What about Borders?

[tubemonkey]

Originally Posted by Kumabjorn

But often they are, no?
The few time I've been to malls in the US they usually had a large Sears, JC Penney or Target adjacent to a main entrance which, for some reason usually was at either end of the mall. Granted, my experience is limited to four or five malls.

More times than not, they are at the ends. But then, I haven't been in a mall in over 10 years.

[fjtorres]

Originally Posted by Kumabjorn

I'm afraid I'm not familiar with the concept of a mall "anchor". Would that be the large retailer (Sears, Target) at the opposite ends of the mall?

If they were at premium high-traffic locations, wouldn't that imply that some new vendor would like to grab that location?

If mall owners charge exorbiant rents I would assume more reasonable malls would appear? A huge empty space, like x-Borders, is not only lost revenue for the owner, but I would imagine it having devastating psychological influence on the consumers mall experience. Vendors next to the x-Borders would loose a lot of foot traffic, the dark gaping hole doesn't exactly insipire wild shopping sprees either, does it?

Well, there's Malls and there's Malls.
Anchor stores are supposed to be the high-traffic draws for the mall.
http://en.wikipedia.org/wiki/Anchor_store
Depending on the size and design of the mall you can have anywhere from 2 to 7 or more. They are usually the biggest spaces and they tend to be located as far as possible from each other. You might see Sears, J.C. Penny's, Kohl's, Macy's, Nordstrom, or similar regional prestige department stores at most suburban locations. Some regional-draw malls might have "all of the above":
http://en.plazalasamericas.com/directory/mall-map
http://www.mallofamerica.com/shopping/directory

Malls also host big standalone storefronts within the same complex.
In recent times the concept of an "open air" mall has taken hold in some locations, usually upscale suburbs without a defined city center in traditional terms:
http://www.crockerpark.com/general-i...on/retail/map/

The problem with filling an expensive storefront is that most malls have as many as a couple hundred stores under lease and the landlords, much like the BPHs, are concerned about the preserving the value of their floor space. Since leases tend to be multi-year it might make more sense to keep the locale sealed and empty until the economy improves and/or an appropriate tenant can move in than to sub-divide it or lease it at a discount and risk other tenants asking for rent reductions or even worse, starting a rent war among regional mall operators.

A common mall development model is to couple an enclosed Mall with an open air strip mall and several standalone buildings in the same shopping complex, which alows the operator to offer different rent rates within the complex. So the onus is really on the store operator to lease a storefront that fits their business model in terms of size, traffic, and location.

[Indio777]

There were three in Washington, DC. One was supposed to become a big restaurant (haven't checked on whether that happened). Don't know about the other two, altho as others have mentioned of Borders elsewhere, one did sell Halloween gear last fall for awhile.

Don't know about ones in the suburbs. In spite of the economic downturn, the DC metropolitan area does have a decent economy compared to other parts of the US, but .....

I miss the Borders in DC. We still have B&Ns, but one closed several months ago and another recently reduced its hours. And I liked having a some choice, especially since local new book stores have largely gone away.

[fjtorres]

Originally Posted by Indio777

And I liked having a some choice, especially since local new book stores have largely gone away.

I'm still pinning for MOONSTONE BOOKCELLARS. And that one went ages ago...

[mlewis78]

The Borders that was nearest to me was in the Time Warner Center at Columbus Circle in Manhattan. It is still empty with no signs of what would be coming next. Another one at Park Ave./57th Street is still empty. The rents in both locations would be very high.

[Xanthe]

The one I used to go to is still empty.

[Lemurion]

Ours was at one end of a strip mall - that originally had Circuit City at the other end and Linens and Things in the middle. Linens and Things became Bed Bath and Beyond and Circuit City has been repurposed as HHGregg, but Borders remains empty.

From what I've heard, it was the rent that killed them. Just no way to generate enough revenue to pay for the space.

[Andrew H.]

Of the four near me, one has become a clothing store, the second one is in the process of becoming an organic grocery...and I think the other two are still empty.

I don't think they are in bad locations, particularly - I think it's just hard to fill a 30,000 sq. ft. space quickly.

[Kumabjorn]

Thank you for all your input, QI reading.
From your input I get the impression that Borders was burdened by some heavy fixed costs in the form of long leases with prime rent rates, and thus margins so small that the initial paradigm shift towards electronic reading, although a small straw, was more than enough to brake its camel's back. I would imagine it stands as a dire warning for other booksellers, no matter where.

[tubemonkey]

One thing that's having a huge impact on retail stores is the tremendous growth in internet shopping. The internet is going to kill off many huge box stores. It's going to force them to trim the size of their B&M stores and ramp up online sales. Face it, that much floorspace is no longer needed.

