netrashetty
Netra Shetty
Headquartered in Ann Arbor, Mich, through its subsidiaries Borders Group, Inc. (NYSE: BGP) is a leading specialty retailer of books as well as other educational and entertainment items. The company employs approximately 19,500 throughout the U.S., primarily in its Borders(R) and Waldenbooks(R) stores. Online shopping is offered through borders.com
As of January 30, 2010, the company operated 511 Borders superstores in the United States, including 508 in the U.S. and three in Puerto Rico. The company also operated 175 stores in the Waldenbooks Specialty Retail segment, including Waldenbooks, Borders Express, Borders airport stores, and Borders Outlet stores.
Borders Group Inc. (NYSE:BGP) is the second largest U.S. based book retailer and the largest mall-based bookseller in the country. The company operates 511 superstores under the Borders name, of which 508 are in the United States and three in Puerto Rico. The company also operates 175 mall-based and other bookstores, including stores operated under the Waldenbooks, Borders Express and Borders Outlet names, as well as Borders-branded airport stores. In addition, the Company owned and operated United Kingdom-based Paperchase Products Limited (“Paperchase”), a designer and retailer of stationery, cards and gifts. Paperchase operates 85 stores, primarily in the United Kingdom, and Paperchase shops exist in 333 domestic Borders Superstores. In addition, the Company operated a proprietary e-commerce Web site, Borders.com.[1] The company generated $2.8 billion in revenue and a net loss of $109 million in 2009.[2]
Company Overview
Borders makes money through the sale of books and CDs as well as its in-store Seattle's Best Coffee brand cafes and Paperchase gift and stationery shops.
Business Segments[3]
Borders Superstores: Borders Superstores sell books, music, movies, gifts, and stationery. Stores average 24,800 square feet and carry 82,000 book titles on on average. Each store has a Seattle's Best Coffeshop inside and offers free wi-fi to its customers. The company does not plan to open any new stores in the near future but rather plans to focus on getting the most out of its 508 stores.
Contents
1 Company Overview
1.1 Business Segments[3]
2 Business Growth
2.1 FY 2009 (ended January 30, 2010)[2]
3 Trends and Forces
3.1 The eBook Revolution
3.2 Increasing Online Competition
3.3 Member Programs Increase Consumer Loyalty
4 Competition
4.1 Traditional Book Retailers
4.2 Online Booksellers
4.3 Retail Megastores
5 References
Waldenbooks Specialty Retail Stores: Waldenbooks stores are small format stores in malls, airports, and outlet malls. Stores average 1,300 square feet and carry an average of 13,500 titles. The company operates 175 Waldenbooks stores.
International Stores: this segment consists of three Borders Superstores in Puerto Rico and the company's Paperchase business in the UK. Paperchase is a stationery retailer operating out of 85 locations.
Internet: Borders generates some of its sales from its [borders.com website].
Business Growth
FY 2009 (ended January 30, 2010)[2]
Net sales fell 14% to $2.8 billion. Sales at Border Superstores and Waldenbooks fell by 14% and 19% respectively. On a comparable store basis, sales at Borders Superstores fell 14.4% and fell 8.1% at Waldenbooks.
The company reported a net loss of $109 million and improvement over the net loss of $187 million in the prior year.
Trends and Forces
The eBook Revolution
The electronic book (eBook) revolution has arrived. Electronic readers (eReaders) offer portability and storage, language attributes, low cost for book purchases, access to millions of free books, and a smaller carbon footprint compared to print books among other benefits. As a result, eBook demand has skyrocketed, with revenue in the industry reaching $398 million in 2009 and expected sales to be $2.5 billion by 2013.[4] The two top eReaders in the market by sales are Barnes & Noble's Nook and Amazon's Kindle 2. However, Borders has developed its own eReader, the Kobo, which is competing for marketshare in the emerging industry.
The Kobo is the simplest of all the eReaders because it offers just black & white text/pictures and does not have internet capabilities. It makes up for the lack of these features by having a low price -- the Kobo retails for $149 but comes with a $20 gift certificate.[5] The company hopes that its low price will attract marketshare away from the more expensive Nook and Kindle 2.
