The Cold Equations

I'm going to follow up yesterday's Borders post mortem with some numbers.

For the year ending Jan. 30 2010, Borders had 508 superstores at year-end, with average sales of 4.5M at each of those superstores. Jan 2008, same # of stores, average sales more like $5.6M. B&N thru early May 2010, average store $6M in sales, more like $6.5 three years earlier. So, Borders had a 20% loss in average per store sales over two years, and dropping from being 15% off your average competitor's average store to being 25% off the pace of the competition. We go back far enough, we will find a day when sales Borders vs B&N were near parity for the average superstore.

To achieve this, Borders has invested considerable sums in remodels. I have been in some that have gone through each of these three rounds:.

1. 2000/2001, the ones where the diagonal lines were taken out and Kohls-like central "racetrack" aisles added to make the stores more shoppable. Not a big expense, mostly moving stuff around.

2. 2005. It was August 13, 2004 when Borders announced it would start to rebrand its coffee shops in 2005 to sell Seattle's Best. A lot of these were the major remodels where they pretty much took out everything in the center of the store, did away with the old-style shelving, often took down the partitions between the books and the music/movie sections. These had to cost some real money, can we say $500K/store? And these remodels ended up being done to almost all of the pre-existing store base, easily 200+ stores.

3. 2009 was a busy and expensive time as Borders spent lots of money to get rid of the music department and try and make stores look attractive with 20% of the square footage uprooted and gone.

If you spend $500K remodeling your typical store that does $6.5M in business, how long a time frame are you going to have to pay off that spend? Considering that music sales have been on the decline for the past decade and book sales kind of flat, a good result for those remodels might have been flat sales. a 5% sales increase amazing. Where's the sense in spending so much money on that? And to me, I can only say that each new round of remodels made the stores less interesting. We can say it's just me, but when you look at those sales results, I'm not sure we should.

Some of the remodel money needed to be spent. Music and movies had to be reduced in size. The Seattle's Best remodels I think did pay off reasonably. B&N was selling Starbucks and Cheesecake Factory, Borders was selling "Borders Cafe Espresso."

And how much does inventory cost?

If you took the crappiest Borders like Commack NY with very bad selection and just put in 10,000 more mass markets to window dress, $7.99x.55x10K is $44K in extra inventory sitting in the store. Forget about all that talk about their slow supply chain and slow reorder cycles, just go back in time and spend an extra $10M in inventory investment across the chain, that's so little vs. what they spent on remodels make it $20M even. Borders would be way, way healthier today. And because that is so much less money than was actually spent on remodels, maybe could have made the supply chain more efficient, invested in web site or other digital initiatives, done other things more productive than spending money so you could have the hardcovers and the mass markets on the same shelves in the sf and mystery sections.

Well, that's not what happened.

I hope for a turnaround. Maybe there's some ray of hope hiding in the holiday sales numbers to justify major publishers extending payment terms, maybe Jeff Bezos is doing that "Steve Jobs thing" where "nobody reads anymore" means "iBooks coming soon," and will want 300 good Borders stores cheap.

I hope. I have felt that the people who've been at the Borders helm since George L. Jones was belatedly fired in late 2008 have been doing some good things within the cash-poor constraints they've had, and I will say again that on balance both this holiday season and last I've preferred the Borders offerings of JABberwocky fare to those at B&N. But the customers haven't been coming back yet, may not have a chance to. It's hard when you look at how hard Borders has fallen in recent years to see where the silver lining will be found.

To compare with another company I like... Whole Foods made mistakes. Built some stores that were too big, too fancy, had a bad value image going into the economic meltdown. But they reacted quickly and sanely. That sit-down cafe space in the Fairfax store was too much, close it off. Talk value, value, value as much as you can. And remodel in sane ways. Just in DC, they poured money into huge remodel efforts. Upper Georgetown, Arlington, Tenleytown, P Street. Whole Foods has poured money into these stores, some of them not even all that old. The difference is that those remodels have always made Joshua Bilmes happier to walk in, given him more ways to spend money in good ways for Whole Foods. I don't know what the payoff period is, these remodels have to cost a fortune. But I can see all the time how it's money well spent. But other than bribing me with Borders Reward coupons, Borders hasn't done much for all of its money and decisions to make the stores clearly and inarguably better places to spend my money. B&N hasn't either, for that matter. Wake me up when they finally realize how icky a fixture the "octagon" is. But B&N hasn't spent money at the store level doing frivolous things. Borders has. For years. In quantity.

