On July 28, ten days after the announcement that Borders was toast, CEO Mike Edwards called together the staff at the company’s headquarters. A decade ago, 1,300 people worked in the fortress-like white building in an industrial park off Ellsworth Rd. Now fewer than 400 remained.
Edwards was only the latest in a series of revolving- door CEOs who’d tried to rescue a business on life support. The sight that greeted the staff as they gathered in the building’s atrium–tables stocked with champagne–showed why he was also the best liked.
“I have to fire myself tomorrow,” Edwards explained. “So I was thinking, ‘What rule would I like to break before I fire myself?'”
The staff joined him in breaking the rule forbidding alcohol in the building. As they sipped from plastic glasses, one woman burst into song: “People–people who need people–are the luckiest people in the world.”
The sentiment resonated with many. “For us,” says one person who was there, “it was about the people.”
I understood how they felt. I’ve known many Borders people myself. When the company had just a single store on State Street, I even worked there, briefly. During Christmas rush in 1978, Tom Borders and I stood side by side at the cash registers. The worst clerk at the store (my sections were always a mess), I nonetheless was able to give the taciturn co-owner a couple of tips on how to ring things up.
Tom and his brother, Louis, had founded their namesake company just six years earlier, but it had grown so fast that by then Tom rarely was seen on the floor. Louis never had been–in that pre-bar code age, his role was tending the one-of-a-kind computer program that tracked the store’s inventory, enabling the store to stock a mind-boggling 60,000 titles.
The brothers owned Borders, but it was Joe Gable, their brilliant, driven manager, who gave the store its intellectual tone. He displayed university press titles prominently and played nothing but classical music on the sound system. Back in the day, you’d never hear a Barbara Streisand tune in Borders.
Later, of course, the brothers cloned their creation, opening four more stores before selling out to Kmart for $160 million. The discounter built dozens more before spinning off “Borders Inc.” as a publicly traded company. Propelled by growth-happy shareholders, the company then raced archrival Barnes & Noble to open hundreds more “superstores” across the country.
“We were the darlings of Wall Street!” recalls Jody Kohn, a company spokeswoman in the 1990s. Borders’ prestige was such that Kohn was flown to Washington to talk up first lady Hillary Clinton’s literacy program. Kohn also flew high on Borders stock. She was so busy she missed the moment to exercise her options at the top (the stock briefly hit $45 a share in 1999), but even so, she says, “I did quite well.”
Just a year later, Borders stock was at $11–a drop that reflected both the broader stock market decline and a sudden change in the investors’ guess about where the world was heading. Previously captivated by Borders’ fast-growing store network, they now worried those “brick and mortar” assets would be rendered obsolete as customers moved to amazon.com.
Many say that’s just what did happen. But those who loved Borders still argue fiercely about whether it was the rise of the Internet or the company’s own missteps that caused it to go bust.
It’s a rags-to-riches-to-rags story, a perfect case study for future U-M business students, and maybe even a book–at least one Borders employee is promising one. But first, the liquidators approved by a bankruptcy court in July have to dismantle everything the brothers and their successors built over the past forty years.
In August, “Store #1” was a mess, pillaged by the hordes of shoppers drawn by garish “store closing” signs. Veteran clerk Terry McClymonds says kids’ books and the 2012 calendars–reduced 40 percent–were hit especially hard as soon as the liquidation sale began.
My old store had moved around the corner to Liberty St. in the mid-1990s. Joe Gable ran it for a while, but eventually left–disgusted, according to friends, at the erosion of what an employee once called “Joe Gable’s ideal academic bookstore.” It wasn’t just the university press books moving to the back, or the section devoted to romance novels–it was the way the books themselves increasingly played second fiddle to higher-margin items like CDs, DVDs, stationery, and wrapping paper. It seemed as if every new CEO added more items, from candy to toys, in a vain attempt to shore up a slumping bottom line.
