Yup, Borders is finished ... see Gawker for details by clicking here.
The pundits told us we had to do "bricks 'n clicks". Had to. They told us what the future would hold, and it held this multichannel nirvana where customers were researching online and buying in stores, so having "bricks 'n clicks" would result in a competitive advantage of unparalleled proportions.
I'm not saying that customers don't research online and buy in stores ... they absolutely do, more than ever.
It's the "your sales will grow" proclamations of consultants, trade journals, vendors, and other folks who've never worked in retail that represents the problem, here. For the most part, across most businesses ... multichannel customers are the best customers ... but being "multichannel" has not resulted in the sales increases promised by consultants, trade journals, and vendors with a vested interest in selling solutions that benefit them. If the sales increases existed, you'd have observed huge increases in your annual retention rate and purchase frequency over the past decade, right?
Retail is for big boys, or for small, local folks, there's no in-between. And if you're going to be a big boy, you're going to be told by another set of pundits that you need to finance a fleet of stores with debt ... lots and lots of crippling debt.
I recall a Retail CFO telling me about how Wall St. would "beat down the stock price" if he paid down debt.
Debt > Strategy.
And when sales drop, by as little as 5%, debt becomes a really tough burden to recover from.
Oh, I know, some of the lemonheads are going to say that Borders didn't respond to changes in technology. That's a pithy response, one that is easy to have in retrospect. How many times have you made strategic mistakes in your job? Never? How many times have your strategic mistakes been made public, so that all marketing experts can openly criticize you? Imagine being an employee at Borders, for just a moment, especially a non-Executive.
You can overcome strategic problems when you're not saddled with debit. Heck, you know this, right? What happens to your mortgage when you suffer a 15% reduction in salary (or you lose your job)? That mortgage payment becomes onerous, doesn't it?
Debt > Strategy.
Pay close attention to the future of books in a retail environment. How do the parallels there apply to your business?
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