Borders Poised to Buy B&N

[Harmon]

Originally Posted by ppw

Almost pulled the trigger to short B&N stocks when they announced the Nook Color. My reservation was that the stock might jump crazy if some one decided to buy it. Now if the merger goes through and the new company keeps the Nook Color direction in the e-reader arena, then it might still be a short.

The Nook Color is a nice piece of hardware currently. But it is taking on too big competitions by going LCD against tablets. Within one or two years, the market for dedicated LCD e-readers will not contribute much to a big company's bottom line.

I took my first serious look at the Nook Color today. I must say that I liked it. It's basically a dedicated Android tablet, right sized for reading, and cheaper than the other similarly sized Androids. At more or less the same price as the Sony Digital Edition, its only weak point is battery life. If I were a first time EBR buyer I think it's the one I'd buy.

EDIT: But then I got my Sony 350, so I have to say that's a closer call than it was. The small footprint of the 350 makes it truly portable, surpassing any other EBR. Thats a big plus for me because it means I can always have my EBR anywhere I go with practically no hassle. Not true of any other EBR, at least for a guy.

[Avarwen]

Meh this could be good or it could be bad we'll just have to wait and see. I don't see the Nook going anywhere for at least a year or two. People seem to be buying them or B&N would be in really bad shape and would not have brought out the Nook color. So until B&N say they are shutting down the Nook store I won't worry about having to buy another ereader for a while.

[Andrew H.]

Originally Posted by DMcCunney

I suspect regulatory approval would be forthcoming. Amazon, Walmart and the like are the competition.

Amazon has a larger market share than either. It wouldn't surprise me if it had a larger market share than both..

But the big chains beat you on pricing, which is why the mom & pop operations are an endangered species. B&N/Borders are large enough to order directly from publishers. Mom & pop shops must go through a distributor like Ingrams or Baker and Taylor. The distributor takes a cut off the top, so the mom & pop store has less margin to play with and less flexibility on pricing. People shop on price, which is why B&N/Borders are killing the smaller retailers. If I'm a mom & pop bookstore, I can tailor to the local climate, but I can still expect customers to go the the local chain outlet for the stuff they carry, and come to me for the less known stuff. Can I sell enough of the less known stuff to stay in business? I wouldn't lay bets on it.

There are an assortment of small book retailers near me, but they are specialty places with a niche focus, like Juvenile/YA, travel, and photography.

An old friend used to operate an SF/Mysteries specialty shop. He fulminated about how the Association of American Booksellers had misled him about the ability of a single person to run such a shop. (They said it was possible - he discovered he couldn't do it effectively, and my SO worked for his for a while. He closed his doors when the building his storefront was in raised the rent and made it impossible to continue.)

I think that even having experienced mom & pop bookstores puts you in the top 5% of the population.

When I was a kid, the fairly typical town in which I grew up had no independent bookstores; only "Book and Card" stores, where the books were on spinners or displayed on shelves withe the cover out.

These were replaced (in 1980 or so) by Waldenbooks and B.Dalton at the mall. This was a huge step up; it's hard to describe how great these stores were. They had so many books that they even displayed some *spine out* - as they didn't have room to display everything cover out!

Around 1995-98, Barnes and Noble opened and the B.Dalton closed and the Waldenbooks went on life support. I had moved away by then, to much larger cities, but it was amazing to come back and see a bookstore like this in the town I grew up in.

So no mom & pops were harmed when B&N opened. Although I do have to wonder whether this was an example of overexpansion, Amazon notwithstanding.

[DMcCunney]

Originally Posted by Andrew H.

Amazon has a larger market share than either. It wouldn't surprise me if it had a larger market share than both..

Depends on what product you are talking about. Amazon began with books, but has grown far beyond that. Amazon has a larger market share in books, but Walmart may have a larger market share in everything else.

I think that even having experienced mom & pop bookstores puts you in the top 5% of the population.

I doubt it. I'm in a major metropolitan area, but so are a lot of others. There used to be a fair number of independent bookstores, but competition from the big chains was too much. There was an article in the NYT a couple of years ago on one in NJ which was closing its doors. An author who had read at the store previously came by to do a final reading and signing as a favor to the owners. A couple of women came up to get books of his signed, and matter-of-factly announced they had actually bought them at one of the big chain's branches because they were cheaper. This pretty much describes what is happening to the independents.

