[quote name='ITDEFX']It's probably the only reason why I shop there , when those 40/50 percent coupons hit.[/QUOTE]
And right there, you've hit upon the problem. What made people shop at Borders? Coupons that essentially wiped out their profit margin. The idea behind the coupons was two-fold:
1) It's a loss-leader -- give someone a coupon to get one item cheaply, and hopefully they'll pick up a few others while they're in the store. It's a nice idea, but if too many people only go when there's a coupon and only buy items that are discounted by the coupon, it backfires.
2) It boosts sales numbers, even if it doesn't boost profits. Essentially, it's a way to lie to the stockholders -- i.e., we had this many sales and this much revenue this quarter. Make those numbers look impressive enough, and stockholders tend to be (at least for a while) forgiving of the actual profit numbers being low. The problem is that while this may provide a temporary boost, it's not sustainable. At some point, if you want to keep your business going, you have to actually make a profit.
Really, I hate to see Borders go as well (though I'm as guilty as the next person of only shopping there when there's a really good coupon), but I've seen this coming for a long time; I'm honestly surprised that it has taken this long. Borders has just kept making one bad business decision after another -- blatantly bad, even as just a customer I could see the problems (when a customer can see your business problems, you're really in trouble) -- and it has all added up.
[quote name='ITDEFX']I just don't get why B&N doesn't close up as well?[/QUOTE]
They're struggling a bit as well, but they're surviving because honestly, they have a better business model and better market penetration:
1. They have stores (real, full-size stores, not "Express" stores) in malls and other high traffic areas, while Borders stores tend to be located in less convenient shopping centers; you really have to be specifically going to Borders, whereas B&N is (more often, I realize this isn't the case with all B&N stores) right there.
2. B&N offers discounts, but they do it more smartly. 10% off with a membership card. Most coupons in the 15-25% range, and the coupon offers are staggered, not continuous. You rarely, if ever, see the ridiculous 33%-40%-50% coupons that Borders throws out there all the time. Customers feel like they're getting a deal, but it's still profitable for the store. Oh, and the paid membership card is genius -- not only do you cover the cost of at least some of the discounts with the membership fee, but customers are more likely to consciously want to use it and buy more, to get their money's worth out of the membership. By the time Borders caught onto this and offered their "Plus" membership, it was already too late (and really, offering another 10% off on top of those high percentage coupons? that's getting into the realm of taking a loss).
3. B&N keeps their stores well-staffed, clean, and brightly lit. Atmosphere makes a big difference. Borders stores tend to be messier, less organized, and more dimly lit. They also tend to be severely under-staffed. I've had several instances where I've gone to Borders to get something, have needed help from a staff member for some reason, and haven't been able to find anyone to help me because the only employees in the whole store were at the registers ringing up customers. In those instances, I've left in frustration without buying anything. Assuming that I'm not the only one having these experiences, those lost sales add up quickly. In B&N, on the other hand, I actually often have to tell staff that I'm just looking and don't need help. I've never had trouble finding help when I have needed it.
4. B&N has entered the online world more competitively. Go to the Borders website -- the prices are just pathetic, barely better than those in the store. B&N, on the other hand, is usually directly competitive with Amazon -- sometimes their prices are worse, but sometimes they're better. Amazon frequently has to price match B&N, whereas that's rarely the case with Borders. And $20 for a membership with free "express" shipping (and the discounts in the store, etc.) is a better deal than $80 for Amazon Prime.
5. B&N has also entered strongly into the eReader market -- the Nook is probably the second biggest seller in the dedicated reader market behind the Kindle at this point. They've marketed it well, and clearly put a lot of resources behind it. Did you know that Borders has an eReader? They actually do, but you'd barely know it.
6. B&N creates and uses relationships with publishers and manufacturers to do big promotions. One good example is their semi-annual Criterion sale -- they partner with Criterion on that; Criterion gives them a discount that allows them to sell the discs for 50% off while still maintaining a profit margin on them. And it's a win-win situation -- it's a huge boost in sales for both B&N and Criterion. That's not the only one of these promotions; you'll frequently see them pop up over the course of the year (though often not as specifically branded, because most brands don't carry the kind of customer loyalty that Criterion does; usually it's displayed as a more generic sale on TV box sets or something like that). Borders rarely has any promotions like this.
I'm sure there are lots of others as well, but those are probably the biggest reasons why Barnes and Noble is doing better than Borders.