The Nook offers more than a million titles, of which 500,000 are public domain books from Google Books. The device comes with 2GB of memory (which can hold 1,500 eBoooks, has an expandable microSD slot for additionally memory, an LCD color touchscreen, free lending of certain eBooks for up to 14 days and is ePub format compatible (meaning that books bought from other stores would be compatible with the device. The Nook comes in two versions, the Wi-Fi Only and 3G + Wi-Fi, which are differentiated by internet connectivity.[6]
The Kindle 2 offers 600,000 books for purchase and more than a million free titles and many. The device has 3G connectivity, a built in keyboard, a PDF reader, and text-to-speech capabilities.[7]
Because each company sell book titles for $9.99, the sale of eReaders is the primary competitive business and has resulted in price wars. In the summer of 2010, Barnes & Noble reduced the price of its Wi-Fi Only and 3G + Wi-Fi Nook devices by $50 to $149 and $199 respectively. In retaliation, Amazon reduced the price of the Kindle 2 by $60 to $189.[8] Trying to maintain its position as selling the cheapest eReader, Borders included a $20 gift certificate to the $149 Kobo.[5]
The Kobo, Nook, and Kindle 2 aren't the only eReaders on the market -- the two devices face competition from Apple's iPad. Although the iPad isn't just an eReader, it does have its own ebook store called iBooks, which is very similar to what the other retailers have. The iBooks store sells books from publishers like Penguin, HarperCollins, Simon & Schuster, Macmillan, and Hachette. iBooks prices are slightly higher than those of its competitors (selling at $15 per book), but the price is expected to fall once more iPads are distributed. In addition, Apple is using ePub, meaning that e-books from other stores might work on the iPad.[9]
Increasing Online Competition
Part of the reason for declining sales growth in brick and mortar stores is the continuing increase in competition from online retailers, which take business (and margin) from brick and mortar sales. In the past, Borders has partnered with Amazon.com (AMZN), letting Amazon operate the websites of its subsidiaries in return for referral fees. However, Borders ended the relationship with Amazon to run its own [borders.com website].
Member Programs Increase Consumer Loyalty
The Borders Rewards program has over 37 million members. Discounts for buying Borders products incentivizes customers to make Borders their destination, increasing brand loyalty. Members can earn Borders Bucks in increments of $5 for each cumulative $150 they spend on qualifying purchases in a calendar year at Borders and Waldenbooks stores nationwide. Borders Bucks expire 30 days after receipt by the member if not redeemed. The Borders Rewards program is free, with no enrollment costs or annual fee, and has been reworked to provide more frequent payouts to a wider variety of customers. On the other hand, competitor Barnes & Noble's member program is not free and charges an annual fee.[10]
Competition
The retail book market is slow to change and is at this point closed off from new superstore entrants. Borders competes on two fronts, with other physical retailers and with internet booksellers.
Traditional Book Retailers
Borders competes with other companies who share its model of having massive book superstores with thousands of titles.
Barnes & Noble (BKS): Barnes & Noble is the largest book retailer in the U.S. The company operates 1357 stores, of which 720 are Barnes & Noble book and music superstores and 637 are Barnes & Noble College Bookstores. Like Borders, the company offers a membership program that gives its members daily savings -- but unlike Borders, this membership service is not free. Each Barnes & Noble store is equip with a Starbucks (SBUX) cafe and offers free wireless internet to its customers. Barnes & Nobles has the edge over Borders in the emerging eReader market with the Nook.
Books-A-Million (BAMM): Books-A-Million is a book retailer primarily in the southeastern US and is the third-largest book retailing chain in the country. It operates 220 stores in 19 states and Washington, DC. The company has modeled its stores after Barnes & Noble, promoting its larger Books A MIllion stores as an inviting community gathering location while placing smaller square-footage stores in malls.
Online Booksellers
Amazon.com is the largest online competition for Borders. Formerly partnered with Borders, Amazon offers the convenience of never having to leave your home to buy a book. Additionally, without some of the overhead inherent for B&M stores, Amazon.com can offer low prices or free shipping, leading to further price competition. Amazon also competes with Borders' Kobo with the Kindle 2.
