Waldenbooks — The Mall Bookshop That Went Down With Borders
Summary
Waldenbooks was the small bookstore in the American shopping mall — the rack of paperbacks and bestsellers you passed on the way to the cinema — and in the summer of 2011 it was liquidated alongside its parent, Borders Group. Its origins were improbably old: on March 4, 1933, in the depths of the Depression, Lawrence Hoyt and Melvin Kafka opened not a bookstore but a book-rental library inside a Bridgeport, Connecticut department store, lending books for a few cents a day. They named the company for Thoreau's Walden. The rental libraries multiplied into the hundreds, and in 1962 the company opened its first true retail store in a Pittsburgh mall — a format made for the suburban shopping centers then spreading across the country. Through the 1970s, Waldenbooks opened stores at the rate of about one a week.
By the mid-1990s it was the largest bookstore chain in America by store count, with more than 1,200 small mall locations and, at one point, around 15% of all US bookstore sales. It had also, by then, lost its independence twice over: Kmart bought it in 1984, then in 1994–95 merged it with the Borders superstore chain to create Borders Group, which spun off public. Waldenbooks became the small-format wing of a company built around big-box superstores — and that turned out to be the wrong company to belong to.
Borders made the fatal misjudgments of the bookselling age: it handed its online sales to Amazon in 2001, bet on CDs and DVDs as those collapsed, and arrived late to the e-reader. As the superstore parent foundered, the mall chain shrank with it. Borders closed some 200 Waldenbooks and small-format stores in early 2010, filed for Chapter 11 in February 2011, and — unable to find a buyer its creditors would accept — began liquidating its remaining 399 stores in July 2011. The last Borders and Waldenbooks stores closed by mid-September. The mall bookshop did not so much fail as get carried down by the superstore it had been bolted to.
Timeline
The Library That Became a Mall Fixture
Waldenbooks began as a Depression-era answer to a simple problem: people wanted to read but could not afford to buy. Hoyt and Kafka's rental library, opened inside a Bridgeport department store in 1933, lent books for pennies a day, and the idea — affordable entertainment in someone else's retail space — scaled into hundreds of leased book departments and rental libraries over the next two decades. The pivot to selling rather than lending came with the American mall. In 1962 the company opened its first dedicated Waldenbooks store in a Pittsburgh shopping center, and it had found its native habitat: a compact, high-traffic shop selling bestsellers, paperbacks, and magazines to the foot traffic the mall delivered for free.
The format was made for the era of mall expansion, and Waldenbooks expanded with it — through the 1970s at roughly a store a week — until by the 1980s it was the largest bookstore chain in the country and a piece of the standard mall furniture, somewhere between the department-store anchors and the food court. It was never a destination the way a great independent or a Borders superstore could be; it was convenient, ubiquitous, and tuned to impulse. That was its strength for thirty years, and it became its weakness the moment the foot traffic and the bestseller both moved somewhere else.
Bolted to the Superstore
Waldenbooks lost control of its own destiny early. Kmart bought the chain in 1984, and then, in a burst of consolidation in 1994 and 1995, combined it with the Borders superstore chain to create Borders Group, which was spun out as a public company. The logic of the day was that books would be sold in two formats — the small mall store for convenience and the giant superstore for selection — under one roof. For Waldenbooks it meant becoming the junior partner in a company whose strategy, capital, and attention were organized around the big-box Borders stores. Its fate was now Borders' fate, and Borders proceeded to make a series of decisions that read, in hindsight, like a checklist of how to lose the book business.
The most notorious came in 2001, when Borders Group outsourced its entire online operation to Amazon — effectively conceding the internet to the company that would destroy it, and pointing its own customers toward the rival's website. Borders also poured floor space and capital into music and movies — CDs and DVDs — just as those categories began their own collapse to downloading, and it was late and tentative on e-readers as Amazon's Kindle, launched in 2007, sold out within hours and remade how people bought books. None of these were Waldenbooks' decisions. But Waldenbooks had no separate strategy and no separate balance sheet; it was a wing of the airplane, and the airplane was losing altitude.
EVERYTHING MUST GO
By the late 2000s the small-format mall store was the most exposed part of an exposed company. Mall traffic was falling, the impulse-bestseller it lived on could be had cheaper and instantly from Amazon, and many Waldenbooks had already been rebranded Borders Express in a half-step toward the superstore identity. In January 2010, Borders closed roughly 200 of these small stores — close to two-thirds of what remained — in a contraction that all but ended Waldenbooks as a meaningful chain before the final act. On February 16, 2011, Borders Group filed for Chapter 11, listing about $1.275 billion in assets against $1.293 billion in debts: a company that owed slightly more than it owned.
Borders sought a buyer through the spring. A private-equity bid surfaced but could not win over the creditors before the July deadline, and so the reorganization became a liquidation. Beginning July 22, 2011, Borders started clearing out its remaining 399 stores — the Borders superstores, the Borders Express, and the surviving Waldenbooks together — under the yellow "store closing" banners, and by September 18 the last of them had closed. Barnes & Noble bought the Borders and Waldenbooks trademarks for a few million dollars, an intellectual-property cleanup more than a revival. The oldest name in mall bookselling, a chain that had begun lending books for pennies in 1933, ended as a line item in someone else's bankruptcy.
The Five Factors
Aftermath
The 2011 liquidation cost the jobs of thousands of Borders and Waldenbooks employees — the company employed on the order of 19,500 people across its banners — in a single coordinated wind-down, capping a decline that had already shed tens of thousands of positions over the prior years. The small mall storefronts, often tucked between larger tenants, were re-let or left dark as the malls themselves continued to hollow out. Barnes & Noble acquired the trademarks, and for a time directed Borders customers to its own site, but neither Borders nor Waldenbooks returned as a store.
The lasting mark is twofold. Waldenbooks is remembered as the quintessential mall bookshop — the place a generation bought its first paperbacks — and its disappearance, with B. Dalton's, left the mall without a bookstore at all. And it stands as a cautionary footnote within the larger Borders case study: the chain that outsourced its website to Amazon and missed the e-book took down with it the oldest name in American mall bookselling, a business that had survived the Depression, the rise of the superstore, and nearly eighty years, only to be liquidated as a unit of a company that made the wrong bets.
Lessons
- Do not run a small full-price store whose only advantage is immediacy against a rival offering more selection at a lower price online; that advantage erodes every year and disappears entirely with digital delivery.
- Never outsource your most important future channel to a competitor — handing the internet to Amazon was convenient in 2001 and fatal by 2011.
- A retail format tied to a single traffic source — here, the shopping mall — dies when that source dries up; diversify the reasons customers come, or share the fate of the venue.
- If you are a subsidiary, understand that your survival depends on your parent's strategy and balance sheet, not your own; a well-run wing cannot save a badly flown plane.
- When a chain owes more than it owns and no buyer will meet the creditors' price, the realistic outcome is liquidation, not rescue — recognize the absence of an equity cushion early, before the closing banners go up.
References
- Discounts abound as Borders dissolves Honolulu Star-Advertiser / AP
- Inside the final days of Borders' bankruptcy — and what Mike Edwards learned as its last CEO Retail Dive
- Borders (retailer) Wikipedia
- Waldenbooks Wikipedia