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What Entrepreneurs Can Learn from Borders' Demise

What Entrepreneurs Can Learn from Borders DemiseIf you're like me, you can remember when the first Borders bookstore opened in your town.

I thought: what a big, luxurious-feeling bookstore…with a coffeehouse inside, too. By 2010, the company had more than 250 stores in the U.S., about 10,000 employees worldwide and sales had mushroomed to $2.3 billion.

Independent bookstores feared the mega-bookstore chain. Wags said it was the beginning of the end of the independent bookstore. And Hollywood even made a movie out of it: Remember Meg Ryan's Shop Around the Corner in the 1998 film You've Got Mail?

My how the mighty have fallen.

Now, Borders is history -- its nearly 400 remaining stores are being liquidated. But the American Booksellers Association reports more than 1,200 independent bookstores are still open.

How did it all go wrong for Borders? Here are four reasons why the once-colossal chain went bust:

  1. Big stores = big rents = high risk. Megastores can only survive on huge traffic volumes. So when customers took to the Web with greater frequency, the giant bookstore business model began to erode. Independent bookstores mostly have much smaller rents to pay, so they can better withstand this migration. Even Best Buy is now renting out store space to small businesses to pay its rent.
     
  2. Underutilization of assets. So they had these vast bookstores -- but what happened in them? Borders could have made them a livelier place with book-group discussions, maybe issue-focused debates, or late-night bands playing in those coffee bars. Perhaps cooking demonstrations surrounding cookbook releases? They had all that room. But not enough was done to make Borders a must-visit destination that was entertaining rather than just a big cavern full of books.
     
  3. Out of touch with trends. The world of books has changed radically in recent years. Shoppers aren't just buying more online; they're buying e-books, too. Yet Borders never developed a strong online presence. Like struggling Blockbuster, their industry shifted, but Borders didn't.
     
  4. Lagging on technology. As books became digitized and were increasingly loaded onto e-readers, Borders did nothing. All the while, archrival Barnes & Noble was also struggling, but it at least attracted a buyout offer in large part by developing the Nook.


Why do you think Borders went under? Leave a comment and let us know.  

Carol Tice, a freelance writer, is chief executive of TiceWrites Inc. in Bainbridge Island, Wash. She blogs about freelance writing at Make a Living Writing. Email her at carol@caroltice.com.

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