about British bookstores over the past ten years, the UK situation is a puzzlement.

There are some nice rants in the comment section on this article from the Bookseller, but none quite explain things. You read this October interview with the head of Borders, you wouldn't think the company would be gone in two months.

I do know that there was a huge performance gap between the major flagship stores and the stores in retail parks in Beckton or Watford, enough so that you have to think either rents must have been very cheap or the company was making too many really bad real estate bets. But is that explanation enough?

In the US, the bankruptcy process is much more friendly to incumbent management and opportunities much more generous to reorganize the business in friendly hands. In the UK, a company in trouble is put into administration in third party hands, and it seems as if the administrator may have spurned offers from Barnes & Noble and/or the old Books Etc. management for some portion of the store base. Why? Who knows.

Waterstones, owned by HMV, is now pretty much the only large retail bookstore chain in the UK. So it's them, Amazon, and then WH Smith's and the big boxes, which can move large quantity of some things but none at all of most because their shelf space is variable and for the most part very very small. Borders wasn't a huge chain but was at least some counterweight to the larger players.