Turning Over a New Leaf At Borders
By Bernice Hurst, Managing Director, Fine Food Network
For people who love books - and there are many new ones coming along every year to replenish the numbers as older ones fade away - nothing can replace the opportunity to browse. Picking up something new, feeling and even smelling it, reading the first (and sometimes the last) page, flicking through it, discovering an author or story for the first time, is a joy difficult to describe. But for those who understand, and believe, as Luke Johnson does, the experience is well worth the £20 million (U.S. $40 million) he may ultimately pay (contingent on future performance) for Borders's U.K. and Ireland subsidiaries.
A serial entrepreneur whose previous businesses include a restaurant chain and a television channel, not to mention his own private equity firm, Mr. Johnson has an enduring passion for books. He is now Britain's third biggest bookseller, with 42 Borders outlets and 28 Books Etc stores in his portfolio. He believes books "are a cornerstone of civilization...fundamental to intellectual development" according to an interview in Britain's The Observer. He went on to say that "if you can't read and don't enjoy reading it's a major disadvantage. I think a home that doesn't have books is a bit of a sad place, really."
Mr. Johnson acknowledges that much needs to be done to turn the business around in the face of competition from internet retailers. Also, deep discounting of best sellers by supermarket chains such as Asda and Tesco have bitten into the bottom line of book retailers.
To enact a turnaround, Mr. Johnson tells The Observer he plans to make better use of the selling floor, improve inventory stocking, and boost publicity. He also sees greater opportunity in online selling as a Borders' retail website is launched next year. Currently, Amazon handles Borders' online sales.
CDs and DVDs may eventually be phased from the mix, but Borders is open to expanding its stationery section and trying new products such as computer games.
"We've got already some children's educational areas in a few branches and a range of products for children including toys, which might be an area for growth," said Mr. Johnson.
But he realizes Border's turnaround has to be driven by books. With some 120,000 titles published annually, there is plenty from which customers can choose. He also points out that only 30 to 40 percent of people ever buy a book, which means that there is a pretty big audience still to tackle. Borders is aimed at "people who like to spend time in a bookstore...customer dwell times are over an hour on average. So it is more of an experience than just popping in quickly to buy the latest Harry Potter."
He sounds confident and inspires confidence. He recognizes the competitive market but has defined a USP (unique selling position). If anyone is going to turn over a new leaf in Borders books, it could well be Luke Johnson.
Discussion Questions: What will it take for book retailers to remain vital in today's competitive environment? What advantages can book retailers exploit over internet retailers and mass market stores? Do you think Luke Johnson should focus equally (or more) on expanding into games, stationery and toys?