My Three Sons

To celebrate St. Patrick's Day, I visited Borders #40 in Bohemia, Long Island.

Well, no, that would be crazy. Really, I celebrated St. Patrick's Day by travelling out to Long Island for the Grand Opening of the Whole Foods Market in Lake Grove, NY. Not as crazy, right! And the Borders was on the way. Like, go to a totally different line on the Long Island Rail Road and have a two-mile walk to the Borders but then the Suffolk County bus goes from directly in front of the Borders pretty much right to the Whole Foods along the way, not crazy at all.

I took this picture as I approached the Borders because you're looking at a little piece of American corporate history that I don't think you can see too many other places right now. In fact, this may be just about the only place in the country where you can see it.

For in the early 1990s, K-Mart decided that the future was in diversification. It acquired Sports Authority, it acquired Office Max, it acquired Borders to pair with the Waldenbooks chain it had owned since 1984. And then almost immediately thereafter, the decision was made that the future was in focusing on the K-Mart stores, and it spun off all three chains. But for a period of two or three years in the early 1990s, K-Mart owned Borders, it owned Office Max, it owned Sports Authority, and it did real estate deals that combined K-Mart stores with an Office Max, a Borders, a Sports Authority, in various combinations. And here we have K-Mart and its three sons, thus the title of this blog post, all lined up in a neat little row, in a plaza built in the early 1990s (my first visit to this Borders was circa 1993), all still in business.

And you just don't see that very often. K-Mart went bankrupt, closed lots of stores. OfficeMax closed lots of stores in the early 2000s. Sports Authority closed stores. Borders has probably closed the fewest stores of all of these chains, let's hope it doesn't catch up in a hurry, but it occurred to me that of the dozens or scores of real estate deals K-Mart did for itself and its progeny, there are only so many of them that included all four brands, and of those the odds are pretty good that one or more of the stores is something else by now, 15 or 18 years later.

Where else but here are you going to get an illustrated piece of corporate Americana like this.

As I enjoyed my ride on the Suffolk bus out the back way into this little slice of Americana, it looked as if they might have patched up some of the potholes. Maybe next time Peter Brett can enjoy the sightseeing a little bit more.

The Whole Foods in Lake Grove was doing the brisk opening day business one might expect, and is the 102nd that I've been to. It has a pickle bar, which is something I haven't seen before, I don't think. Their Indian bar had a squash puree that I hadn't seen at other Whole Foods, though the sign that says their Indian food is from Zaika is a little bit deceptive because Zaika turns out to be part of the same Cafe Spice outfit that provides Indian food to most of the Whole Foods in the region. They had a good gelato brand.

This Whole Foods is pretty much across the street from Borders #79 in Stony Brook, which was also a K-Mart real estate deal. My three sons are all still there, but the K-Mart is now a Lowe's. I also popped over to the relatively new B&N in Stony Brook, which was added around two years ago when the Smith Haven Mall added a "lifestyle center" outdoor extension, the Borders in Commack, and the B&N in Commack. Most of the stores had around 70 non-Charlaine Harris JABberwocky titles. The Borders in Commack has always been an underperformer and had only 50. So why is the Borders in Commack the only Borders on LI that still opens at 9AM? Do they have some super-brisk business at the Seattle's Best? This was my first visit to this B&N in Commack. They had a store catercorner that closed. This newer store is part of the Huntington Square mall where it looks like they pretty much demolished all of what was a small, old, decaying little mall, save for the Sears, and rebuilt it with the B&N taking up most of the space. I don't think the B&N does much better for sf/fantasy than the Borders does. The best current barometer is to see if a B&N has the Deathstalker books by Simon Green and/or the Blood books and some others from Tanya Huff, since those are titles that are found at the better stores in genre but not at the lesser locations.

