When Borders met Books Etc

<p>It is almost 10 years to the day that the giant US bookseller Borders bought the small London chain Books Etc, bringing &quot;unbridled&quot; joy to publishers across the UK. <a target="_blank" href="http://www.thebookseller.com/documents/BordersbuysBooksEtc-3rdOctober199... width="200" height="272" align="right" alt="" src="/documents/UserContributed/image/Bookseller%20Images/borders1997.jpg" /></a></p>
<p>&quot;The future is not what it used to be&quot;, the Bookseller pronounced (click the image on the right to read the original report). <br />
<br />
Borders paid &pound;40m for a chain that had 21 shops and an annual turnover of &pound;31m. Last week the US bookseller announced the sale of a business more than seven times larger for roughly half the original price.<br />
<br />
It would be fair to point out that Borders will retain a 17% stake, worth about &pound;4m, but that doesn't look like much when compared to the $115m loss it is taking on sale of the business.<br />
<br />
It was all very different back in 1997. Booksellers Association president Jonathan Chowen, then managing director of Sussex Stationers, said: &quot;The UK book trade has changed overnight.&quot;</p>
<p>UK publishers were joyous. Tim Hely Hutchinson, then Hodder Headline chief executive, said: &quot;I am delighted to see a high quality superstore operator move to the UK.&quot; Nigel Newton, then as now chief executive of Bloomsbury, said: &quot;I have a very high opinion of Borders, based on the empire it has built in the US.&quot;<br />
<br />
Rival retailers were less happy. James Heneage, then managing director of Ottakar's, provided a note of caution, warning that its large superstores could struggle in the UK: &quot;I would be amazed if they worked here.&quot; Heneage also warned of &quot;price cutting&quot;. Alan Giles, then managing director of Waterstone's, said: &quot;Publishers must be concerned whether the UK book market is going the same way as the US book market, where the chains' expansion has been reckless.&quot;<br />
<br />
The Bookseller's Leader column said the deal would have a &quot;monumental impact on the UK book market&quot;. But it warned: &quot;The entry of the US giants will be successful only if they help to bring about a substantial increase in the size of the UK book market. Unless that happens there will be much blood on the floor, spilled for no better reason than a desire for increased market share.&quot;</p>
<p>The Bookseller got it half right. Sales rose, but somehow the bottom line failed to follow.<br />
<br />
In 1997 the UK consumer book market was reported to be worth &pound;2.3bn. Ten years on the value of that market is now said to be &pound;3.3bn. Borders UK has clearly contributed to that growth: it now has UK sales of &pound;223m, and operates from 69 stores.</p>
<p>But it made a profit of &pound;2m&ndash;a figure scarcely different from the &pound;2.2m profit reported by Books Etc back in 1997. As David Roche chief executive of the new Borders said today: <a href="http://www.thebookseller.com/blogs/45535-david-roche-qa.html">that is a lot of effort for little reward</a>.</p>
<p>Luke Johnson is likely to receive a similarly warm reception. <a href="http://books.guardian.co.uk/news/articles/0,,2175087,00.html">He is already saying all the things publishers love to hear</a>.</p>
<p>As The Bookseller of 1997 might have commented, the future is not what it used to be&ndash;again. But Paul from Books Etc&nbsp; probably has it better: &quot;<a href="http://www.thebookseller.com/news/45494-borders-announces-sale-of-uk-arm... the first time in a long time, the future looks exciting.</a>&quot;</p>
<p><img width="300" height="6" align="middle" src="/documents/UserContributed/image/Bookseller%20Images/dottedline.jpg" alt="" /></p>
<p>As an addendum, I cannot resist referring to another story we had in the magazine that week. It began: &quot;The board of W H Smith has rejected an audacious bid to buy the company led by Tim Waterstone.&quot; It seems that we might have had it wrong about the future after all.</p>