When I was a kid, the fairly typical town in which I grew up had no independent bookstores; only "Book and Card" stores, where the books were on spinners or displayed on shelves withe the cover out.

Those still exist, Chances are excellent the books are placed there by the rack jobber that services the store, and the store itself exercises no choice in the selection. The store primarily sells cards and gifts, with books as a sideline. I see the same thing locally in the discount drugstores.

These were replaced (in 1980 or so) by Waldenbooks and B.Dalton at the mall. This was a huge step up; it's hard to describe how great these stores were. They had so many books that they even displayed some *spine out* - as they didn't have room to display everything cover out!

That's the norm, not the exception. I saw statistics some years back that indicated there were about 50,000 books published each year in the US, and the average bookstore had room to shelve perhaps 5,000 - 8,000. New books and featured titles got full cover displays. Others were spine out.

I have a fair sized two story Borders near me, and a four floor Barnes and Noble superstore a bit father away. They have more books cover out, but most are spine out. There are simply too many books to display with all covers out, no matter how big your store is.

Around 1995-98, Barnes and Noble opened and the B.Dalton closed and the Waldenbooks went on life support. I had moved away by then, to much larger cities, but it was amazing to come back and see a bookstore like this in the town I grew up in.

Waldenbooks is a unit of the Borders Group these days, and at least some of their stores have been renamed Borders Express. B. Dalton's was started by the Dayton's department store chain, located in malls, and competed with Waldenbooks. Barnes and Noble bought them from Dayton's in 1987, and operated them through 2009, closing the last 50 stores by January 2010.

So no mom & pops were harmed when B&N opened. Although I do have to wonder whether this was an example of overexpansion, Amazon notwithstanding.

At the time, probably not. It was retail consolidation, as the chains started squeezing out the independents in attempts to gain market share and economies of scale. It's been made worse in recent years because book unit sales have been flat or down, and revenues have increased only due to price increases. Ebooks have increased the pressure, but the problems existed well before they came about. There have simply been too many books chasing too few readers. Publishers have gone through wrenching rounds of consolidation, and retailers have followed in their wake.
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Dennis

[emellaich]

I compare this with video stores. I know bookstores have been around much longer, but I think that video stores (in a more compressed lifecycle) show us what is in store for book stores.

Mom/pop video store ==> Blockbuster & Hollywood ==> Redbox, Netflix, iTunes, Amazon, Hulu

Fast forward ten years and I just don't think we will see bookstores except as specialty stores in the largest cities. For social purposes, we may continue to see strength in coffee shops (from Starbucks to McDonalds), but their media will be CNN and the Net, not books, nor newspapers.

So, the problem for both BN and Borders is that their strength is in physical locations and physical books. I predict we will see the same thing happening there as we have seen in video and with newspaper publishers. I don't really see them as strong competitors on the internet. Right now, their physical stores give them leverage for their web sites. As just a web site only they don't have the same critical mass as Amazon.

I visit Amazon for lots of reasons: Electronics, household goods, and books. Every time I visit I see the latest Kindle hardware, or the latest book releases. Amazon's overall web presence is just too dominate. If the other guys lose their ties to physical stores, I just don't think they will be able to keep up.

I do seem some possibilities. Amazon's natural competitor is Walmart (IMO). It seems to me that Walmart could purchase BN to better match against Amazon.

Another possibility is a partnership/merger with Sony. I'm not quite sure how this plays out since Sony's track record here is spotty. It does own record production. However, it closed down its online music service. Of course they do have their own online bookstore. I just can't figure out where they are headed long term.

Apple could be a possibility, but they have never shown an inclination to grow iTunes through acquisition.

I do wonder about some of the other electronics manufactures who may be eying the moves of the Sony reader, the iPad, and the Kindle. Samsung has its tablet, but doesn't have iTunes or a book store. What about Sharp? Panasonic? Might one of these need a media partner to work with their software.

Anyway, it seems to me the answer is a partnership like this. Not a BN/Borders merger. I'm not saying the BN/Borders won't happen. I'm just guessing it won't amount to much over the next ten years.

