Scalpels are flailing wildly on the Internets at present, dissecting the downfall of the massive BOOKS-MUSIC-CAFE retail empire. The question is what killed Borders, and the answer from management is that it was the victim of changing times, amongst other mysterious forces. The consensus among commentators is that management didn’t (and doesn’t) have a clue; about strategy, or about brand loyalty and engagement.

There are four or five main strategic blunders over the last decade being singled out for scrutiny. The backing of the physical distribution of music when the shift to digital was already made, the late entry into e-books (Borders’ Kobo eReader came out a year ago), over-investment in physical stores with lukewarm sales, and the outsourcing of online book sales to Amazon (yes, to a competitor) from 2000 to 2008, have all been pinpointed.

So when last week Mike Edwards, Borders current interim CEO, sent out an email to Borders Rewards customers that was spectacular in its head-in-sand-delusional way, many were frustrated (those that cared) and/or bewildered (those that didn’t hit delete).

Among those that didn’t immediately hit delete was Robert Passikoff, founder and president of Brand Keys. Passikoff sees Borders’ downfall as being ultimately illustrative of the brand and how it was managed toward the end of its forty-year history. He offered some observations and comments on the email from a customer loyalty and engagement perspective.

Edwards: “I want to personally thank you for your loyalty and support…”

Passikoff: “What loyalty?”

E: “You might be asking yourself what happened?”

P: “Not really. Borders was egregiously bad at identifying consumer product and lifestyle trends, introducing candles and stationary, CDs and DVDs at a time when consumers were moving in other directions.”

E: “We had worked very hard toward a different outcome. The fact is that Borders has been facing headwinds for quite some time including a rapidly changing book industry, the e-Reader revolution, and a turbulent economy.”

P: “This is like Krispy Kreme blaming the Atkins diet on their brand positioning blunders. It’s true that the book industry has changed and the economy has been wonky, but volumes of competitors – from Barnes & Noble to Wal-Mart – have managed to take away market share and customers from Borders in that same economic environment. Borders was late to the Web, and late bringing e-tailing into their marketing mix.”

E: “Going out of business sales begin in stores Friday July 22. I encourage you to take advantage of this one-time opportunity to find exceptional discounts on your favorite books and other great merchandise.” [Marketing note: Our news editor picked up an adorable plush Star Wars doll for $5].

P: “Pleeeeeeease… when you can only get customers in the door based on price, you’ve ceased to be a brand and have turned into a commodity. And today, consumers are looking to be delighted, and only real brands that can engage customers can do that. Loyal customers follow The Rule of Six: they’re six times more likely to rebuff competitive offers, and six times more likely to invest in your company.”

E: “I feel privileged to have had the opportunity to lead Borders… My sincerest hope is that we remain in the hearts of readers for years to come.”

You, Dear Reader, can come up with your own witty retort for that last one.

Peter Roper
BY Peter Roper ON 29 July 2011
Editor of Marketing Magazine and