Earlier today, thousands of customers received an email from Borders (NYSE: BGP) CEO Mike Edwards. It was typical corporate PR drivel - absolutely unreadable. I barely made it through the first sentence, which read "For generations, Borders stores have been beacons of enlightenment and education, where readers young and old explore their passions and find those special books that speak to them personally."
Who writes this crap?
Luckily, Content Matters was able to get an initial draft of the email, before their corporate PR edited it. This version seemed much more honest, so I thought I should share it in its entirety:
Dear Borders Rewards Member,
For more than a decade, Borders stores have symbolized what is wrong in retailing today, where corporate leaders, completely out of touch with their customers, make decisions based not upon where the market is going, but instead where it's been.
Let's face it. The last innovative thing we at Borders did was adding couches, encouraging readers to spend hours in our stores, flipping through books while sipping cappucino. Because we knew then that people had nothing better to do with their time than sit around in a bookstore for a few hours at a time. That was in the early 1990s and we know that behavior of readers hasn't changed much since then.
Of course, in the late 90s we started to hear about this Seattle-based company that wanted to sell books over the web. Yeah, like that was gonna take off. But eventually, we had to fight back, so we launched a website where readers could find and purchase books online. After a little while, we realized our own site sucked, so we simply partnered with Amazon and let them run it. That continued for around seven years, which gave us the chance to fully ignore the Internet, as our partner was running the show for us.
Eventually, we began to think this Internet stuff may have some legs, so in the spring of 2008 we launched our new Borders.com site with great fanfare. We focused on the top 20 bestsellers, because that's where we make our money, and called it the Magic Shelf. See, we knew that by calling it a bookshelf, our users would know that there were books there. We made it just like visiting one of our stores. Well, one of our stores if it only had 3 shelves, covering fiction, nonfiction and DVDs. Pretty cool, huh?
The other thing we noticed was that Amazon seemed to be charging way too little for their books. Books are valuable and we didn't want to hurt our margins. So when Amazon was selling bestselling hardcovers for $15, we priced them at $25, just a couple of bucks off list price. And even if we priced them lower on our website, we'd still charge you the higher price if you bought it in our stores. Heck, once you're in the store, you're a captive audience and unlikely to go elsewhere.
So around 3 years ago, Amazon came out with this Kindle e-reader. As my mama said - who the heck wants to read a book on a computer? So we did the smart thing and ignored it. Our friends at Barnes & Noble came out with their own version, called the Nook. And we ignored that one too. Then last year, our private equity investors told us that without an e-book strategy, they weren't going to keep funding us. So, we partnered with a company to launch the Kobo. What, you haven't heard of it? Really? We've sold upwards of several dozen of them so far.
Wayne Gretsky famously said "I skate to where the puck is going to be, not where it has been". Well, how the heck are we supposed to figure out where things are going. So, instead, we try to focus on where the puck has been. We see what companies like Barnes & Noble did a year or two ago, then set our compass to follow. But it's not just Barnes & Noble. We follow leaders in other industries, like Blockbuster Video as well.
Well, anyway, here we are. We're shuttering a bunch of stores as we file for Chapter 11 bankruptcy. And while our creditors might let us restructure our debt, we still don't have a business model for how to compete in the current environment. But don't you worry. I made sure that my compensation package includes a very healthy severance package. So I'll be just fine.
Sincerely,
Mike Edwards
President & CEO
