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Wednesday, February 2, 2011

A Giant Hath Fallen

Currently reading: Magic Bites by Ilona Andrews

I was going to post about this subject later, but so much has hit the proverbially fan in the last two days, it needs to be addressed.

DISCLOSURE:  I worked for Borders Group, Inc., ("BGI") in one of their Waldenbooks stores as a part-time bookseller 2002-2004.

Even though Waldenbboks was a chain, the owners operated the stores like indie stores with knowledgable, full-time staff as one of their biggest advantages. All that changed when Kmart bought the company, then spun Waldenbooks along with Borders into its own company in 1994.  Back in 2002, it was no secret BGI planned to close their smaller stores like the one I worked in and focus their efforts on their big box stores.

And even back then, BGI executives were axing the full-time employees in favor of cheaper part-time staff.  Computer systems were antiquated by the standards of the day, making it almost impossible to find the books customers wanted.  We never had whatever tome Oprah was spotlighting on the same day the show aired, which pissed off a lot of customers.  Despite everything, our little store avoided closure because we were so damn profitable.  (Much to our district manager's eternal annoyance!)

Still, seeing all these little things, I knew my favorite book store wouldn't last forever.

And now the end is nigh.  Over the course of 2010, BGI fell behind in paying vendors, particularly the publishing companies.  They then tried to get the Big 6 to cover their refinancing with GE Money Bank.  Can you say throwing good money after good books?  On Monday, Publishers Weekly announced BGI was not paying their stores' landlords.  In response, BGI's stock dove under $ 0.75 (the stock price had been hovering around dollar for the last year).  Yesterday, Bloomber leaked the report that BGI is preparing to file for bankruptcy as early as next Monday.

I honestly can't see BGI surviving a Chapter 11.  (FYI:  Chapter 11 allows a company to reorganize and continue business.)  Its debts are too steep, one of the many reasons the BGI board has not been able to find a buyer the last couple of years.  Its chain of command is too inflexible.  Its board of directors can't see the big picture; their parachutes are in the way.

Please note, the change in business between e-books and print cannot be used as a scapegoat for BGI.  The company was in trouble long before the e-publishing tipping point.

Any company needs to a structure that allows it to respond to market changes.  Barnes & Noble is trying with the introduction of the Nook, the addition of toys, and the expansion of their webstore.  BGI was already behind when the recession slapped the U.S. across the face.  Rarely can a company pull their collective can out of the fire in that kind of economic enviornment.

So what does any of this have to do with my announcement yesterday?  A lot.  Many writers don't understand the supply lines of their product, i.e. their books.  If one avenue of delivery to your consumers (i.e. readers) fails, how do you get your product into their hands?

If you can't answer that question, I'm sorry to say you're in the wrong business.

2 comments:

  1. I've been reading about this on yahoo. It's so sad how many companies are having to shut down. I don't know if I'm correct but I remember reading somewhere that Barnes and Noble was going up for sale. Our bookstore here at the college is Barnes and Noble. Thank you for posting this information.

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  2. At one point, BGI tried to buy B&N, which to me, made no sense since BGI couldn't run their own company. The fall-thru of the sale was one of the myriad reasons for the battle over the B&N Board of Directors between two shareholder factions last year.

    I'm sad because to me, bookstores and libraries are the only places I feel welcomed and accepted. But you still have to look at a bookstore like any other business--adapt or die.

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