Business Brains

Borders bookstore folds, can remaining booksellers adapt?

Posting in Sustainability

Embracing technology and staying agile helps chains such as Barnes & Noble ride the technology tide.

This week, Mike Edwards, CEO of Borders, announced that the bookseller was unsuccessful at finding a buyer and would be going out of business and liquidating its assets. Edwards blamed "a rapidly changing book industry, the eReader revolution, and a turbulent economy."

Indeed, it is difficult to be in a business being swept away by the tide of technology, and its no secret that online retailers, especially Amazon, offered a way to procure books faster and, for the most part, cheaper. Recall that Borders itself was part of the wave that swept away many local bookstores with its faster and more efficient supermarket model for book sales in the 1980s and 1990s. Of course, even Amazon now needs to worry about the ongoing viability of Kindle against all-in-one devices such as the iPad.

Now attention turns to the other major supermarket of books, Barnes & Noble. Will it, too, be swept away by the digital tide?

Steve Wunker, managing director of New Markets Advisors and the author of Capturing New Markets: How Smart Companies Create Opportunities Others Don't, says B&N has so far navigated these treacherous waters in a savvy way, and continues to see growth, sustaining both physical bookstore operations and moving steadily into the ereader space with its Nook offering.

Wunker, in a recent post at the Harvard Business Review site, outlines B&N's philosophy, which provides lessons to any business competing in an industry stressed by technology:

Competing with its legacy business: "Rather than swim against the e-book tide, B&N has embraced the inevitable with its Nook readers," says Wunker "The company has moved so aggressively into the reader space that its e-book market share has grown to 26%."

Focusing like a laser beam on target customers: Rather than try to offer a reading device that appeals to all 7 billion people on earth, B&N targeted customers seeking a simply, easy-to-access and read interface -- for people "who love reading yet have been under-addressed by [Amazon]" that simply want to pick up the device and read -- such as children (with an ability to handle glossy magazines and children's books) and senior citizens.

Experimenting relentlessly: "B&N has long been in the vanguard of the bookselling industry. It was one of the first to discount bestsellers, publish its own titles, offer authors self-publishing options, create super-stores, and put coffee shops in its establishments."

Staying agile: The company is trying to be as flexible as possible with its business model, such as negotiating short-term leases on its stores.

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Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure