[DMcCunney]

Originally Posted by doreenjoy

I didn't mean to imply that it was an obvious "win" for them, but at this point both companies are in so much financial trouble, they're definitely going down if they don't do something big. And merging the two is the kind of radical thing that just might work.

As mentioned, the question is "Can two sick companies make a healthy one?" The answer is usually no, but exceptions are possible.

The easiest advantage is that a combined entity can scale down. They could function with less overhead, fewer management employees; they can shut down the lowest-producing and most expensive locations. Of course that would only occur if they had been collecting good data over the years, and there's no guarantee that they have good data. I used to work for a large company that went through one big merger per year on average, and I was always shocked at how frakked up the data gathering was.

Indeed. And if you don't have good data, you are managing on guesses.

I'd like to think they've been at least doing decent sales tracking, but whether they pay attention to the numbers is another matter. One of the problems for the publishing industry is that buying decisions are made by increasingly fewer people, with buying for the entire chain happening at HQ. that's all very well, but it tends to ignore demographics for individual stores, and I've heard too many stories of store managers frustrated because they know what their customers buy, but that's not what HQ orders.

I think both could take a leaf from Target's book. Target is obsessive about customer data, and tracking what sells where, to fine tune the mix at individual locations to emphasize what sells there. I don't know offhand if B&N or Borders even attempts that, but "no" would be my offhand guess.

They certainly need to slim down. Book sales are down, and I don't see a dramatic recovery happening. Less books sold need fewer outlets to sell them. I suspect there is substantial overlap in their store locations, and closing the poorer performing one in any given area is an obvious step.

They would most of all need to identify and keep the right people at the highest levels. They need visionaries at this point, people who can see new possibilities and not cling to the way they've always done things in the past. One of the big mistakes would be to fire the B&N execs and keep the Borders execs -- that's typically what happens in these situations,and it's almost always a mistake. They need to take the time to ID the people who can lead them into new realms.

That's always a fraught process. It's more so when you have a very sick chain like Borders trying to acquire a sick larger competitor. Given the state Borders is in, are the people running it the best to run the new merged entity?

But if Borders is the acquirer, there will certainly be a strong tendency to keep their folks and get rid of the B&N crowd.

The "psychological merger" of the two brands might be the hardest part. B&N has marketed itself as the "literary chain", a kind of nationwide store that still hand-sold literary fiction (hand-selling being the recommendations of each employee to each reader). Borders has always had a bix-box style, and they've focused on genre fiction and other elements that make them more "populist" in feeling than B&N. Heck, most B&N locations don't even *have* a Romance section, whereas Borders promotes "romance readers groups" that meet each month and give out ARCs (donated by the truckload by romance publishers) to the members of the group. That's a pretty wide cultural divide to cross.

It is indeed. The B&N near me has a Romance section, but it's one of their superstores, with four fllors occupying half a block, so if it's in print there's a decent chance the store has it. The Borders near me has decent selection but can't compete with the B&N - it simply isn't big enough.

I like the B&N staff recommendations. They don't govern my buying, but they give a sense that the people who work there read, and care about what they sell.

And the B&N does book centric events with author signings and the like, but didn't sponsor reading groups the last I looked.

Not saying it's a slam-dunk, but I think it's their only shot.

I tend to agree. My concern is the hedge fund offering to come up with the money. Those folks are not long term investors. They'll want to combine the operations, close redundant outlets, try to cut costs dramatically, and boost the stock price of the merged entity so they can cash out by buying low and selling high.

I'd feel better about the idea if I thought they were in it longer term. As providers of the financing, they'd have a fair amount of clout in the process, and could do things like trying to insure that the best people were kept, regardless of point of origin. I just don't see them being hands on long enough.

I rather hope I'm wrong.
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Dennis