I used to celebrate my birthday by visiting all of these various bookstores, Bohemia then bus to Stony Brook then bus to Commack then maybe on toward Huntington and maybe down to Farmingdale. It's gotten harder in recent years to take the time off for this, so I was glad the Whole Foods opening gave me an excuse to visit some of these old haunts.

It's still just a cupcake

Maybe I need to get out of town more.

In around 33 hours actually in the Washington DC area over the weekend, I managed to see 3 plays, visit 1 B. Dalton, 4 B&Ns, 4 Borders, chow down at 2 Whole Foods and a Pizzeria Uno, do the Saturday NY Times puzzle, two from Sunday, a regular and a cryptic, read 70% of the new Violette Malan book and get started on Tanya Huff's next.

I'll talk more about the plays later, but just a few idle observations.

I've sung the praises of Georgetown Cupcake before, no doubt I'll do so again, they're some of the only overpriced cupcakes that at least taste really, really, really good. But what is the world coming to when I pop by their new expanded flagship location in Georgetown and see over 30 people curled around in the store waiting to buy cupcakes. It's just a cupcake. It's not worth waiting, sorry, no possible way unless it's your child's bar mitzvah and the caterer's truck with the viennese table pastries overturned on the beltway, that anyone should wait 30 minutes for a friggin' cupcake. I noticed they had a new location in Bethesda down the street from the B&N on Bethesda Row, much closer to that B&N than the Georgetown location is to the B&N in Georgetown, and the Bethesda store does a much better business in sf/fantasy than the one in Georgetown, so I expect in the future that I'll go to the Bethesda location, and I did wait five minutes or so the next day. And yes, the carrot cupcake was yummy, and the chocolate/vanilla and the key lime pie and the chocolate mint, even though the icing had kind of run off from the top of the cupcake by the time I ate them back home after taking them around with me for several hours and I had to scoop the icing back on top of the cupcakes.

The original home of the Rockville Pike Borders, which became an Anthropologie when Borders moved down the street into White Flint Mall, is an Anthropologie no more. The store is up for rent, so if any of you want to open a store in a historic retail location on 11500 Rockville Pike... And this huge Borders location no longer has even a single visible store-discretion shelf facing in its Front of Store, nor really does the wonderful Borders on 18th and L have any store discretion that's visible in its FOS. I find this a little depressing. I can remember back 20 years when a Borders had character. Of course, there weren't 500 stores back then. And one of the problems the chain had was that it had too much character and not enough management. And I wasn't very happy with George L. Jones because he didn't run a tight ship. But the nostalgic part of me wishes the chain could be a well-run chain while still retaining some of that store-specific character.

B&N will soon have Elizabeth Moon's Deed of Paksenarrion back on shelves. Should have been there all along, but that's a long story. Maybe I'll tell that story in a blog post some day. That was one of the nice things to see in the stores. The bummer thing is that Borders is underordering on Peter Brett's Desert Spear, around half as many of those as the new Robert Redick hardcover, though I bet Peter will outsell the Redick by about that same margin.

It's soon going to be $8.30 for a one-day pass on the DC MetroRail system. Is it that long ago this was a $5 bargain?

As I get older I get more crotchety about my hotel rooms. I went down twice to ask for a new room because any of the ones facing the air wells on either side, the HVAC equipment at the bottom of the airwell, all that noise just shimmies up the walls. Which leaves a room facing the street so you can get the street noise as the "best" option. I probably won't race to book the Hilton Garden Inn on 14th St. again.

I've never seen so much snow in DC. Knocked over light posts and paper boxes. The sidewalks not so bad but at the corners where snow was plowed from two different streets, you had some interesting detours.

The Pizzeria Uno in Bethesda is closed. And right before I headed to DC, my younger brother told me the one in Manchester, CT is closed now as well. I enjoyed my dinner at the Union Station location. I tried the honey crisp chicken salad for the first time, along with that new moroccan lentil soup, and it was a good thing.

