Over the last month, the Borders book chain has been liquidating assets as it closes its nearly 400 stores nationwide. The struggles of the brick-and-mortar bookstore have been well documented, but the reality that Borders is truly going out of business has sent shockwaves through the industry. Indeed, the failure of Borders sends a cautionary tale to business owners across the country. Below are some of the lessons every business owner should take from the collapse of Borders:
1) The failure to respond to market shifts is fatal. Most observers conclude that Borders was effectively “done in” by the emergence of online booksellers, such as Amazon.com and others. While Amazon emerged as a major threat in the late 90’s, Borders had the capital and the assets to survive for more than a decade. However, despite having plenty of time to act, Borders was never able to respond to the threat posed by the internet. The lesson for business owners: whether you like it or not, change is inevitable. Be prepared to respond–or risk extinction.
2) If you are competing only on price or convenience, you won’t inspire customer loyalty. Many business owners attempt to win business by offering great prices or convenient services. And while those strategies can lead to temporary success, they don’t offer longtime stability. Why? Because as soon as another business comes along that can do it more cheaply or more conveniently, your customers will leave. As a business owner, do your best to ensure that you are providing real value to your customers–value they simply cannot get elsewhere.
3) It is better to push the envelope than to wait for your competition to innovate. When the internet first became popular with the general public, many businesses and individuals viewed it as a “fad” or diminished its importance. In hindsight, it would have been far better for businesses like Borders to experiment with the value of internet to their customers–even if they ended up wasting their time. Had major brick-and-mortar booksellers utilized the internet while it was still emerging, companies like Amazon wouldn’t have had the chance to compete. Borders held back, Amazon charged forwards–and the rest is history.
As a business owner, you must face the reality that your market can shift at anytime. There’s no need to panic, but it is important to spend time regularly evaluating your market and staying on top of any trends that could pose a threat to your business model. While few industries will ever experience as radical a transformation as the book industry over the last fifteen years, the fate of Borders should serve as a cautionary tale for business owners everywhere.
[Image: Flickr user madprime]