Borders’ In-Store-Only Coupons Sign Of A Much Bigger Problem

Written by Evan Schuman
April 29th, 2009

Starting in February, Borders quietly changed how it handled its coupons, changing them from being available for both in-store and online orders to solely in-store. In and of itself, that’s not so surprising, especially given that the $3 billion chain that month all-but-halted meaningful E-Commerce investments. But the move to push all sales into the stores runs counter to customer desires, which is rarely a good longterm strategy.

That may be precisely the point. With the economy still scraping bottom, many retailers and E-tailers are having to craft strategies that are designed to be very temporary and very emergent. There’s a major E-Commerce vendor, for example, that is out there trying to convince retailers to halt efforts to bring in new sales, proposing that they instead force all efforts on the installed base. This forces us to consider three distinct issues:

  • Will these temporary, emergent strategies work?
  • How easily will they be to reverse after the emergency is over? (This presupposes that they indeed can be reversed.)
  • Will these approaches actually put merchants in a much weaker position after the crises abates, even if the policies can be successfully reversed?

    Let’s start with the key issue: Will these temporary approaches even work? The two examples cited offer very different—almost polar opposite—strategies. One suggests an in-store-only approach, but opening it to all existing and new customers, while the other suggests a limit to the installed base, but is channel-agnostic. Would submit that even a short-term strategy will only work if the target audience can be persuaded to do it.

    The focus on installed base at least speaks to the audience on its own terms. Even that approach is not suggesting blocking or alienating prospects, but merely that no money or effort would be deployed to try and woo them. Limited dollars in an emergency requires unpleasant triage decisions.

    Borders’ coupon approach seems much less likely to succeed, namely because it’s forcing one channel on a group of prospects who are typically leaning toward a different channel.

    And even if it somehow worked temporarily—worked being defined as boosting sales—issues two and three are even less kind. Is crippling an online operation going to leave the chain stronger or weaker when the crises abates? And can it be restarted, at a time when rivals have been steadily investing? Will customers resent being pushed into a channel to convenience the chain?

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    4 Comments | Read Borders’ In-Store-Only Coupons Sign Of A Much Bigger Problem

    1. Will Mc Kenna Says:

      I’m not sure that I agree with your premise. I think most Borders’ customers enjoy the in-store experience and just view the emails as an (informational) annoyance. The coupons serve as an reminder/incentive to go get ‘that book’ you were needing anyway. Borders’ problems, I believe, stem from a shrinking base of readers plus the obvious economic reality that eating comes before reading. Like many retailers they are trying to get more from less.

    2. Brad Says:

      I am a typical geek with over 25 years sitting behind the computer screen. I buy online all the time. Even have special bank accounts setup just for online buying.

      I hate buying books online.

      Books are a tactile experience, shopping is half the fun. Even techie books require a good looking through before I decide between the 5 or 10 possible choices.

      If I want to save money and know exactly what I want, I go to Amazon. Good discounts and lots of used vendors. When I get an in-store only coupon it encourages me to go and shop. How often do I walk out with only one to use the coupon on? Never. On the web site it’s so sterile that I buy the item, log the coupon and I’m gone.

      The strategy pushing people towards brick and morter has a good foundation in this business. Very tactile, very shopping oriented.

      Bravo Borders for going against the grain!

    3. Kelly Says:

      Book people go to book stores and shop online only when they know exactly what they want. Coupons online result in lower average sales. Coupons in-store lead to impulse buying and much higher average sales. If Borders wants to grow sales driving traffic into the store is key. People who read and shop for books are the ultimate multi-channel consumers, they’ll make a store trip with a good offer.

    4. Keith Says:

      It seems that Borders has set itself up for failure in its Web strategy. It sells a majority of items at at list price. To make coupons only valid in a B&M store further alienates those who would prefer to shop online. So, yes, while, as Kelly says, book people go to book stores, there is a huge market of those who will pass right on by and go to amazon or Borders is leaving money on the table.


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