The liquidators, though, have taken that diversification to a whole new level. After years of buying failed businesses, they’ve picked up all sorts of odd things–including the baby blankets, stuffed animals, and perfume that now greet customers as they walk in the front door. While some old hands cringe at the sight, others go out of their way to praise “their” liquidator. Unlike recent corporate managers, they say, the woman sent in to run the final sale has listened to the store’s veteran booksellers. When longtime employee Sharon Gambin pointed out that there were unsold books in the back by Barbara Kingsolver and Michael Pollan that she knew would be popular with Ann Arbor readers, the liquidator gave them a prime spot previously occupied by a display of stuffed animals–and they quickly sold out.
Employees have been told that the downtown store will close in mid- to late September–or sooner, depending on how fast everything sells. The bookcases, display racks, even the lighting fixtures are up for grabs. One customer even tried to buy a roll of toilet paper from the bathroom and got indignant when told at the cash register he couldn’t buy it. He protested, “The sign says ‘Everything on Sale!'”
A couple of people approached McClymonds about purchasing bookshelves, adding, a bit sheepishly, that they were from Barnes & Noble. Two men in suits also inquired about shelves, explaining they wanted to open a Korean-language bookshop. According to a web post by Gambin, “the most requested fixtures are those we brought from the original location on State St. The old hutch that sat at the back of the store, the small side table and the UM Law Library table that served as our new hardcover table.” Gambin says appraisers were brought in to value some of the more unusual items, and the most popular ones will probably be put up for bid.
Some Borders customers have already begun to migrate to Nicola’s Books in Westgate. Owner Nicola Rooney says she has gotten calls asking if she carries magazines now carried by Borders and says she may adjust her inventory to, for example, include more science fiction. Rooney downplays it, but she’s also able to bring in bigger-name authors for readings.
Rooney herself was briefly a Borders stockholder. In late 2008, when the stock fell to 65 cents a share, she purchased some for her retirement plan. With the bankruptcy, the stock is now worthless–but Rooney says she says sold in time to realize a small profit.
After working at Borders for most of fourteen years, Terry McClymonds, wiry and expressive, knows many customers by sight and vice versa. He’s been touched that many have expressed their sadness about the closing and concern about his future.
McClymonds, sixty-four, is typical of a certain personality who once gravitated to Borders. A Yale grad (“the same year as George W”), he once advanced two rounds in a competition to appear on Jeopardy! Though he never was called for the show, when asked, he can still instantly rattle off the six bodies of water bounding Alaska.
Like many Borders employees of his generation, McClymonds decided early on that a stimulating work environment mattered more to him than a big salary. When he started, job applicants still had to take a test to demonstrate knowledge of literature, and he loved discussing books and classical music with customers, many of whom were U-M profs–he remembers talking with former U-M president Lee Bollinger and his wife, Jean, both regulars.
McClymonds also works as a bartender at the Aut Bar. When Borders closes, he expects to work more hours there and get health-care coverage under the bar’s plan. (While employees can continue their existing coverage under COBRA, Borders–and its health-care contributions–will disappear at the end of 2011.)
After years of attrition, the staff at Store #1 is down to about thirty people. All but four are part time, and McClymonds believes that most have other sources of income (second jobs or spouses) to cushion the loss. The higher-paid employees at “corporate,” some of whom are supporting families, have more to lose.
Borders has sponsored a couple of job fairs, with Domino’s Pizza and ProQuest among the companies recruiting. A website, BordersSeparationResources.com, posts contact information from another 100 companies that have expressed interest in hiring Borders employees, ranging from Busch’s supermarkets and Advance Auto Parts to Barnes & Noble.
In an ironic testimonial to the ubiquity of electronic media, thousands of Borders employees around the country, past and present, are joining the Facebook group “Borders Class of 2011 and Before.” They’re thanking coworkers and managers and reminiscing about everything from Harry Potter store parties to the travails of liquidation, as well as trading funny questions from customers (“I want ‘How to Kill a Mockingbird'”).
The tone is angrier at iworkatborders.livejournal.com, an older site perused for years by business reporters (and, reportedly, management) for clues about why Borders was unraveling. A poster there, using the name “bordersscrewedme,” protested about not having received a final paycheck. Another, “dcdummy,” wrote of working overtime in a heat wave to empty a distribution center. In a touch of macabre humor, “finalbordersfun” suggested a “death pool,” where workers in each store could bet on which day would be their last on the job.
