Borders Group

Borders Group, Inc. is the nation's second largest retailer of books, music, and other educational, informational, and entertainment products. Its Waldenbooks bookstores were in over 1,000 mall stores by 1995. Furthermore, it owned the rapidly expanding Borders Books & Music superstores and Planet Music stores. Throughout the country, the Borders name is associated with superstores catering to book and music lovers, with a wide selection of hard-to-find titles and tapes as well as a growing number of varied forms of electronic media. These superstores, which numbered 116 in early 1996, provided customers with plentiful sitting and browsing areas, a well-versed customer service team, and even espresso bars featuring live entertainment. Borders Group, Inc. came into existence following the spin off from its parent Kmart Corporation in May 1995. But the Borders name dates back over two decades. Borders began as a single used bookstore in Ann Arbor, Michigan. The shop was founded by Louis and Tom Borders in 1971. Serving the bustling academic community of the University of Michigan and Ann Arbor's smaller colleges, the store held its own and became a popular neighborhood hangout. Within the next several years, the Borders brothers opened two more bookstores in Michigan, one in Atlanta, and another in Indianapolis. In addition, Louis and Tom started a wholesaling business they called BIS (Book Inventory Systems), which experienced healthy growth. To achieve their dream of taking the Borders name national, Louis and Tom put their faith in a young man named Robert DiRomualdo, a graduate of the Drexel Institute of Technology with a Harvard MBA. DiRomualdo had worked his way through several merchandising and marketing positions at Acme Markets and Little General Stores before becoming president and chief executive of Hickory Farms, the prominent food shop chain. By 1992, Borders had quadrupled its size and was beginning the complicated process of going public. Around the same time, the retailer attracted the attention of the huge Kmart Corporation, which had bought Waldenbooks in 1984 and was looking to expand its book retailing segment even further. In October of 1992, Louis and Tom Borders sold their business (though they remained investors), and Borders became a wholly owned subsidiary of Kmart. Sales from Borders' operations for 1993 reached $224.8 million, a 15.8 percent increase in net sales over the previous year. Several changes were implemented in 1993, including modernized cash registers, a human resources department, formal training programs for employees, and the introduction of music to the stores' stock. In August 1994, Borders and sibling Waldenbooks formed a new company called Borders Group, Inc., with plans to eventually break free from Kmart. DiRomualdo joined with George Mrkonic, who ran Kmart's specialty stores division for four years (which included Builders Square, The Sports Authority, Pay Less Drug Stores, Waldenbooks, Borders, Kmart's in-store Reader's Market shops and others) and had jumped over to the Group in November. He had helped shape the company into a mechanized book and music mecca. By the end of the year Borders had acquired five CD Superstores and one Planet Music outlet. The company went on to add four Planet stores and 32 new Borders superstores. The Group's overall sales for the year reached $1.5 billion. With what some analysts have called the industry's most sophisticated computer inventory management and sales system, Borders not only possessed the highest sales-per-foot ratio in the industry, but was able to track popular titles by selling season. Borders had identified as many as 55 separately defined seasonal patterns and programmed these into the computer system to keep better track of seasonal and regular bestselling titles, and to help maintain a supply of such titles with little or no interruption in prospective sales. Though Borders' transition from small retailer to national cha