Thursday, October 19, 2017

Borders’ Eight Month Lag Did Them In

We’ve all heard about the companies of the last decade or so that have failed–whether it was failure to keep up with technology trends, listen to their customers, or keep up financially–and landed themselves in the “failed-to-innovate” graveyard. We actually covered a few examples in our infographic, The Survivors of Tech, but I wanted to take some time to dive a little deeper into a few of their stories. This is part four in our series, and you can check out Part One, Part Two, and Part Three here.

Borders and Barnes & Noble
This is one of the more complicated survivor stories, because there are many layers to Borders’ ultimate demise. Something truly scary? (It is Halloween time, after all) All it took was an eight month lag for Borders to fall behind Barnes & Noble in the race to go digital, and it turns out the events leading up to that eight month gap made it impossible for Borders to bounce back.

Let’s rewind to 2009, when Barnes & Noble first released the Nook e-reader. If you’re like me, you may be surprised to be reminded that at this point, Amazon’s Kindle e-reader had been on shelves for two years. So Barnes & Noble wasn’t exactly quick to adapt to this new tech either, however they were quicker than their most direct competitor–Borders–which ultimately was all that mattered in the end.

What makes this story so complicated is its layers. From the outside looking in, it seems that a technological lag was all it took for Borders to succumb to its newly-digitized competitors. But the true irony lies in the fact that Borders was actually early to the digital game, creating its first website in 1998 and even turning over all its online business to–ready for this?–Amazon. How’s that for irony?

Layer two of this tragic tech tale? Borders, in a move that sealed their fate, reclaimed their online business from Amazon in 2008, just one year before Barnes & Noble answered Amazon’s Kindle with their Nook. In an effort to catch up, they partnered with Canadian brand Kobo to sell its e-reader, but–just eight months after Barnes & Noble’s Nook release–it was already too late.

By this time, Borders’ business was crumbling internally. Joe Gable, manager of Borders’ flagship store in Ann Arbor, Michigan, recalls executives scrambling to revamp their brick and mortar locations as their online real estate was crumbling.

“They spend millions developing this stupid ‘store of the future’ and then six months later they pull the plug on it. So picture the money just pouring out. Then they get a new guy in. I say, ‘What do we need?’ (He says,) ‘We need a new idea for a store.’ ‘Well, what could that possibly be?’ ‘Let’s call it the concept store. ‘Let’s have more consultants, and let’s develop totally different fixtures–metal fixtures–and let’s have a different layout, this time instead of a racetrack, people will find things by bumping into them!”

So, although Borders’ ultimate demise was due to that crucial eight month lag, a deeper look reveals internal frustrations that added to the already mounting panic. At its core, Borders’ story of failure is complex and layered far beyond that digital gap: it’s a combination of giving up a valuable technology partnership (Amazon) at a pivotal moment in digital, and losing sight of customers’ needs while the competition was flourishing, both online and in-stores.