Nobody was very surprised at the big management shake-up at Borders this week. The book retailer based in Ann Arbor, Michigan, had been struggling for a long time and finished 2008 with devastating sales results. The obvious culprits in the eyes of the Board, it seems, are the top management team, including ex-CEO George Jones, who got replaced after just two years in the job. And then there is the tough book retail market led by online-competitor Amazon.com with their ridiculously great service, low prices and their newest gismo, the Kindle.
Looking at Borders from a customer’s point of view first, let me (a book-store lover) describe the impression customers get from Border’s flagship-store in Ann Arbor. In and around the store entrance one finds shelves, piles and boxes of severely marked-down (cook-)books which look like as if they needed shelter and a hot drink. Upon entering the huge store which is located in the city center of Ann Arbor, large tables of so-called ‘bargain-books’ and discount signs block the view from bestsellers, new and beautiful hardcovers and those books generally appealing to the interested reader. Last week, boxes full with discounted Christmas decoration items were elegantly placed in the middle of the store, next to the cosmetics and sweets section. Upstairs, Borders made room for their stationary sales of ‘Paper Chase’ products which are more prominent than their selection of greeting cards. Well, you get the picture. Personally, I will never understand why I’m expected to buy my skin care cream at a book store, much less a pink mini-Christmas tree. But Borders seems to know what they are doing. Or are they?
Aggressive Hard Sales versus Demand-Driven Strategies: that’s Borders for you
After trying to lure customers into buying non-book related items and ‘bargain books’ without success, Borders still hasn’t understood what people want. Instead, their newest plan is “to more aggressively drive a turnaround of the company within today’s challenging economy.” (Ann Arbor News, Jan 5 2009) by exchanging the top management team. The new CEO has “some book experience” (same source) which he gained at Barnes & Noble’s; hopefully he can take a leaf out of their book because B&N seem to be doing something right: they are still a proper bookstore.
Part of Border’s turnaround plan is to keep reducing debt, improving cash flow and improve margins; whilst these actions will remain indispensable for their survival, I keep looking for a mentioning of their customer’s needs and expectations: to no avail. Whilst Amazon’s Kindle was sold out for a few days despite a price of hot $360 per piece, ex-CEO George Jones wrote in a recent interview: “So what about the Kindle. I personally can't imagine taking an electronic book to a beach during a summer vacation. Do you see that as being anything more than a little niche kind of product or do you think it will grow and be significant in the book industry?” Aeh, Mr Jones, where have you been in the past few months? Shouldn’t you have known what was actually going on in the book retailing industry here on planet Earth?
Wake Up call for Borders
Every business owner witnessing the Borders-struggle can learn with them. First, to get the focus off the purely price-driven hard-sales strategy: it will only work so long. Amazon.com isn’t successful only because they offer nearly any book there is for a fantastic price: they know what their customers want, need and desire. And they give it to them: fast, reliable and affordable. Second: think before you act. Making a wrong strategy more aggressive might be the wrong path to take. If Borders tries to further lower prices instead of presenting themselves as a customer-oriented and adaptive book retailer, then we can anticipate their fate: they will be history soon.
Therefore, when considering your Sales Strategy think twice:
1. Do you know exactly what your customers want, need and desire from your products and services?
(If the answer is No, no problem: why not simply ask them?)
2. Are you anticipating the consequences of your business decisions or are you acting like a headless chicken when things go wrong?
(Think it through before you write your next newsletter, decorate your shop window or prepare for your customer meeting tomorrow)
3. Focus on your customers. In the end, they are the ones who will make your success.
(Who else?)
For comments, please click on Comments underneath the article. For further feedback, references or help with your sales strategy, please contact me at andrea@derlercoaching.com
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