Was it bad luck, or bad leadership?
That’s the question Borders survivors and alumni alike are asking: was the chain a victim of forces beyond its control–the rise of the Internet, the fall of the economy, the deadly attraction of e-books? Or was the greater problem the series of well-compensated but shortsighted executives who overextended the company financially, even while losing sight of what its customers wanted?
Exhibit A for the second group is the fact that Barnes & Noble is still standing. But B&N is also exhibit A for the first group: it, too, is losing money, and the main thing keeping its stock price up is investors’ enthusiasm for the Nook–its e-book reader.
Former Borders exec Margaret Noori–who previously worked at B&N–blames the forces that drive all publicly traded companies. “I think they started down a path they couldn’t get off,” says Noori, now a U-M lecturer in Native American studies. “Once they grew to a particular size and once they became public, it was very hard to turn back.”
Longtime Borders book buyer Carla Bayha, after rattling off a dirty dozen mistakes the company made, was dumbfounded when I asked, “When was the last time Borders did anything right?” The next day she emailed that in recent years Borders had tried to correct some of its errors, but by then it was too late.
Bayha’s dirty dozen includes: Borders’ early decision to use Amazon as its online order system, losing contact with its customers and undercutting the value of its brand; signing long store leases during the boom years, never imagining the good times would end; expanding into unwelcoming international markets (Singapore residents apparently liked their Borders; Londoners did not); being slow to upgrade ordering and inventory systems; and not giving store managers the freedom to tailor their inventories to their markets.
Former spokeswoman Jody Kohn and others also believe that being headquartered in Ann Arbor worked against the company, given that publishing is New York-driven. She recalls that at a National Book Awards ceremony one year, Barnes & Noble “had five tables. I was the only one [from Borders].” Without a permanent New York presence, some believe, publishers turned first to Barnes & Noble for author signings and special promotions.
Michael Chaim worked for Borders for twenty-four years. “When I dropped out of grad school in Ann Arbor in 1987, there was only one place in town that I wanted to work–the Borders on State Street, which was the best bookstore I’d ever seen,” he recalls. He went on to run the company’s Madison store–which, he says proudly, always turned a profit.
After his store closed this past spring, Chaim wrote an analysis of what went wrong. Topping his list: “Don’t Disdain Your Core Business” and “Don’t Disdain Your Employees.” Each new CEO, he writes, “came into the book business convinced … that the people in the book business didn’t know what the heck they were doing. They all prided themselves on being ‘retailers’ who were going to convince those long-haired book lovers inside the company just how to sell product.” From the book-lovers’ perspective, their leaders “never got that retail bookselling is a one-transaction, one-sale-at-a-time business, with your best chance at a sale being a true, genuine discussion with a customer about meeting their needs.”
The Borders brothers and Joe Gable, of course, understood that from the start. Some now imagine wistfully that had Borders remained in one store, the crown jewel of Ann Arbor, its depth of titles and literate clerks might have allowed it to survive and flourish even in the face of the Internet and e-books.
In an Observer story last spring, poet Keith Taylor argued eloquently that Borders’ downfall began the moment it decided to open a second store. But Chaim dismisses the dream that the company could have stayed as it was, forever Joe Gable’s ideal academic bookstore on State.
“The horse left the barn long ago,” Chaim says of the decision to expand. “That’s what the Borders brothers wanted to see happen.”
In an e-mail soon afer the liquidation was annouced, buyer Carla Bayha, referring to the famous “stages of grief,” wrote, “Employees have been at all stages from anger to acceptance, but not many were left at denial.
Asked what she’d miss, Bayha replied, “I will miss being proud of something that was once great, that I helped to build, and that gave full-time, meaningful employment to intelligent adults. Borders changed the culture of this country, and made us a more open and informed society.”
She signed her message:
Life After Borders
Thank you Tom, Louis and Joe for building the best bookstores in the world!
A proud employee for 27 years
A delighted customer for 40
“Don’t let it be forgot.”