Blimey, What's Going On At Borders?

Publishers always get jittery when there are big changes in book retail (you should hear the behind-the-scenes concerns about Waterstone's new distribution centre) so the shockwaves were considerable when Borders announced the departure of David Roche earlier this week.

Since that announcement both new CEO Philip Downer and the man with the millions Luke Johnson have gone on record to reassure everyone that this is a good thing and there is nothing to worry about.  That won't actually stop publishers worrying though, especially as Borders have been seen as an increasingly serious and viable alternative to the other high street retailers since Roche joined nearly two years ago.

Some of the initiatives introduced under Roche's watch have been hugely popular with publishers.  They reduced the cost of promotions, making them the most cost-effective retailer to do business with in almost every instance, and created an Independently Published bay which has given a leg up to a whole host of exciting new books and publishers that no one else was promoting or, in some cases, even stocking.

Roche himself is also a very popular individual in the industry, someone the big guns in publishing like doing business with.  With him at the helm there was a feeling that Borders would continue to improve and he was able to convince publishers to back his plans, even if the size of the business didn't perhaps warrant that level of support.

Which sort of hints at the key problem that Borders have always had, from the publisher viewpoint anyway, in that they simply don't have the clout that Waterstone's and Smiths have when it comes to shifting volume.  One of the most oft-heard phrases during conversations between publishers is 'if only Borders had more stores'. The implication being that they would move a lot of focus and cash Borders' way if only the chain could sell the amount of books that their bigger rivals can do by default as well as design. 

The medium and larger publishers treat Borders seriously, but only apportion a small percentage of their spend to them in light of the level of sales expected.  It has been different for small publishers.  I know of a couple that shifted their entire retail marketing spend to Borders last year as they were the only retailer that could guarantee a return on their investment.  But the reality is that they only represent a small percentage of books sales (and a teeny tiny percentage of CD and DVD sales) in the UK.  They are a very welcome player, but not a major one.  And by the sounds of it, expansion is not on the agenda under the new regime.

So what has gone wrong?  Why has such a highly respected and consistently successful retailer upped and walked?  Rumour was that Johnson and Roche didn't get on.  If that was the case, it has been denied in press statements but not necessarily believed, then there was only going to be one winner in that argument - the man with those millions.

What next?  If Borders continue to prove value for money for publishers and carry on with their support for indies as well as offering a decent alternative on the high street then presumably there is no problem.  If the new regime start tinkering, and you would guess they will, then hopefully it will be to improve and progress.  If their planned review of the business can strengthen the work already done then great.  If they get it wrong then their rivals will give them a thumping.

The other big question is whether or not Roche's departure will prompt other people to leave.  It is well known that some of the key head office staff were tempted to join Borders because of his involvement, whether they are as keen to stay without him remains to be seen.

Oh, and what will Roche do next?  Both David and James Heneage are currently outside of book retail.  They have got together before (for the failed bid to buy Ottakars), is it completely out of the question that they will get together again?

It is never dull in the book world (well, it is actually, but it is a bit exciting this week).

Comments

[A friend of Rachel Worth]

Waterstone's and Borders it's a bit like coke and pepsi. Although they are both fizzy drinks full of sugar they do generate loyalty. I've never really fallen for Borders. I thought it was all a bit of spin really - Got really excited by the try something new or whatever it was campaign and then felt let down as the titles featured didnt seem that different from what every ones else had at the front of the shop. They obviously have found favour with the smaller publishers from what I read on blogs except as a customer I dont really see it. Sure in the bigger branches there is a visible presence but not more so than the bigger Waterstones and some of the relatively smaller ones i've been in I've struggled to find an indy bay or table.
In Scotland the local titles were hidden away in glasgow store - even smiths had more front of store.
Dont get me wrong I dont dislike them and have and will continue to shop but not as top of mind