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Six Ways Borders Can Save Itself

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Increase foot traffic with a change of image and style.

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Don't let the smile on that barista fool you: Borders (BGP) is in serious trouble.

The brick-and-mortar bookseller has been handicapped by the forward-thinking tech initiatives played out by both Amazon (AMZN) and Barnes & Noble (BKS) as well as overall readership decline in the printed page. The buzz behind e-readers continues to grow, units are selling out, and without an e-reader of its own, Borders remains on the outside of the party.

Borders shares are currently hovering around $1.19, down 73% from their year's high in June.

Although Barnes & Noble may be struggling too, after reporting a second-quarter net loss and cutting its full-year forecast, it does have its Nook e-reader as a fail-safe. That is, if it can ever meet demand and ship it by Christmas. And its stock is around $22, just 23% from its year-to-date high.

The success of the Kindle seems to keep Amazon's stock buoyant -- especially after the company boasted record sales for the e-reader in November. No doubt, even after two years, the Kindle is still an appealing holiday gift.

Borders' loss in the third quarter reached $39 million, or $0.65 per share, which missed analysts' expectations by a wide margin. The retailer announced it would be shutting 200 Waldenbooks locations and will be revealing its plans for its own e-reader in the coming weeks.

But this is a case where "better late than never" may not actually apply.

So how can Borders expect to catch up? Here are six suggestions as to how Borders can reinvent its image and become a unique outlet in a crowd of homogeneous retailers. Yes, it'll cost 'em -- with a pipe dream or two -- but dire situations require drastic measures and, believe me, the story of its recovery would be a real page-turner.

1. Don't bother designing your own e-reader.


Face it, you missed the boat. The market will only allow a handful of choices before it becomes saturated. As Amazon and Barnes & Noble plan post-holiday replenishments for their e-readers, the gap between Borders and the public's interest in a competing device widens. While the Digital Center program with Sony's (SNE) e-reader hasn't exactly set the world on storm, if expanded to include other devices, this may be your ticket into the e-reader realm. Your competitors may balk at such a deal, but Apple (AAPL), Research in Motion (RIMM) and Motorola (MOTO) would surely be keen on making some headway in the e-reader market with their iPhones, BlackBerrys, and Droids.

2. Go full-hipster.


Common assumptions dictate that you should "never go full-hipster," but it would set yourself apart from cookie-cutter superstores. And no, your Starbucks (SBUX) subsidiary cafes won't go far enough. Adopt a clean but fashionable "used bookstore" decor -- comfortable seats, throw rugs, desk lamps. Play some Gang of Four. Maybe consider a liquor license. Do whatever it takes to target the extremely discerning college kid contingent to make Borders an actual fun place to hang.
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