Retail Megastores
Wal-Mart and Target are the main retail megastores, which sell everything from books to clothes to groceries. Despite not being a core sales segment of their business, these larger stores have had an impact on the sale of books by making best sellers more widely available. This puts pressure on traditional book retailers like Borders to cut prices on bestsellers to retain store traffic, leading to diminished margins.
As of January 30, 2010, the company operated 511 Borders superstores in the United States, including 508 in the U.S. and three in Puerto Rico. The company also operated 175 stores in the Waldenbooks Specialty Retail segment, including Waldenbooks, Borders Express, Borders airport stores, and Borders Outlet stores.
Borders Group Inc. (NYSE:BGP) is the second largest U.S. based book retailer and the largest mall-based bookseller in the country. The company operates 511 superstores under the Borders name, of which 508 are in the United States and three in Puerto Rico. The company also operates 175 mall-based and other bookstores, including stores operated under the Waldenbooks, Borders Express and Borders Outlet names, as well as Borders-branded airport stores. In addition, the Company owned and operated United Kingdom-based Paperchase Products Limited (“Paperchase”), a designer and retailer of stationery, cards and gifts. Paperchase operates 85 stores, primarily in the United Kingdom, and Paperchase shops exist in 333 domestic Borders Superstores. In addition, the Company operated a proprietary e-commerce Web site, Borders.com.[1] The company generated $2.8 billion in revenue and a net loss of $109 million in 2009.[2]
Company Overview
Borders makes money through the sale of books and CDs as well as its in-store Seattle's Best Coffee brand cafes and Paperchase gift and stationery shops.
Business Segments[3]
Borders Superstores: Borders Superstores sell books, music, movies, gifts, and stationery. Stores average 24,800 square feet and carry 82,000 book titles on on average. Each store has a Seattle's Best Coffeshop inside and offers free wi-fi to its customers. The company does not plan to open any new stores in the near future but rather plans to focus on getting the most out of its 508 stores.
Contents
1 Company Overview
1.1 Business Segments[3]
2 Business Growth
2.1 FY 2009 (ended January 30, 2010)[2]
3 Trends and Forces
3.1 The eBook Revolution
3.2 Increasing Online Competition
3.3 Member Programs Increase Consumer Loyalty
4 Competition
4.1 Traditional Book Retailers
4.2 Online Booksellers
4.3 Retail Megastores
5 References
Waldenbooks Specialty Retail Stores: Waldenbooks stores are small format stores in malls, airports, and outlet malls. Stores average 1,300 square feet and carry an average of 13,500 titles. The company operates 175 Waldenbooks stores.
International Stores: this segment consists of three Borders Superstores in Puerto Rico and the company's Paperchase business in the UK. Paperchase is a stationery retailer operating out of 85 locations.
Internet: Borders generates some of its sales from its [borders.com website].
Business Growth
FY 2009 (ended January 30, 2010)[2]
Net sales fell 14% to $2.8 billion. Sales at Border Superstores and Waldenbooks fell by 14% and 19% respectively. On a comparable store basis, sales at Borders Superstores fell 14.4% and fell 8.1% at Waldenbooks.
The company reported a net loss of $109 million and improvement over the net loss of $187 million in the prior year.
Trends and Forces
The eBook Revolution
The electronic book (eBook) revolution has arrived. Electronic readers (eReaders) offer portability and storage, language attributes, low cost for book purchases, access to millions of free books, and a smaller carbon footprint compared to print books among other benefits. As a result, eBook demand has skyrocketed, with revenue in the industry reaching $398 million in 2009 and expected sales to be $2.5 billion by 2013.[4] The two top eReaders in the market by sales are Barnes & Noble's Nook and Amazon's Kindle 2. However, Borders has developed its own eReader, the Kobo, which is competing for marketshare in the emerging industry.
The Kobo is the simplest of all the eReaders because it offers just black & white text/pictures and does not have internet capabilities. It makes up for the lack of these features by having a low price -- the Kobo retails for $149 but comes with a $20 gift certificate.[5] The company hopes that its low price will attract marketshare away from the more expensive Nook and Kindle 2.
