Retail TouchPoints: Q&A with George Jones CEO, Borders Group, Inc.
Through a special arrangement, what follows is an excerpt of a current article from the Retail TouchPoints website, presented here for discussion.
After losing market share to both online and offline competitors for a number of years, Borders seems to be turning the page to a more positive chapter. Driving the turnaround is George Jones, the former CEO of the Saks Department Store Group and executive at Target. Mr. Jones recently discussed Borders strategic plans during a presentation at the Leadership In Retail Forum in NYC and afterwards shared further insights with Retail TouchPoints. Here, Mr. Jones discusses Borders’ new store concept and how it’s embracing the digital revolution.
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TouchPoints: Can you elaborate on the new concept stores?
Jones: Without revealing too many details, I can say that the concept store will have many of the features that our customers love about our regular superstores – the warm and inviting atmosphere and a vast array of books, music and movie titles – and it will also have new elements including what we are calling “Destination Businesses.” These are categories in our stores that Borders will become known for as the best place to shop anywhere for these categories. It’s all part of differentiating our shopping experience.
RTP: Can you talk about some of the interactive aspects?
Jones: For example, we will be featuring a “Digital Center” where customers can download, burn CDs, create photo books, research their ancestry, and much more. We’ve already begun to introduce certain elements of the digital center concept into other stores and customers are loving it.
RTP: What other digital initiatives do you have?
Jones: As a further extension of our commitment to offer our customers the best in digital, we are in the process of exploring several potential arrangements for key partnerships with respect to our digital offerings. In September of this year we signed an agreement with Sony to offer its new Reader Digital Book in more than 500 of our superstores and sell e-book downloads on a co-branded site that we will share with Sony, and that will ultimately become part of the new Borders.com e-commerce site when it launches in early 2008.
RTP: You are taking a fairly progressive approach to embracing the digital revolution. Can you describe your strategy around this?
Jones: There’s no denying that technology is now part of the fabric of life. We also know that people still love to shop and spend time in our bricks-and-mortar stores. By adding the digital experience to our stores, we will make them even more enjoyable and create a more compelling shopping experience. The digital world and the traditional bricks-and-mortar world can successfully co-exist, and in fact, Borders will be bringing the best of both these worlds to our customers to make the total experience even better – a kind of 1+1=3 strategy.
Discussion Questions: What do you think of Borders’ strategy of adding a digital experience to their stores? What else could they be doing to prepare for an increasingly digital world?
If only someone could invent a way to carry books around in non paper format. Oh wait! They have. Ebooks are all the rage now. And because they can be downloaded into iPods, PDAs and Blackberries, almost everyone has access to this type of technology. From a customer service standpoint, I see a free standing kiosk, much like a digital photo print station, where the customer can stick in some kind of media storage and make their purchase and take delivery without having to go through the cash. Taking it a step further would allow the customer to download via Bluetooth and not even have to take their device out of their pocket.
And ebooks are just the tip of the iceberg. Music, movies, documentaries, audio books and even a free video or audio newsletter can be added to the mix to entice customers to download.
We will see more of these self serve kiosks around in the very near future. If the chain wants to get creative and offer an exceptional customer experience, they can allow customers to set up credit accounts, such as Bill Me Later, and increase the velocity and basket of each transaction.
The ideas George Jones shares with us sound pretty good. But here is a basic problem I have with bookstores: I often can’t tell them apart. Maybe Borders needs to create a overarching brand personality that a shopper like myself, who holds no loyalty to any one store, can connect with.
I’ve lived for three years with a major bookstore brand right across the street from my house, and even though my wife has a loyalty card, and my family frequently makes a stop there to browse for entertainment, I can’t name which store it is. All I know is that there is a competing brand of store about two miles up the road. That’s a branding problem of the entire bookstore industry.
In the past, I’ve worked with specialty bookstores, like the Mystery Bookstore in New York and LA, and that store had a distinctive personality.
Borders has been voluntarily losing the experience war with Barnes & Noble for years, and that will continue if all they do is add terminals to buy product on line in their stores.
When B&N added sofas and coffee bars, Borders took them out and “value-engineered” their experience…contextual damage like that takes years to repair in the world of perception.
If you’re going to shop for books at all in ‘bricks’, there’s just got to be something vastly more appealing than doing it at home: entertainment, food & beverages, socializing, readings, discussion groups, guest appearances…it’s hardly about the product at this juncture…THAT, we can all do online, at home.
