Borders–Thinking Outside the Box

John Moore comments at Brand Autopsy on a new display strategy being tested by Borders Book Stores.  As you probably know, book stores normally display their books with the edge facing the customer. ||||||
The obvious reason for this is you can put more books on the shelf that way.

But recently, Borders experimented with displaying books with the cover showing. [ ] [ ] [ ] [ ]  Even though the number of books displayed was reduced by 5-10%, sales increased by 9%.  Book stores have used the |||||| model for decades, probably since the very first book stores.  It’s just the way books are sold.  Give Borders credit for trying something new.

On the other hand, are the customers’ needs being met?  It depends.  If the customer’s looking for a best-seller, then yes, her needs are being met.  But what about the customer who’s looking for a book on woodworking.  That customer is going to have fewer choices.  And isn’t "huge selection" one of the big box book stores’ selling points?    But, for a company with stockholders to answer to, 9% more sales with 10% less inventory is awfully hard to pass up.  It’s the typical short-term thinking that gets big companies in trouble all the time.

Which points out the fatal flaw in the big box business model.  They claim to offer bigger selection and lower prices than their independent competitors.  But, in the end, there’s a lot of rent, and a lot of utilities to be paid on those big stores.  And there are a lot of stockholders who expect to see profits grow every year.  How do you do that?  Either increase sales, which becomes increasingly difficult, or lower expenses.  And one way to lower expenses is to reduce inventory, taking away one of their selling advantages.

One beneficiary of this new business model would be the independent book stores who have the ability to display more of the specialty books that Borders won’t have.  Since these books will have limited availability, they won’t be discounted, making them more profitable. An added bonus is the independent’s knowledge of their merchandise. A good indie bookseller is likely to  point out better choices (or additional choices) to readers.  Customers will become increasingly frustrated with the chain store and become more loyal to the retailer who seems to always have what they need.

There are several lessons we can learn from the Borders experiment.  The most important one may be that a small short-term increase in profits, when it comes at the expense of good customer service, isn’t such a great idea.  If you’ve promised your customer selection, then you’d better have it.  Because, in the long run, it’s never a good idea to break a promise.

For another take on the Borders experiment, check out Seth Godin’s post, "Do You Have vs. Do You Want?

2 Responses

  1. I would suggest you have Tacony look at there own customer service treatment at the Vac Pro Division. For 30 years I have been able to just give a description of what I needed and it was done. Sure an error happened from time to time but it was no big deal. Now when a part is ordered by description and an error happens all of a sudden it’s my fault.

  2. Ralph,

    Thanks for the comment. I’m not in the office today, but I’ll look into this the first thing Monday and get back to you.

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