Borders expands urban presence
By Mike Ramsey
Associated Press
DETROIT — Borders Group Inc. is becoming an urban pioneer.
Associated Press
The book retailer, based in Ann Arbor, Mich., is opening stores in Chicago, San Francisco and Detroit in once-devastated retail areas or in commercial or industrial areas that have never had places to shop. The Detroit store opened on the ground floor of Compuware Corp.'s new world headquarters amid shuttered storefronts and empty buildings — many of them under renovation.
Connie Garza browses at the Borders store in downtown Detroit. The store is among those opened in once-devastated retail areas or in commercial or industrial areas that have never had places to shop.
Urban locations are not always an easy sell, especially for large stores similar to Borders that rely on roomy parking lots. But Borders, the country's second-largest bookseller, has 50 stores in urban settings out of 480.
Alex Lelli, vice president of development, said urban stores are big contributors to Borders' profits.
Detroit's store, which opened in November, has exceeded sales expectations, though the company won't provide sales figures. It's too early to say how well the stores in Chicago and San Francisco are doing.
Lelli said the newest stores are opening in places that aren't obvious — Borders is looking for areas where redevelopment looks like it's going to take off.
"We hopefully make that decision at the right time," he said.
In some cases, such as in Detroit, the arrival of Borders is pegged by local development officials as a magnet for more retail development nearby. Other stores and restaurants, including a Hard Rock Cafe, also have opened on the ground floor of the Compuware building.
Roslyn Smith, sales manager for the store, said customers have thanked her personally for opening.
"They say, 'Oh my God, I can't believe it's a bookstore in downtown Detroit,' " she said. "People who live down here say 'I am so glad I don't have to drive to the suburbs.' "
Paul Czarnick, a Compuware employee browsing magazines, said the bookstore created a major buzz among co-workers before it opened.
"Being in the computer business, it's handy to have it here to see what's available," he said.
Borders' executives are pleased when the store can make an impact in an area trying to make a rebound, but it has to make financial sense.
In Detroit, Lelli said it's unlikely the store would have been built if it were not in the same building as Compuware, which employs more than 4,000 people. While hundreds of new residences are under construction downtown — including 157 loft apartments across the street from the store — the city lacks the residential density and good public transportation that Chicago and San Francisco supply.
The 8,000-square-foot store is less than half the size of a typical Borders superstore. It offers limited hours and fewer items because it caters to the business crowd visiting on their lunch hour or after work.
Borders also has an escape clause in its 12-year lease with Compuware if the store doesn't meet sales expectations. Company officials say the clause is not uncommon in suburban stores as well.
Those special considerations either help ensure success or limit risk for a large retailer going into a borderline market and give it an advantage over future competition, said Stephen Roulac, a real estate consultant and author of "275 Corporate Real Estate and Place Mistakes and How You Can Avoid Them."
He said Borders is likely building in these markets at a lower cost than in other areas and can potentially benefit from being a main attraction instead of getting lost in a sea of retailers found in traditional suburban locations.
Roulac said the store in San Francisco, where he lives, is across from the Giants' stadium, SBC Park, and surrounded by lofts — many unfilled — built in the dot-com boom. The store opened May 12 and is among the first retailers in the area.
Chicago's store, which opened April 17, is in the largely residential area of Uptown Chicago. While the section of town has been known as an entertainment district, Borders is one the first major retailers to build there.
Opening this summer is a Borders store in Louisville in a new entertainment district called Fourth Street Live. Borders, along with a Hard Rock Cafe and some restaurants and bars, are being built in place of the city's failing downtown Galleria shopping center.
Lelli said being the first retailer to move in an area creates brand loyalty when other retailers follow.
And other businesses will follow, said Eugene Fram, a senior marketing professor at Rochester Institute of Technology. Fram said the retail industry is so overbuilt in traditional markets that retailers soon will have no choice but to seek downtown locations.
