Borders Flips to Chapter 11
I remember a few years ago, I was lucky enough to attend another yearly manager’s meeting for B&N in Orlando Florida. I knew what to expect after going through the ringer the year before. Rooming with a fellow manager in a swanky hotel, publishers using a hall the size of a stadium to hand out free books not yet available to the public, and being next to the Happiest Place on Earth but not getting the time to see it. I was always the most excited person in our district and the fact that I might get a pre copy of Colbert’s “I Am America and so Can You” only made me more annoying to be around.
However, the first day there I walked into the vast lobby maze only to hear the loud roar of multiple tv’s hanging on the walls and dead silence coming from the 100 or so manager’s around them. Everyone was crowded and still, some men were having to sit down. People were holding their hands against the back of their heads as they stood. I blinked trying to understand what I was seeing. It was the day the stock market crashed, the first day of the great recession. Our own stock was falling from the $40 mark into the 20s. In that sea of hundreds, everyone was effected. “What a day to have a 401K” muttered a man next to me before he slowly walked away. You could practically hear A Christmas Story‘s Ralphie’s voice after the dogs ate the turkey saying, “It was gone! All gone!”.
The next day, my boss tried not to act too alarmed by all of this, probably for our sake. He told me that if he had sold his stock earlier he could have made close to $40,000 but then he shook himself out of it and shrugged it off. If I were him I probably would have burst into tears. As the days rolled on, the rest of the conference had a haze of defeat. People quiet and foggy moving from seminar to seminar. Our top men and CEOs were huddled in corners talking with worried looks on their faces. One female manager in my district got fired for having sex on camera in an elevator. I guess everybody grieves in their own way.
It wasn’t until the last night that our CEO got on stage, looked at us and the investors, and said that we were going to be alright. That Borders was for sale, we had looked at it, and there was no way we wanted to buy that kind of debt. Our CEO made like grandpa and told us that he and the board were going to do everything in their power to save our company. That it was soon time to evolve and we were going to face a possible e-reader and new technology.
That’s how a company is supposed to think. Sadly, for Borders employees, that was not how their company was managed. No CEO around to react to such devastation with such determination. Tonight there are five Borders in my area getting ready to close in the next few weeks. That many people are now out of work because their company held on so tightly to old fashioned ideas and made bad decisions with their stock and leases. I loathe e-readers but I will give the customers what they want. Besides getting in the e-reader market late, here is what they did that sunk them:
They would stick a Waldens in a new mall, any new mall, and sign a 10 to 15 year lease without hesitation. That meant if a competition’s superstore moved across the street and wiped out Waldens’ business then they would still be in the red, paying their mall rent. It takes 1 million dollars to close ONE mall bookstore. Borders couldn’t even afford to close the stores they needed to.
Gift Department Equals NO Sales
Yes, Build a Bear is cute but you can’t save a super store on that alone and investing in the brand was stupid. It cost more to buy the rights than what was recouped. Also, our large store sells a good Gift Department but there is no way that a store can depend on greeting card sales in this electronic age. Borders started an initiative where they wanted to be THE place for greeting cards and gift. Yes, Hallmark is closing shop in many places but there is a reason they are closing shop.
No Membership Fee
Nothing in life is free except for the Borders card. There is a reason for that. We charge $25 for our membership and that will get you good discounts but that $25 is paying for the loss we are taking on those discounts. Borders was just taking a loss on their deals and getting no membership fee to pay for them.
Over a year ago, there was a strict rule sent out to all Borders employees, from corporate. There was one title of the week (it could be anything from a random Sci-Fi novel to a gardening book) and they must sell at least six to ten copies of that specific title, that week. Also, every employee was required to mention this book to every customer or risk being written up. That meant if grandma comes in for a birthday card for grand daughter you were still supposed to try and sell her Vampire Lover or what not. The only reason for this was that Borders knew they had too much stock on these titles in their warehouses and it was too expensive to send them back to the publishers. Borders buyers are the first on my whipping post. They could never do their job right. In the stores there was either not enough on the shelves or too much of one title some buyer in Michigan got really excited about.
I am having writer’s block tonight (thus, the novel here) but at least I can sleep well trusting in the people who run my company. Yes, Amazon wants us out but there will always be a need for B&N even if Amazon decides to open their own stores. We have the best minds in NYC and I wish that had been true for our friends at Borders. My thoughts are with them: doing what we do every day, loving their books and their jobs, only to wish someone would have taken better care of them.