Borders Books – Shrewd Innovation and Smart Acquisitions

Tom and Louis Borders started Borders Bookstores in 1971 while still students at The University of Michigan. Their first shop in Ann Arbor led to local expansion. Before online bookselling put a stranglehold on their operation, Borders was the second largest booksellers in the world.

The Brothers

Tom Borders was born in 1943 in Tennessee, while Louis Borders was born in 1951 in Michigan.

The brothers grew up in Ann Arbor, Michigan, where they were both avid readers and book collectors. After college, Tom Borders worked for a small publishing company, while Louis Borders pursued a career in technology. He founded a company called Webvan that delivered groceries and other goods.

In 1971, the brothers opened their first bookstore, Borders Book Shop, in Ann Arbor. The store was an immediate success, and the brothers quickly expanded, opening new locations in Michigan and eventually in other states.

Innovation

Under Tom and Louis’s leadership, Borders became known for its large selection of books, magazines, and music. They also had a comfortable atmosphere and knowledgeable staff. The company’s success continued throughout the 1980s and 1990s, and by the early 2000s, it had over 1,200 stores around the world.

One key that gave Borders an early advantage over the competition was their unique inventory-control software. This was created by Louis Borders in the 1970s.

Mergers

Borders also grew through mergers and acquisitions. Some of the other brands that Borders acquired include:

B. Dalton Bookseller: Borders acquired B. Dalton, another bookstore chain, in 1987. B. Dalton had over 800 stores in the United States at the time of the acquisition, and the acquisition helped Borders become the second-largest bookstore chain in the country.

Bookstop: Borders acquired Bookstop, a Texas-based bookstore chain, in 1992. The acquisition gave Borders a stronger presence in the southern United States.

Doubleday Book Shops: Borders acquired Doubleday Book Shops, a New York-based chain, in 1992. The acquisition gave Borders a larger presence in the Northeastern United States.

Brentano’s: Borders acquired Brentano’s, a bookstore chain with locations in several major U.S. cities, in 1998. The acquisition helped Borders expand its footprint in urban areas.

Paperchase: While not a bookstore chain, Borders also acquired Paperchase, a UK-based stationary and gift retailer, in 2004. The acquisition allowed Borders to diversify its offerings and appeal to a wider range of customers.

Ownership Timeline

Here is a brief history of Borders ownership:

Borders bookstore was founded in 1971 by Tom and Louis Borders, and remained a privately owned and operated company for many years. However, as the company grew and expanded, ownership changed hands several times.

In 1992, Kmart Corporation purchased a 21% stake in Borders, and the following year, it acquired the remaining 79% of the company. Under Kmart’s ownership, Borders continued to expand, opening new stores and launching an online sales division.

In 1995, Kmart spun off Borders as a separate company in an initial public offering (IPO), allowing it to operate as a standalone business. However, Kmart remained a major shareholder in Borders, and the two companies continued to have close ties.

In 2006, Borders formed a partnership with private equity firm Pershing Square Capital Management, which acquired a significant stake in the company. This led to a major restructuring effort, as Borders attempted to shift its focus to digital sales and improve its financial performance.

Online Squeeze

However, as competition from online retailers like Amazon intensified, Borders began to struggle. In 2011, the company filed for bankruptcy and began liquidating its remaining stores.

Since the closure of the Borders business, Tom and Louis have largely stayed out of the public eye. Tom Borders has reportedly focused on philanthropy, supporting organizations like the Ann Arbor Hands-On Museum and the University of Michigan. Louis Borders has continued to work in the technology industry, founding a new startup called Zesty that develops restaurant management software.