Career Management: Borders Books

From me personally, to the near 2000 employees at Borders Books UK, a company now in administration, a heart felt: good luck!

For the rest of us, is there a career management lesson in their plight? Certainly, I think for those looking to manage long term career prospects, there is. The lesson is called – beware the long term business model!

Regulation changes

Borders came to the UK post the 1997 decision by the Monopolies and Mergers Commission to allow publishers to sell books at different rates to different bookshops. Coverage of the opening of their first London shop just off Trafalgar Square gained high media exposure, with books, newspapers, televisions and coffee all allowing you to browse and fell at home, over look through was in effect a commercial library mode up to that point in the UK. Pile em high, let you relax, and sell em cheap was the Borders Books model.

And then came Amazon. Add on top of that the explosion in UK supermarket retailing, and the result today is that the largest sellers in the UK book market are either Amazon (19%), Waterstones (19%) or the supermarkets (combined: 50%). Which leaves Borders Books and all those nice little high street independents struggling to compete for 12% of the £1.9Billion market. £1billion is still a lot, but not a lot when your business model is busted.

Career management competition

Jeff Bezos founded Amazon on the principle that if of all the available book titles in print at that moment, even the worlds biggest book store could only stock one copy of 5% of them. Hence, you needed a bigger footprint to be able to offer every possible book. Amazon does that, even the out of print books which it lets third party retailers and individuals sell through their portal: a model which clearly steps on the toes of services like Advanced Book Exchange and eBay!

Terry Leahy’s model at Tesco in the UK now is simply that Tesco is a brand, and that – copying Virgin – they take a product or service, strip it back to the bare essentials, and having excellent customer service (Virgin benchmark customer service on a product by product basis; Tesco just assume that if you buy there already, CS is good enough), sell it. With books, they just go back to the old Jack Cohen formula and pile it high to sell it cheap. They therefore just take the top ten sellers, and add in a few select own-brand titles aping the most popular trends at that moment. I was in my local Asda’s the other week, and noticed that the top sellers were always placed next to own brand books in the same category at almost the same price. I have heard all the leading retailers comment that they barely make money on the best sellers, but huge margins on the own-brand books – its the model now copied by Mike Ashley at SportsDirect. The result of this model is that the best sellers – shifting between a quarter and a third of book sales – make hardly any money for anyone in the book trade.

Career management – employer questions

If one third of your stock turns over quickly and makes no margin, while in the other two thirds of your stock is low turning, and if you don’t have it you lose the sale, your business model is busted. That means the writing is on the wall, and at some point costs or infrastructure will be cut, and hence jobs lost.

If you are looking at long term employment prospects with either your existing, but especially a potential new employer, then know the answer to the following three questions, all based on Michael Porters market forces model:

• largest competitor + sell to market model differences
• buying or selling company
• new products

If the answer is negative in one area, be cautious; if in two, start looking soon; if in all three, watch out for the redundancy notice.

Good Luck!

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