Borders Cheap E-Readers and Teddy Bears Won't Help Lure Customers
In the midst of a bear market -- and its own plummeting stock-- Borders (BGP) bookstore chain is getting bullish on bears â€" Build-A-Bears, that is. By shifting its focus from books to more specialty items such as teddy bears, Borders is attempting to reinvent itself. However, the partnership between two retailers hit hard by the recession seems more last ditch effort than targeted strategy.
If you don't have children under 10 (or don't know any adult stuffed animal aficionados), Build-A-Bear Workshop (BBW) is specialty retailer that peddles the create-your-own experience with teddy bears and other plush animals. The partnership will launch an in-store "Build-A-Bear Craft Shop" featuring 28 Build-A-Bear branded products in most of Borders 500 stores.
At first blush, it appears to be an expansive move into old territory on Border's part â€" for years bookstores have devoted varying degrees of real estate to plush creatures whenever children's books morphed into hot merchandising opportunities. But as Build-A-Bear's menagerie grew from one teddy to millions of furry friends, the company sidestepped storybooks entirely, preferring to appeal to young customers online via its own virtual gaming site and other licensed kits and furnishings.
Indeed, Build-A-Bear's initial interactive marketing schemes catapulted it to global retail stardom, but recently there've been more misses than hits. Mall stores used to post sales associates at the door to keep the crowds in control. Now staffers stand at the door trying to lure customers in by waving the latest plushie. The balance sheet reflects the fall out of favor. Fiscal second quarter total revenues were down 10.5 percent to $74.1 million and net retail sales were $72.5 million, a decrease of 10.8 percent. Comps were likewise flagging, decreased 10 percent overall.
Build-A-Bear's got plenty of cash though, which looks good compared to Borders' anemic second quarter results. Sales were down 11.5 percent to $526.1 million, and comparable store sales declined by 6.8 percent. The bright spot? Online, Borders.com sales increased 56.2 percent to $15.5 million.
Which begs the question: as Borders watches more of its customers transition to e-books and e-commerce, why is management bothering to beef up its brick-and-mortar strategy? Even with a revamped customer loyalty program â€" which many shoppers will no doubt use for online (think free shipping!) â€" the company's still being forced to close major outlets.
Trotting out Build-A-Bear kits alongside its Kobo e-readers (now with new lower prices to beat Kindle and Nook!) just doesn't feel like it will be a compelling enough product mix to get customers off their asses and into the shops. Investing in "new signage" and "expanding the assortment of educational kids toys and games" just seems like throwing good money after bad marketing schemes.
Image via Steven McKay CC2.0
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