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A blog wherein a literary agent will sometimes discuss his business, sometimes discuss the movies he sees, the tennis he watches, or the world around him. In which he will often wish he could say more, but will be obliged by business necessity and basic politeness and simple civility to hold his tongue. Rankings are done on a scale of one to five Slithy Toads, where a 0 is a complete waste of time, a 2 is a completely innocuous way to spend your time, and a 4 is intended as a geas compelling you to make the time.

Wednesday, February 16, 2011

The List

As you can imagine, I spent a good chunk of time looking at the list of Borders that will be closing in the next six to ten weeks following the chain's bankruptcy filing this morning.

I'll have more to say about some individual locations or other specifics, but a thing or two worth noting:

First and most important, a store's fate didn't depend on sales alone. Which might be my biggest sadness about the list. My hope had been the Borders would close a third of its stores doing 20% of its business, but it just ain't so. The rent and square footage ended up saying as much about a store's profitability as the quantity of books it is selling. So here in New York City, there's a store in Glendale, Queens that is still remaining open, in a failed attempt at an upscale shopping mall. So failed that the shopping center itself was just sold at a bankruptcy auction. Hence, the Borders survives. Why? Well, along with the movie theatre the Borders is one of the few traffic generating assets in this failed mall, the rent has probably been dropped to a pumpkin slice and iced mocha at the Seattle's Best cafe, so Borders can keep it open as long as they make payroll. This means the effect on book sales is likely to be bigger than I'd have wished. Yuck!

That being said, there are so many of these stores more than once over many years that have clearly never lived up to expectations, and have clearly been drains on the company even during the good old days. From Kips Bay in Manhattan to Friendship Heights in DC to Century City in LA to a good half dozen of the stores closing in the Chicago area, Borders is finally free of stores that never worked to their rent rolls and expectations, and a company that is free of those many dozens of bad eggs is a better, stronger company on many levels.

However, every store has to contribute to overhead. With fewer stores there are still certain fixed costs that don't go away. The surviving stores have to make an even stronger contribution to overhead in order for the company to have any good chance of moving forward in slimmer shape. Considering the problems Borders has had in recent years, this is sadly not a sure thing.

There is no one type of store that seems to have survived better than some other type. There are new concept stores from 2008 that are gone (Southbury, CT). There are stores in major urban locations (18th & L, DC). There are stores in weird rural locations (Colleyville, TX). There are Waldenbooks replacement stores (Southbury, Milford CT). There are stores in fancy downtowns (Los Gatos, CA). There are new stores and old stores. The problems at Borders weren't limited to this thing or that thing, but to anything and everything.

There's still no recognition that the company needs to use the strengthened cash position it could have coming out of this filing to strengthen its supply chain, speed replenishment, and update reordering and inventory systems to match B&N. The bankruptcy filing still lists things like "strengthen Borders Rewards Plus" and "start selling related non-book items" as the major focus areas of the turnaround plan. These things aren't going to cut it, if they don't deal with the supply chain.

Personnel? Let's say you're a good GM who's been working at a store selling lots of books with too high a rent, and there's some other store that's surviving because the rent is cheap even though the store itself is managed like shit? With all the tumult, are there people who are going to try and be sure the bad GMs are the ones who end up exiting, and the better GMs will somehow find their way to the stronger remaining stores? Of course there are also a lot of hourly employees who are out of work now, many of them wonderful people. I think here of the clerk at the LA/Howard Hughes Plaza Borders who helped track down copies of some Peter V. Brett books when we did drive-by signings in the area last August. There are a lot of great people like that.

Recovery: Borders needs to make May Day into Borders Day, or something. Somebody needs to work on having a major event with the best author they can possibly find at every surviving Borders store as a way to get some people into the store, make people aware publicly and in a very big way that the surviving stores are in business. I doubt there's anyone working on this.

The closing list emphasizes the folly of all the money Borders spent on remodels. If the store was losing money, did it really matter if it was losing it selling music and movies instead of bargain books? There's so much mis-deployed capital investment represented here.

This is a terribly sad day for me, made at least tolerable because it's the necessary and too long in coming capstone to an event that was becoming inevitable. Several of the earliest Borders stores I ever visited are soon to leave, many of them stores I used to love to visit, that once were truly marvelous stores to shop. There are business concerns I think about, this is real shitty timing with regard to the paperback releases of Oath of Fealty by Elizabeth Moon and The Desert Spear by Peter V. Brett as an example. But my thoughts are less there right now, than with the long-time friends I am losing.


Vincent Rupp said...

Colleyville is a pretty nice suburb of the DFW Metroplex. There's a surprising amount of upscale shopping in the area. That Borders in particular is satellite to a warehouse-size natural/fancy food store. Texas is a pretty deceptive state. Still, when Borders wanted $12 for The Great Gatsby, I went to Half-Price Books a few miles away and got it for $4. So your general conclusion somethin' ain't right is right.

Unknown said...

Thank you for taking the time to really explain what this will mean. I've always liked Borders and i hope we won't loose them entirely.

Unknown said...

I love how the letter sent out from the president of the company essentially points the finger at the economy. Nope, had nothing to do with changing high-level management a few times. Nope, had nothing to do with the joke of the Borders Express remodels. Nope, had nothing to do with closing down Waldenbooks because "none" of them were profitable. It certainly had nothing to do with upper management threatening to fire workers in stores who didn't merchandise the flawed way Corporate wanted, thus causeing internal creativity to stagnate.

Don't be stupid, it was the economy.

The funny thing is that any worker with half a brain could see what was going on even 5 years ago. But Borders' management acts like this is a shocker. I worked in the #1 ranked Waldens in the company...which they closed. I rebuilt another Waldens from losing money to making a significant profit within 3 months...which they then closed. Of course this was in 2006, so Borders management must have PREDICTED a coming bad economy and did the only reasonable thing: close down profitable stores to cut expenses.

Basic accounting in not their strong point.

Elizabeth Moon said...

The saddest thing about the Borders bankruptcy is that they're still not dealing with the real causes of their failure, as you say. Tells me that both the people at the top in Borders, and the people who are promising to pour money in, don't have a clue.

Lawrence Watt-Evans said...

Why on Earth are they so convinced that the Borders Rewards program is a money-maker? I've never met anyone who likes it; mostly I hear complaints about the unwanted hard sell for it that makes customers avoid the stores.

Unknown said...

I want to add a counterpoint to the comment about the Borders Reward program. First, I signed up when it was free and enjoyed my 33%-off coupons. Those made me a loyal Borders shopper.

Then, I paid $20 to upgrade. They threw so many coupons and perks at me that it paid for itself in a few months. I'm still a loyal Borders shopper, because their stores have more personality than B&N. However, it is true they often don't have the specific books I'm looking for.