Whole Foods is about to open the new store in Chevy Chase, MD just over the border from DC in Friendship Heights. May 18, I'm told. That's just a little over a mile from the Tenleytown store in DC and not far from the River Rd. location in Bethesda, so I see some same-store cannibalization in the near future. And it's maybe but three years ago that the Tenleytown store was given a pretty major remode. I also see on their web site that the store in Lake Grove, NY will be opening on March 17.

With my little weekend trips the past two weekends when I've been considering myself as on vacation and able to do more than just the Sunday Times crossword, well, I've impressed even myself with how well I've done on the Saturday puzzles. They're not easy, and it takes some backing and forthing and fermenting in the back of the mind while I do other stuff, but I've been very pleased.

I just can't seem to get as much done on a weekend when I'm home.

The More Things Change...

In many ways, Boston is where it all began for me. February 1979, my parents and my younger brother are staying at the Sheraton Boston the same weekend as Boskone, we're allowed into the dealer's room even though we don't have a membership, somebody's pimping free samples of Omni Magazine, before you know it I'm reading stories by Orson Scott Card and George R. R. Martin, getting hooked on the stuff, and some 31 years later I'm one of the leading literary agents for sf/fantasy. There's also the six weeks I spent at Harvard in the summer of 1981 overshooting my allowance on movies, comic books and fantasy and sf novels. So whenever I go to an sf-y something in Boston, it always has a nice extra bit of resonance for me. With not too much lead time, I decided to take a break from NYC and head up to Boskone this year.

So what's up in Beantown?

Since my last visit a few years ago, the good news is that Pandemonium Books in Cambridge survived a scare a few years back when relocation delays led to money problems led to some difficulties with the IRS. The bad news is that the store's book inventory is now mostly new books for the new books, but then mostly used books for the backlist. Better that than not to have the store around at all, and there were customers and a decent crowd in the downstairs gaming room this past Saturday. I did them a favor and suggested they not charge $3.95 for a decent used copy of Beyond the Blue Moon by Simon R. Green, which goes for $16+ on Amazon at the moment.

Pandemonium is the successor to a bookstore on the second floor of a building on Eliot Ave. in Cambridge where I spent many a dollar when I was there in 1981. That building is still around, but now connected to another building with an IHOP where I didn't eat because there was too big a line. I ended up getting Ben & Jerry's for breakfast from their outlet in The Garage, which was the building that housed the previous incarnation of Pandemonium.

I think the Pizzeria Uno in Harvard Square was around in 1981 but too expensive for me to eat at. On this trip, I ate at an Uno's one stop up the Red Line in Porter Square, the 52nd Uno's that I've eaten at. This is in a little shopping mall that may once have been thriving and now is not, and I'm sure once upon a time you couldn't just walk in and find a table on a Friday night. But I must say that the new Moroccan Lentil Soup is one tasty bowl of soup, and with under 200 calories in the bowl. I highly, highly, highly recommend.

The Out of Town News kiosk in the center of Harvard Square was saved from closure a while back, and honestly it may as well go, because it's not even a good version of a US newsstand any more, really, and has about as many out of town newspapers as you'll find at your local Midas outlet. But across the street, the Crimson Corner sundries shop still puts Analog, Asimov's, F&SF, EQMM and AHMM on display right at the front door. If there's ever a tradition you'd think not to have stood the test of time, but somehow or other you still can't walk into this little shop without having a chance to catch up with some good mystery or f/sf fiction.

Besides getting to my 52nd Unos, I took the MBTA out to Dedham Mass to visit the largest Whole Foods in New England, and I believe my 101st of those. I had a very good time. This is in the very busy and prosperous-seeming Legacy Place lifestyle center, which as we can see

here is theoretically going to have a new Borders in it come Summer 2010.

Peeking in through the window...

