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Borders struggles to hold off final chapter

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By Michael S. Rosenwald
Friday, January 21, 2011

Meetings of the history book club at the Borders bookstore in White Flint Mall are device-free. The other night, during a discussion of "1848: Year of Revolution," no Kindles, iPads or Nooks showed up. There was one cellphone sighting, but it was fleeting.

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"This group is challenged by e-mail," said Christian Minor, a physicist and longtime member.

In a quiet alcove, in a circle of 14 chairs and with a 496-page book on their laps, club members discussed events an ocean and several lifetimes away. But they had the present in mind, too: What will become of their monthly meeting spot?

Borders, they know, is struggling to survive. It recently suspended payments to book publishers. Dozens of its stores across the country, including several in the Washington area, have closed. For many in the industry - and for this group of Borders regulars - the question is not whether the chain will go under, but when.

"How many record stores are there these days?" Minor said after the meeting, resigned to the eventual end.

A Borders spokeswoman declined to comment or make executives available for interviews.

How Borders arrived at this once-unthinkable moment is, like many stories of troubled companies, a tale of strategic errors, missed opportunities and revolving-door management (the chain is now in the hands of a former tobacco executive). But the company's collapse, though perhaps hastened by missteps, seems to many industry insiders to have been inevitable, brought on by cultural changes too swift and sweeping to fend off, even for a huge player in the nation's cultural life.

Borders was a major force in redefining Americans' reading habits, selling millions of books in places where they had once been scarce and helping scores of novels to become movies and subjects of national conversation. Now, Borders faces a pool of potential customers who quickly spread culture themselves, one viral video or status update at a time.

Once, Borders was, with rival Barnes & Noble, the long tail of reading, with supermarket-size stores offering thousands of obscure titles alongside bestsellers. Now, Borders confronts the limitless, more efficient supply chain of Amazon's online emporium. Borders, which helped a generation of readers learn the pleasure of diving into a book for hours at a stretch, now competes for the attention of readers who dip into a few pages on an iPad, open Facebook, read some more, then tweet random thoughts. Printed books don't need a power outlet or a data plan, yet for some people, their utility seems to be fading.

Even Barnes & Noble, which analysts say is better run than Borders, feels the stress of steering a business whose customers' bookmarks are increasingly digital. "Sometimes I want to shoot myself in the morning," joked Leonard Riggio, founder and chairman of Barnes and Noble.

Boom times

Before Riggio and the Borders brothers, Louis and Tom, started their chains in the late 1960s and early 1970s, respectively, bookselling in much of the United States was largely confined to quaint independent shops offering personally selected, mostly highbrow books. Chains such as B. Dalton and Waldenbooks, offering mostly bestsellers, emerged in the shopping malls that opened as middle-class families moved to the suburbs.

The Borders brothers - then geeky recent grads in the college town of Ann Arbor, Mich. - wanted to stock their local store with a broader array of books, like the best independent shops in the biggest cities. They did so with the help of sophisticated software that helped them predict which titles would sell. The brothers saw dollar signs in licensing the software to other independent bookstores, but owners of those shops rebelled against the idea of machines doing their jobs, according to Wharton Business School professor Daniel Raff, who has studied the chain's early days.


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