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Saturday, July 23, 2011

Borders Books, d 2011

Borders joins the list of businesses KMart owned at one time which have floundered, such as Builders Square, Sears, and Kmart itself.

I remember the first Borders Books on State Street in Ann Arbor in the 1970s.  Borders and another bookstore, David’s Books, opened at about the same time less than a block from each other.  David was a familiar fixture in Ann Arbor: with a British accent, long hair, and a penchant for selling a few best sellers cheap out of cardboard boxes on the street, David took years of bookstore experience into his new venture.  David’s Books had a wide selection – nearly as wide as Borders at that time – and discounted everything. 

David’s Books was very popular, but didn’t last long. The large inventory sold at a low margin was a strategy that demands higher volume than David’s could generate.  The Border brothers were sharper at controlling inventory and at pricing to the market. I’m sure these guys had a love for books, but fundamentally they understood retail operations.

KMart acquired Borders in 1992, hoping the notoriously smart Borders management could expand Borders and rescue their struggling Walden operation.  But the senior management left the company, leaving KMart with two book divisions which didn’t have much in common except less competent management.

Borders got spun off, but always seemed a step behind the curve relative to Barnes and Noble and, in particular, Amazon. Sure, you could buy books on-line through Borders, but it wasn’t easy and unless you had a huge discount it wasn’t worth the hassle when Amazon’s interface was so much better.  Amazon sucked the air out of the retail bookstore business, and Borders suffocated.

The rise and demise of Borders is a reminder that retail is a brutal business.