... and looking at all of the other stores that have opened already at Legacy, you get the unfortunate impression that they decided a while back to maybe take a break from actually building out the store in order to decide if it made more sense to actually build and open the store or find their way out of the lease. I sure do hope the store will be open in the Summer, because this looks like a nice happening place for a Borders, and I do so love being part of the first day excitement at a new bookstore.

The Vinny T's across from the Prudential Center where Steve and I had dinner with Simon Green in 2004 is now closed. I did pop in to the Sheraton Boston in the Pru to pay proper homage to the 2nd floor South Tower meeting room where the hucksters room had been in 1979. Boskone hasn't been at the Sheraton for a while, and the past few years has been in a nice Weston attached to the new convention center in a desolate waterfront area not quite a mile away from South Station. That neighborhood is alas just as desolate as I remembered it being a few years ago, but Boskone itself was a solid convention. Around a thousand people, well run, people seemed to be having a good time. Next year Charlaine Harris will be a special guest, so I will probably be back for more.

The Acela is a nice train, but it is so frustrating not to have real high speed rail in the US. For whatever reason, we had a really pokey train ride up and were 15 minutes late, kind of like being in a car that you know wants to go faster only it can't. The trip was better coming back since the train was actually going at the speed it's supposed to. Except when we had an unscheduled stop just after the bridge from Groton to New London, and sat for 45 minutes because of some signal difficulty. It was still faster both ways than the unelectrified bad old days when the train went slower and had to do an engine change in New Haven, and the seat is nice and comfortable.

I sat in on a couple readings and a panel on the Google settlement. Ya know, folks, Google at least wants to pay authors money. I wish half the energy being spent opposing Google was being spent thinking on ways to deal with piracy and file-sharing and other people and places and companies and things that would rather not pay authors at all. As Jane Yolen and the other panelists pointed out, the Google settlement is flawed.

The flagship Borders on School St. in downtown Boston is still a really nice bookstore selling lots and lots of books. Borders has a new sf/f buyer as the excellent Morgan Burns has been promoted to doing graphic novels and other such things. We'll miss him!

I finally found my way to the Landmark Kendall Square and saw The Last Station. So maybe I'll blog about that.

I didn't get as much work reading done as I'd hoped on the weekend, I never do. But I did catch up on comic books and other fun things, and I did very well on each of the Friday, Saturday and Sunday crosswords in the NY Times.

Basically, it was nice to be in Boston, to look out my hotel window and see the Sheraton Boston across the way, and to walk in to Harvard Yard and look at the staircase where I can remember reading Robert Heinlein in the summer of '79.

How I Spent My Summer Vacation

For the first time in a long time, much longer than I can remember and this is probably not a good thing, I took four days off where I did not once check e-mail and tried to minimize the amount of time I even spent thinking about the job. I did have around 100 e-mails waiting when I got back, but the world and JABberwocky seem to have survived.

This was to Connecticut to visit with my family. My parents came up for a few days, and the entire family (less one niece in Israel) got together Saturday afternoon for a seven-week preemie celebration of my mother's 80th birthday. I got her the 40th birthday card I neglected to obtain for her the first time around; that's the kind of guy I am.

My mode of transport to CT is usually Metro-North Commuter Railroad to New Haven then Amtrak to Hartford. I could take Amtrak from Penn Station in NY, but Penn Station is such a pit of existence while the New Haven train station is so nice that I'd rather have time to kill in New Haven if need be. If I have lots and lots of time to kill in New Haven and my luggage isn't too heavy to walk with, I can walk a mile over to the downtown/Yale area. It adds a little time to the trip, but not necessarily a godawful amount, especially since it's slightly quicker for me to get to Grand Central to catch Metro North. And sometimes it's quicker as when on the way back Sunday night the connecting train from Boston to New York was running very very late.