[tubemonkey]

Originally Posted by Kumabjorn

Thank you for all your input, QI reading.
From your input I get the impression that Borders was burdened by some heavy fixed costs in the form of long leases with prime rent rates, and thus margins so small that the initial paradigm shift towards electronic reading, although a small straw, was more than enough to brake its camel's back. I would imagine it stands as a dire warning for other booksellers, no matter where.

I think many of these Borders' stores remain empty because of the large amount of floorspace they have. Who needs a building that big?

[Kumabjorn]

Originally Posted by tubemonkey

I think many of these Borders' stores remain empty because of the large amount of floorspace they have. Who needs a building that big?

If rent was halved, do you think other tenants would be willing to fill the space?

[tubemonkey]

Originally Posted by Kumabjorn

If rent was halved, do you think other tenants would be willing to fill the space?

Interesting idea.

Maybe they could remodel these buildings and turn them into microMalls with multiple smaller stores or specialty shops inside.

[fjtorres]

Originally Posted by Kumabjorn

Thank you for all your input, QI reading.
From your input I get the impression that Borders was burdened by some heavy fixed costs in the form of long leases with prime rent rates, and thus margins so small that the initial paradigm shift towards electronic reading, although a small straw, was more than enough to brake its camel's back. I would imagine it stands as a dire warning for other booksellers, no matter where.

Mostly correct.
But if you're looking for lessons for other booksellers there is more to the story than high fixed costs.
The consensus on Borders is that the switch to digital was the final push on their unstable house of cards. What destabilized it in the first place was online book retailing.

The big "warehouse" model of store needs high traffic, often from relatively far away, just to pay the rent. That works if there is no closer aternative. Borders (and other big box retailers) relied on its depth of inventory to atract customers from far and wide.
A trip to Borders could easily eat an entire saturday afternoon for a person 50 miles away and result in $100 or more in purchases. (Say, 10-20 paperbacks and discounted books.) Plus gasoline and ancilliary purchases. For most people, something to do a few times a year.

Enter online book purchases: deeper catalog, free shipping, no travel time.
The further away from the big box retailer, the more attractive online becomes.

Strip away the long-range customer and each store needs to sell more to the remaining *local* customers or *reduce* their costs. Borders couldn't do anything about their rent, they didn't know enough to reduce logistics costs, and their suppliers were not about to give them any special treatment, so they could only reduce inventory depth and personnel costs.
(Towards the end, Borders' staff in most stores was generally perceived to be... not very helpful...)
Those changes made online purchasing attractive even to people living within walking distance of a Borders.
(It also didn't help that 75% of all Borders were within a couple minutes of a B&N.)

And then, on top of all that, ebooks became mainstream.
Suddenly, the most avid readers (the core customers of any book retailer) started switching to ebooks. Borders was no longer just losing sales, they started losing their best *customers*.
The company that hadn't caught up to the *last* retailing revolution got steamrolled by the new one. They were *two* paradigms behind the rest of the market.
RIP.

High rents were a component of their failure but what really did them in was their business model of having the customer come to them. Of thinking their product was special and would sell itself. That customers would go to any distance, bear any cost to get their books. Not true, is it?

I'm of the opinion that B&M pbook retailing can and will survive but it needs to completely ditch the current business model and go to the one in use by other retailers that are weathering the online sales challenge a lot better; smaller stores more broadly distributed. Instead of focusing on the product, they need to focus on the customer. Instead of making customers go to the store they need to take the store (closer) to the customer. Radio Shack, Payless, Gamestop, Starbucks all do this; their stores run 1500-3000 square feet versus the 30000 square feet of the typical Borders and B&N. And instead of locating them in or near big regional Malls, they are located... well, everywhere. Big malls, small malls, downtowns and strip malls. Books *used* to be sold that way... they need to go back to it, but with modern logistics. Online buying with ship-to-store, in-store kiosks for online and digital purchases, regional warehouses for next-day special orders.

Here's an old report on Gamestop's strategy:
http://www.icsc.org/srch/sct/sct0304/page45.php

And a newer one on how they intend to deal with *their* looming digital threat:
http://venturebeat.com/2010/08/24/ga...-threat-looms/

Booksellers could learn a lot from other retailers, if only they would stop pretending that "Books are special".
They're not.
Books are just another consumer product subject to the same consumerist rules that have evolved over the past 50 years.

Consumers now have the real power; ignore it at your peril.

[tubemonkey]

Originally Posted by fjtorres

Booksellers could learn a lot from other retailers, if only they would stop pretending that "Books are special".
They're not.
Books are just another consumer product subject to the same consumerist rules that have evolved over the past 50 years.

Consumers now have the real power; ignore it at your peril.

This ^

If books become difficult to get, my solution is to give them up and substitute them with more audio and video media. I will not pay more, nor will I jump through hoops to get them.