The Nook offers more than a million titles, of which 500,000 are public domain books from Google Books. The device comes with 2GB of memory (which can hold 1,500 eBoooks, has an expandable microSD slot for additionally memory, an LCD color touchscreen, free lending of certain eBooks for up to 14 days and is ePub format compatible (meaning that books bought from other stores would be compatible with the device. The Nook comes in two versions, the Wi-Fi Only and 3G + Wi-Fi, which are differentiated by internet connectivity.[6]
The Kindle 2 offers 600,000 books for purchase and more than a million free titles and many. The device has 3G connectivity, a built in keyboard, a PDF reader, and text-to-speech capabilities.[7]
Because each company sell book titles for $9.99, the sale of eReaders is the primary competitive business and has resulted in price wars. In the summer of 2010, Barnes & Noble reduced the price of its Wi-Fi Only and 3G + Wi-Fi Nook devices by $50 to $149 and $199 respectively. In retaliation, Amazon reduced the price of the Kindle 2 by $60 to $189.[8] Trying to maintain its position as selling the cheapest eReader, Borders included a $20 gift certificate to the $149 Kobo.[5]
The Kobo, Nook, and Kindle 2 aren't the only eReaders on the market -- the two devices face competition from Apple's iPad. Although the iPad isn't just an eReader, it does have its own ebook store called iBooks, which is very similar to what the other retailers have. The iBooks store sells books from publishers like Penguin, HarperCollins, Simon & Schuster, Macmillan, and Hachette. iBooks prices are slightly higher than those of its competitors (selling at $15 per book), but the price is expected to fall once more iPads are distributed. In addition, Apple is using ePub, meaning that e-books from other stores might work on the iPad.[9]
Increasing Online Competition
Part of the reason for declining sales growth in brick and mortar stores is the continuing increase in competition from online retailers, which take business (and margin) from brick and mortar sales. In the past, Borders has partnered with Amazon.com (AMZN), letting Amazon operate the websites of its subsidiaries in return for referral fees. However, Borders ended the relationship with Amazon to run its own [borders.com website].
Member Programs Increase Consumer Loyalty
The Borders Rewards program has over 37 million members. Discounts for buying Borders products incentivizes customers to make Borders their destination, increasing brand loyalty. Members can earn Borders Bucks in increments of $5 for each cumulative $150 they spend on qualifying purchases in a calendar year at Borders and Waldenbooks stores nationwide. Borders Bucks expire 30 days after receipt by the member if not redeemed. The Borders Rewards program is free, with no enrollment costs or annual fee, and has been reworked to provide more frequent payouts to a wider variety of customers. On the other hand, competitor Barnes & Noble's member program is not free and charges an annual fee.[10]
Competition
The retail book market is slow to change and is at this point closed off from new superstore entrants. Borders competes on two fronts, with other physical retailers and with internet booksellers.
Traditional Book Retailers
Borders competes with other companies who share its model of having massive book superstores with thousands of titles.
Barnes & Noble (BKS): Barnes & Noble is the largest book retailer in the U.S. The company operates 1357 stores, of which 720 are Barnes & Noble book and music superstores and 637 are Barnes & Noble College Bookstores. Like Borders, the company offers a membership program that gives its members daily savings -- but unlike Borders, this membership service is not free. Each Barnes & Noble store is equip with a Starbucks (SBUX) cafe and offers free wireless internet to its customers. Barnes & Nobles has the edge over Borders in the emerging eReader market with the Nook.
Books-A-Million (BAMM): Books-A-Million is a book retailer primarily in the southeastern US and is the third-largest book retailing chain in the country. It operates 220 stores in 19 states and Washington, DC. The company has modeled its stores after Barnes & Noble, promoting its larger Books A MIllion stores as an inviting community gathering location while placing smaller square-footage stores in malls.
Online Booksellers
Amazon.com is the largest online competition for Borders. Formerly partnered with Borders, Amazon offers the convenience of never having to leave your home to buy a book. Additionally, without some of the overhead inherent for B&M stores, Amazon.com can offer low prices or free shipping, leading to further price competition. Amazon also competes with Borders' Kobo with the Kindle 2.
Retail Megastores
Wal-Mart and Target are the main retail megastores, which sell everything from books to clothes to groceries. Despite not being a core sales segment of their business, these larger stores have had an impact on the sale of books by making best sellers more widely available. This puts pressure on traditional book retailers like Borders to cut prices on bestsellers to retain store traffic, leading to diminished margins.
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