I visited my 73rd and 74th Whole Foods Markets. #73 is in Glastonbury, CT and I was visiting just shy of its 4-month anniversary. It's a "just right" location, big enough for the prepared foods to have some specialness but not so big (like the one in Columbus OH I visited with Tobias Buckell) you wonder where all the customers are supposed to come from. This store has its own in-house bake-house, and while I was there they were taking a big huge disk of dough that looked like some monster from a science fiction movie and turning it into cranberry pecan (I think) rolls. I sampled a four-cheese sourdough bread that was really yummy, and if I thought my younger brother and his family were more the types to enjoy artisanal bread maybe I would have gotten some. The store also makes a sublimely delicious white chocolate brownie that is so good it almost makes me want to move to Glastonbury so I can fatten myself up. The 74th I count with reluctance since it's an old Wild Oats location that was one of the first to be rebranded as a Whole Foods post-merger. Apparently the merger is still a work in progress; I was told by the Prepared Foods Team Member who dished up my small dish of Pete's Ravioli that there's talk of a renovation but who knows when, and that since the store looks the exact same as it did only the contents of the shelves are different that people don't really know if it's a Wild Oats or a Whole Foods or a what. It was very quiet on a summer Sunday while the "real" Whole Foods two miles away in West Hartford center was bustling when I shopped there an hour or two later. Part of me says I shouldn't count the Wild Oats as a Whole Foods, but the sign says Whole Foods and the food on the shelf is Whole Foods, and as I visit other parts of the country (like Denver for WorldCon) I'm not going to know which are conversions and which are real and as they do more renovating the gaps will close. So I'll count them.

Trivia note that Bishop's Corner had one of the earliest B&N superstores before they built them quite as super. It's now closed. There's a new store in West Hartford Center in the Blue Back Square development, and one right across the street from the Borders in Farmington that is always very very quiet compared to the Borders. The staff roster for that B&N on Sunday had only 4 bookseller/cash wrap people on it, so they weren't expecting a throng.

I dump a lot on Borders in this blog, but here to dump on B&N a bit: can anyone explain why the Glastonbury and West Hartford locations of B&N do not have a model on and are not carrying Brandon Sanderson's MISTBORN? This is inexcusable. The publisher will tell me how B&N loves Brandon and sells tons and blah blah blah, and I don't want to hear it. The time they spend trying to justify this for B&N, I'd wish they would spend getting on B&N's case, that, like, in case they haven't noticed, Brandon is one of the top-selling fantasy writers in the country these days, in fact THE WELL OF ASCENSION was Tor's top selling fantasy mass market two weeks ago according to Nielsen Bookscan, and I shouldn't have this overhanging my vacation. Sad to say, this isn't something unique to Tor. There's a form of regulatory capture that takes place in the dynamic between the sales reps at the major publishing houses and the buyers at the major chains just like between the airlines and the FAA. So don't get me started. Today it's B&N, Tor and Brandon, a couple years ago Penguin, Borders and Charlaine Harris, somebody else tomorrow, and some people who've spent time with me know that I can go on about these stupidities at very great length.

The Pizzeria Uno at the WestFarms Mall has closed. This was one of the earliest of the Unos I visited, a fixture on visits to the CT area for me for many many years. PF Chang's is taking over the spot and I'm sure will make the Mall feel much happier with itself, but I will miss the Unos. Happily there is still one by the Buckland Hills Mall in Manchester on the other side of Hartford. There is a general feeling of ennui toward Friendly's amongst my family. Smaller scoops of ice cream, inferior food, not like we remember it. But is it them or our memories that are faulty?

I attempted to play things on a Play Station and did not do very well. Too many buttons. I'm not fast-fingered enough on the quiz game. The karaoke game doesn't do it for me. I did better at Wordigo, which is a word game I would recommend. It's a kind of multi-player solitaire word game.

The blueberry picking wasn't up to snuff. Most years I've been up closer to the 4th of July when the blueberry patch is just opening and there are clusters and clusters that are ready to fall into the bucket. A little harder to find those two weeks in to the season. Lots of fun, still, and it's not like the berries were bad, but it's definitely worth keeping in mnd for next year that earlier in the season is better.

Bradley Airport in Hartford is looking rather shabby. There are some transit systems that use letters for buses and some that use numbers and some that use both, so why does CT Transit think their Hartford bus system will be much the wiser for their expense of converting from letters to numbers?

So them's a few musings inspired by my vacation.