The content of those 331 e-mail messages from Borders reveals the leadership thinking behind Borders' inability to continue as a viable retail bookstore operation. You can't just have a list of customers, offer to sell them any old marked-up product or service, and expect that your company will be able to thrive off the profits from the margin. Retailing is no longer just about buying low and selling high.
When there are more books on the shelves of retail booksellers than could ever be read by the literate public, more music than could ever be listened to, more greeting cards than can be sent, more movies than can be viewed, Borders needed something more to stay competitive. And that doesn't mean they needed more stationery products, more scrapbooking supplies, more toys, or more arts and crafts kits. The retail business model in the U.S. has expanded beyond supply and demand, although the mindset of the Borders leaders did not.
The "more" that Borders - and every retail chain that desires to remain competitive with a fast-moving consumer target - needed was more genuine relationships. You don't need to have a personal connection with a customer in order to make a sale, you just need a personal connection to make a second sale. Loyalty is a feeling, not a commodity. And when there are more consuming choices than there are consuming needs, loyalty is the only retailing currency that has any value.
On July 22, 2011, one of the 331 e-mails that I have received from the Borders company came from CEO Mike Edwards. It was actually a very thoughtful and heartfelt letter of gratitude which provided me with a warm and fuzzy feeling about a company that I had no particular positive or negative feelings about prior to that. If any of the four men who held the Borders CEO position in the last five years had sent me, and 1.8 million other Borders rewards members, a personal and heartfelt e-mail, perhaps Mr. Edwards wouldn't have needed to send the one to announce the liquidation of the chain.
The lack of comprehension about the essential need for meaningful customer relationships in today's U.S. retail industry is evident in the words of that heartfelt farewell e-mail which said, "... Borders has been facing headwinds for quite some time, including a rapidly changing book industry, the eReader revolution, and a turbulent economy. We put up a great fight, but regrettably, in the end, we weren't able to overcome these external forces." This reveals a Borders-against-the-world stance, and in that stance there is an acknowledgement that Borders considered customer preferences and consuming trends as "external forces."
The shifting needs and desires of customers are not the enemy of retailers. They should be the joy of retailers. A company that has a meaningful relationship with its customers would never take the stance that giving customers what they want in the way they want it is a headwind that needs to be fought against.
Shifting consumer preferences were not the problem for Borders, they were the solution. But if retail leaders are busy focusing on the what-was and the what-is, they won't have any time or energy left to imagine the what-could-be.
There are many U.S. retail industry leadership teams who can't embrace an expanded retail model that includes the customer in every facet of their retail decision-making process. Instead of embracing the new U.S. retail paradigm of engagement, these leaders are turning their focus away from their primary U.S. market and looking overseas. They are finding temporary success in less evolved international retail environments where the old reliable supply-and-demand-buy-low-sell-high model still works. And when those markets are saturated with goods, and those societies are inundated with marketing messages, and American retail brands are no longer new and exciting, what will those disconnected behind-the-times retail leaders do?
When there's no more low-hanging retail consuming fruit to pluck on planet earth and when resistant decision-makers are wrestled to the ground by the failures created with their own antiquated belief systems about what retailing is and isn't, that's when the U.S. retail industry leaders will make a last ditch effort to master the part of the retail equation that has always mattered the most. Of course, that's the customer. And if you weren't sure what the previous sentence was going to say before you read it, then you might just be one of those out-of-synch retail leaders.
What does it take to create a meaningful customer relationship and expand the retail business model to factor that customer relationship into every leadership decision? The complete answer to that is another blog for another day. But if I was to choose one of the three U.S. booksellers that was best at each of the most fundamental aspects of a customer-infused retailing system it would be these:
- Customer Service - Amazon (AMZN)
- Customer Satisfaction - Amazon
- Customer Loyalty - Amazon
- Customer Feedback - Amazon
- Customer Preference - Amazon
- Customer Systems - Amazon
- Customer Engagement - Barnes & Noble
- Customer Experience - Barnes & Noble
- Customer Information - Barnes & Noble
- Customer Relationship - Barnes & Noble
From the perspective of a customer, I wouldn't say that Borders handled any of these customer aspects of retailing better than its competitors. And perhaps there are other customers who had more elevated and holistic shopping experiences with Borders than I did, but apparently not enough of them did to keep Borders in business.
Never before have retailers had more tools at their easy disposal which can be used to interact with customers and engage them in a meaningful way. And yet most retail organizations in the U.S. insist on using the tools of a new retail paradigm in the same old way. And when they get pitiful results they blame it on the tools themselves, and scorn the consumers who refuse to respond in the way that corporate retail marketing departments think they should.
So in the wake of the liquidation of another great American retail brand, the question that U.S. retail industry leaders should be asking themselves is not "What are we going to do differently so that we can survive in the future?" The question that begs for an answer instead is "Who are we going to be so that we can create our own future retailing reality?"
The lesson that all retailers large and small can thank Borders for teaching them is this... If you can't be the cheapest, or you don't know how to be the most special, or you refuse to be the most engaging, then you don't really have a reason to "be" at all.
Thank you Borders for that very important lesson, which was 40 years in the making.
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