Who—or What—Killed Borders?
Former GM Kate Schwab Speaks
Thursday, February 17, 2011
Slow Death: How could Santa Barbara possibly have lost Borders, its citadel of State Street culture, its cathedral of books and DVDs, its mecca of music?
This downtown destination for all ages, in its heyday, was also our coffee house, site of al fresco chess tournaments and book-signings, bubbling with cerebral excitement, a place where kids sprawled on the floor downstairs and read while parents sat and did the same.
So what happened to Borders, anyway? Well, the short answer is that it died a death of a thousand cuts, some deeper than others. One slice was Borders’ top management’s decision to open a store in the busy Goleta Marketplace, which was a boon to UCSB students and Goletans but sapped the downtown store’s strength.
But maybe the biggest problem was that the world has changed. It electrified itself and didn’t need to go to brick-and-mortar buildings anymore to get its books, music, and DVDs. Borders couldn’t cope, and now the whole chain is expected to file for bankruptcy this week and close about 200 of its 674 stores.
Perhaps the best witness to the Death of Borders is Kate Schwab, its general manager (GM) during its best years, who loved her baby and suffered when it faded and died.
The sharply escalating rent was a factor, in her view, but not the whole problem. “Well, if what I was told is true, that the rent in the final year or two was really $150,000 or more per month, then yes, rent was part of the problem,” Kate told me. “When I was the GM, I recall the rent being about $54,000. Tripling the rent did not help that location. But that’s only one part of it.”
“Borders Inc. owns a chunk of the blame,” she continued. “Years ago, maybe five or six, Borders opted to not dive into the Internet world. Instead, we entered into a relationship with Amazon. Online orders from the little Borders.com site would be fulfilled by Amazon. Seemed like a good idea at the time. But all the while, Amazon was gathering the info on Borders’ customers. And when the first Borders.com fizzled, all those customers belonged and were committed to Amazon.
“Borders plunged into the CD market years ago, and we, no pun intended, rocked it. We really did. But then Napster and iTunes and downloading came around and music sales plummeted. We used to really sell lots of DVDs, too. But that dried up, too.
“Management changes didn’t help; it never does. A friend at the San Luis Obispo store (still open, by the way, for the moment) tells me he’s had five district managers in the past year and a half. The corporate office has revolving doors at the top level.
“Lastly (and perhaps this is just me taking this personally), it’s sort of a business technique that ‘marketing is the first department to get cut’ in lean times. Which is what happened three years ago. Borders laid off more than 40 of its 50 district marketing managers, me among them. Bear in mind: These 40-plus people were the people who regularly spent 40 or 50 or even up to 60 hours per week promoting big or small events, getting the word out to the communities, and driving footsteps (and sales) into their stores.
“Borders Santa Barbara was a showpiece in the company when it opened in 1995. First of all, I mean, c’mon — Santa Barbara! But all of it — the design and architecture of it, the size, the city, the famous people who shopped there, the great sales for the first several years — it was really one of the top stores in the company.
“So, I think a lot of things conspired against this particular store. Having a cheaper-to-operate store in Goleta didn’t help. Why keep open the big huge expensive one when one with lower rent (and better sales) is so close by? The Santa Barbara store, I think, was hit particularly hard: Book sales dropped, the CD/DVD thing really affected this store, ‘shrinkage’ was a big issue there. It was a big shoplifting store. I’ve chased my share of those people. Rumor was people would steal CDs or DVDs, walk one block to Morninglory, and sell them there for cash. So the poor Santa Barbara store had so much going against it.
“I think, from the very beginning, that store had so many obstacles to hurdle: the direct competition across the street, the beloved independent stores, the homeless and shoplifting issues, staffing problems, then the Internet and downloading, and the economy.
“But in its heyday, it was one heck of a great store, a great place to meet and have coffee and read through a book before buying, or listen to some great music. It really was a wonderful store, a wonderful place, wasn’t it?
“I was there on that last night. I found it was too emotional to stick around for the actual last closing, the actual locking of that front door for the last time.”
(After being jobless for 11 months, Kate has been a marketing specialist with the Metropolitan Transit District for two years.)