Given all we hear about secular trends in media consumption, you’d think the book business was near extinction. It is not. It actually manages to eke out a 1% gain every year.
Borders? Not so much. Four years in a row its revenues stayed exactly flat, then fell 10% last year. It hasn’t had positive net income since 2005, and is now a cash burner. The company just received a private infusion of $25 million. Let’s figure out how to spend it before Borders goes south of its borders.
Shrink And Focus
Maybe you are not meant to be a $3 billion company. Especially one that believes it can be all things to all people. SG&A hasn’t budged – there’s your tell. Maybe you could turn a profit as a $2 billion company.
Goodnight Mr. Walden
Stop closing 150 or so Waldenbooks annually. Each year operating profit on the remaining ones gets WORSE. Get rid of them all, once and for all.
Kids R U
Again, focus. The best seven-year CAGR has been in juvenile paperbacks. There’s a mini-spurt in the under-5 population. And parents with money will spend it through the nose, ears and ass on their kids.
This will turn into a barbell targeting strategy, as you’ll also pick up the grandparents, so keep a few history books and biographies around. But forget Gen X and Gen Y, who believe you don’t need to read to succeed.
New Store Layouts & Partners
Take out the movies and music and one-third of the adult books. Turn half of each store over to Chuck E Cheese or similar. Then add a large, permanent event space to your side so that…
Up Close & Personal
…You become the community hub you keep writing about in your business strategy. Be the center for kids learning, educators, kid authors and entertainers, etc.
The Kids and Teen sections of your website look like they were designed by a 50-year old, 50 years ago. You can’t beat Amazon at its own game. Rethink and redesign. While you’re at it, refocus the Borders Media section (see Kids above). Stop trying to be a full-on TV studio – no wonder SG&A is so high.
Sponsor everything kids-related you can, on air, online, and offline. Team up with schools. And that community thing? Do it online too.
Even with this focus, you can see there is plenty to do with that $25 million infusion. This is the make-or-break year. The year for Borders to test some new borders.