Dancing on Border’s grave
I’m not shedding any tears over the demise of Borders and neither is anyone else in the retail industry. It’s just business.
There are always a few sentimental customers who turn up with a choice quote or two in the formulaic media eulogies that appear whenever a retailer goes under, but those customers will just have to find somewhere else to sip coffee and read books for free.
The death of Borders may be an occasion to mourn for a small group of customers, but it is a cause for celebration among other retailers. They no longer have to compete with a financially struggling company prone to unpredictable and irrational behavior as it struggles for life, and now Borders real estate can find its way into the hands of retailers eager to take their turn at putting it to a more financially rewarding use.
That process has already begun with the marketing of the Border’s locations underway by DJM Realty, a Gordon Brother Group company retained to manage the disposition of real estate, even before the liquidation plan was approved by the bankruptcy court. Retailers can’t wait to get their hands on the remains of Borders, with DJM noting strong interest in the company’s locations.
“With a lack of new real estate development and restrictive barriers of entry in several key markets, surplus real estate like Borders becomes a very good opportunity for a number of growing retailers looking to open for business during the next four to 12 months,” said Andy Graiser, co-president of DJM Realty. “It is not every day a portfolio becomes available which includes premier real estate sites in Northern and Southern California, the cities and surrounding suburbs of New York, Illinois, Texas, the Northeast corridor and Mid-Atlantic states.”
For those compelled to understand what went wrong at Borders the answer is quite simple; because it is the same thing that always goes wrong with failed retailers. The company was no longer relevant to a sufficiently large enough base of shoppers to achieve an acceptable rate of return. Retail is about survival of the fittest and Borders wasn’t as fit as some of its competitors.
Linens ‘n Things is gone because it didn’t do as good a job as Bed Bath & Beyond. Circuit City is gone because it wasn’t as good as Best Buy. The same is true of the thousands of independent hardware stores and pharmacy retailers that were prevalent two decades ago. Consumers preferred the breadth of assortment and low prices offered at places like Home Depot, Lowes, Walgreens and CVS. Walmart and Target decimated the ranks of regional discount store chains before driving Kmart into bankruptcy.
Such is the cycle of life in the retail industry where past performance is no guarantee of future success. That’s why retailers who prosper over a long period of time are those with a healthy paranoia who recognize that even the most seemingly insignificant competitor must be taken seriously. They proactively implement change and experiment with new initiatives rather than becoming complacent with current success and waiting until change is forced upon them by new competitors and deteriorating business conditions. At that point, as Borders and others learned the hard way, a downward spiral has already begun and more often than not it tends to be irreversible.