Mr. Jones’ ideas and programs sound exciting and should generate some additional traffic for the stores. Book stores is an area in which people seem to develop a loyalty so, hopefully, this attempt is not too late. His ideas were about creating more revenue streams, not involving or creating a better experience.
There may be another inherent problem. Where are their stores? What market are they penetrating? Strategically, is the collaboration with other companies (B&N with Starbucks) working? Do their stores seem like a big department store or a warm and inviting cozy book store?
The digital strategy difficulty: will there be enough margin for bookstores? Most digital/electronic products take a Darwinian journey into The Land Of No Margin. If folks can download a book electronically, why bother visiting a bricks and mortar location? Why not search the internet for the lowest possible price? It only takes a few minutes. And if Sony and/or Amazon sign up all the significant publishers, who needs bookstores?
In the recorded music business, an oligopoly led to unsustainably low margins and the subsequent decline of music retailers. And that was before the iPod and online music sharing (legal or not) delivered the coup de grace.
The ability to adapt and improvise is something that Borders does well.
Another company that the experts were shuttering was Blockbuster, with the big upswing in this new technology called DVDs and the expected downturn of video rental from the corner stores. They were able to survive–some may say thrive–in a very difficult market.
Borders will need to differentiate themselves from the other book stores. To be the Top of Mind in the consumers’ perspective will take considerable change.
Borders has a tremendous amount of internal data, which can tell them exactly what consumers like/dislike about their current experience and product mix (titles, coffee, accessories). They need to use this data on an aggressive scale.
Another company (a big electronics category killer) used their data to totally reshape the inside of the store to make an imprint on the consumer. They removed 25% of the mix and improved sales by 50%. This type of change will make a statement, both in the market and in the consumer’s memory.
Borders needs to be the destination store of choice.
I agree that becoming a digital destination is a worthy goal but am skeptical about the ability to execute. Borders’ search kiosks don’t work properly–even the new ones. A lot of these ideas sound great at HQ but never get executed with any regularity. I’d look at the dollars spent on training for this initiative as a barometer of future success.
Other retailers have made themselves into Destination locations. It makes sense for bookstores to attempt differentiation in this manner.
A key to success will be trying enough new ideas that they find some that stick AND make money. Testing a concept in a few stores won’t give you enough of a sample to extrapolate. It’s a big investment to relay an entire store to test a new idea, but probably necessary if these bricks and mortar book retailers want to survive and not just turn themselves into a super-sized Starbucks.
Borders is giving it a shot, and should be commended for it. My question is whether they intend to innovate and dominate in the digital business arena or simply embrace it. Are there “top secrets” still in Mr. Jones’s bag of tricks? A wee Wii room, perhaps? And another for Guitar Heroes? How about blacked-out football games via satellite for patrons (free, of course – illegal to charge for it)? I’d like a huge-screen overhead shot of my favorite Caribbean harbor or Ajax ski run via Google Earth (without paying $400 for a membership), along with a poster-sized, plotter-produced printout that can be mounted on a wall and later moved to another wall – like the Fathead sports graphics.
Would Garmin or Tom Tom or Magellan like to preview their portable GPS navigation products in Borders stores before they charge $600 to buy one? How about customers downloading step-by-step directions to a destination using the terrific graphics and audio from these systems to replay on their laptops? The dynamic GPS factor would be lost, but it would be better than MapQuest (and a sales pitch to boot!). Their beginning and end points could be arbitrary GPS points in the relevant Zip Codes perhaps. Or any GPS point they select from a list. I’d pay to try it.
Come on, Jones! What’s up your sleeve?
I agree with much of what Lee Peterson wrote. Adding digital capabilities to the retail experience is important, but it’s only a part of the overall experience. It is not likely to evolve into a key point of differentiation. More likely, there will develop a bundle of ‘must-have’ digital capabilities that all book superstores must have to be a player.
While still competing with education, libraries, Amazon.com and Starbucks, will Borders up its competition with the web? Their edge now is a nice, social place to read and a good selection of books to choose from. Content is what makes people read anything, no matter what the media. These new tech ideas from Borders are fine and may help a little as long as they aren’t substitutes. In the long run though, book length ideas are moving away from paper.