Borders' New E-Commerce Strategy Falls Flat During Holidays

In 1971, Tom and Louis Borders opened an 800-square-foot used bookstore in the quintessential college town of Ann Arbor, Mich., and named it Borders Book Shop. Flash forward nearly 40 years, and their namesake book establishment, now expanded to 1,100 stores and 28,000 employees worldwide with a state-of-the-art e-commerce website, is in trouble on a Dickensian scale.

[ MORE ON CIO.com Inside the E-Commerce Strategy That Could Save Borders | Which Online Retailers Have the Most Satisfied Customers and What You Can Do to Improve Your E-Commerce Efforts | How Wal-Mart Lost Its Technology Edge ]

The 2008 holiday shopping season was the worst in several decades: Retail industry sales fell 2.2 percent, the biggest decline since at least 1970, according to the International Council of Shopping Centers.

Borders Group, in particular, found little joy in the season. It reported that during the nine-week holiday period that ended Jan. 3, 2009, total consolidated sales were US$869 million, which was an 11.7 percent decline compared to the same period last year. Comparable store sales at Borders superstores, a key retail metric, showed a decline of 14.4 percent compared to the same period in 2007.

Borders then announced a management reshuffling on Jan. 5: Out went CEO George Jones, who had been specifically hired in 2006 to turnaround the company; other high-level positions were shaken up. (Susan Harwood, who joined in 2007, remained as CIO.) And lastly, Borders heard from the New York Stock Exchange that it was closer to being delisted. In May 2007, its stock traded at over $20 per share. Just over a year later, in July 2008, the share price hovered around $4 to $5. In early January 2009, a share of Borders Group stock traded at about 50 cents.

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