Just yesterday, I walked through one of the Borders that is in the process of shuttering its doors as part of their retraction strategy. Everything in the store was 30%-50% off.
This isn’t a bankruptcy, but it’s close. When you’re closing a retail outlet of any sort, you have to dispose of the inventory. At this point, a lot of your normal decision-making is inverted, when it comes to pricing. In normal business operations, you’ll often sell some very popular items at or below your unit cost (what’s referred to in the retail world as a loss-leader), just to get bodies in the door. One example germane to the book business is the last Harry Potter book; you could find this brand-new bestseller for %30 off at Borders. You walk in the door, you browse the new hardback section, you pick up Deathly Hallows, but you browse the magazine rack and the classics and maybe buy a cookbook for Aunt Mabel while you’re there. Profit! They don’t make any money off of Harry, but you helped move some of their other inventory.
In a liquidation scenario, though, you’re balancing two opposing factors: you have a strong incentive to sell the *entire* inventory, so that you don’t have to pack it into boxes and ship it elsewhere (in the Pasadena Borders, they’re even selling off the furniture – need a bookshelf?) However, for the inventory items that have good turnover rates you’re actually less inclined to fire-sale, because if you *do* have to pack some stuff up after you close the doors, the boxes of books that will move anyway are less likely to be a major loss than the 80 copies of The South Beach Diet that you still have in the back, that are likely to just wind up, after shipping, in the back of whichever store they’re destined to live out the rest of their bookish lives.
This leads to a whole different set of economic incentives both for the seller, and the buyer. The buyer who only buys new releases or bestsellers might hit the store in the first couple of days, looking for a bargain. But the other new-releases-and-bestseller buyers are also there, so the popular book will be (maybe) 10-15% off. As you get closer to the “shuttering the doors” deadline, you might drop the price another chunk. But the books that are unlikely to sell are unlikely to sell everywhere, so the discount will be much higher.
This is a very long winded way of noting the following: in the Pasadena Borders store, the following genres were marked down by the following rate:
- Science Fiction and Fantasy: 30% off
- Mystery: 30% off
- Romance: 40% off
- Computer Howto/Fix It books: 40% off
- Fiction/Novels: 40-50% off
- Philosophy and Classic Literature: 50% off
Pleased that our economic overlords are indicating that the general public likes Mysteries and SF more than Romance Novels, but wryly amused that Homer and Shakespeare and Hobbes are really in the “nobody will buy this unless we dump it” category.