[Notre Dame]

In the UK, what saddens me is that in almost every town other than large connurbations (200,000 people upover), practically almost the only bookshops I see are publishers' remainders stores. Even more saddening is that a few years ago their stock would be books that shouldn't have been published in the first place. Now, there is a lot of almost current material in those stores by well known authors.
http://chrisscottwilson.co.uk

[DJHARKAVY]

Anyone know anything about print-on-demand?

Seems to me that would be a good long-term model for the brick-and-mortar bookstore. Keep electronic copies of all books, sell the book and print/bind it for you if you want a hard copy.

Saves on warehousing and shipping, although the cost per book might be prohibitive...

[MV64]

Not to mention there's no telling how long it would take for the book to actually be printed, since that is in the publisher's ballpark.

[DMcCunney]

Originally Posted by MV64

Not to mention there's no telling how long it would take for the book to actually be printed, since that is in the publisher's ballpark.

Actually, it isn't.

There are Print On Demand stations that will print and bind a book on the spot, from an electronic original. Quality has been getting steadily better, and it can be hard to tell a POD book from a traditionally published title. There's no particular reason why something like this couldn't be installed in a bookstore to handle low demand titles.
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Dennis

[DMcCunney]

Originally Posted by DJHARKAVY

Anyone know anything about print-on-demand?

Seems to me that would be a good long-term model for the brick-and-mortar bookstore. Keep electronic copies of all books, sell the book and print/bind it for you if you want a hard copy.

Saves on warehousing and shipping, although the cost per book might be prohibitive...

Print on Demand will certainly have an impact on bookstores, as a way to provide desired titles without requiring the shelf space to store them. Prices for a POD title would be higher, though I don't offhand know how much.

But I doubt the bookstore is going to sell many pure ebooks. If you can just pop online and buy and download directly to your connected device, why bother going to a bookstore to get it?
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Dennis

[doreenjoy]

Originally Posted by DMcCunney

There are Print On Demand stations that will print and bind a book on the spot, from an electronic original. Quality has been getting steadily better, and it can be hard to tell a POD book from a traditionally published title. There's no particular reason why something like this couldn't be installed in a bookstore to handle low demand titles.

Some of these POD kiosks have already been installed in college bookstores and libraries.

But currently it's a low volume, high cost venture - not the kind of thing a brick&mortar store wants taking up space.

[mlewis78]

Originally Posted by DMcCunney

I

The fundamental problem both face is declining sales. Same store sales are down across the board, and places like those require volume. We're seeing contraction: B&N closed a large outlet elsewhere in Manhattan because of declining sales. The B&N superstore near me still exists, but it's in a relatively lower rent district.
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Dennis

B&N near Lincoln Center is closing in January due to rising real estate costs for that store. Is there another B&N in Manhattan that has closed? I think that the B&N in Tribeca is relatively new. I came upon it by chance when I was down there two months ago.

Oddly, the B&N that is closing on Bway/W. 66th just shortened their hours two weeks before Christmas. Now they close at 10pm instead of midnight. I don't know how their sales are, but the store is crowded whenever I go into it.

I walked into the Borders at Columbus Circle this evening just because I have a coupon. It was mobbed and in the history section, I couldn't browse because of the people sitting on the floor in the aisles while reading books. The line up front was very long. It's hard to find books I have in mind in that store. It's not well organized nor well stocked.

[DMcCunney]

Originally Posted by mlewis78

B&N near Lincoln Center is closing in January due to rising real estate costs for that store. Is there another B&N in Manhattan that has closed? I think that the B&N in Tribeca is relatively new. I came upon it by chance when I was down there two months ago.

No, the Lincoln Center one is the one I was thinking of. I saw the report on the closing, but misremembered when it was to happen. No surprise on the closing, though: rents in that section of town are in low Earth orbit.

The one near me is by Union Square.

Oddly, the B&N that is closing on Bway/W. 66th just shortened their hours two weeks before Christmas. Now they close at 10pm instead of midnight. I don't know how their sales are, but the store is crowded whenever I go into it.

Given rents, I doubt they could sell enough.

I walked into the Borders at Columbus Circle this evening just because I have a coupon. It was mobbed and in the history section, I couldn't browse because of the people sitting on the floor in the aisles while reading books. The line up front was very long. It's hard to find books I have in mind in that store. It's not well organized nor well stocked.

The closest to me in on 2nd Avenue in the 30s. Stocking and organization were okay the last time I ws there, but that was a while back.
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Dennis