The Chain Gang

The larger of the country's two giant chain booksellers, Barnes & Noble, can trace its roots back to 1873 with a single bookstore in Manhattan. Jennifer Wolfertz, manager of corporate communication for Barnes & Noble's corporate headquarters in New York City, says the venerable old bookshop had fallen on hard times when it was purchased by Leonard Riggio, owner of a string of college bookstores, in 1971.

Riggio went on to enter the publishing and mail-order game when he acquired Marboro Books in 1979. Seven years later, Riggio teamed up with Holland-based retailer Vendex to purchase the B. Dalton Bookseller chain of mall bookstores.

In 1989, Barnes & Noble came under fire when it pulled Salman Rushdie's controversial Satanic Verses from its shelves across the country. Public outcry was so strong that the chain was forced to reverse its decision, and began selling the book again. That same year, Barnes & Noble bought out the Scribner's Bookstores chain and BookStop, which was founded in Austin by local entrepreneur Gary Hoover in 1982. Last June, they purchased the University Co-op Bookstore.

Wolfertz says that Barnes & Noble now concentrates on expanding its superstores, and is closing BookStops as the leases on those properties come due for renewal. Over the past five years, three of the six BookStops in Austin have closed, the most recent being the Lincoln Center store that shut its doors in October.

Barnes & Noble went public in 1993. Also that year, the book chain signed a deal with Seattle-based Starbucks to put coffee shops in its superstores. Today, Wolfertz says, B&N owns a total of 399 superstores and 613 other stores across the country. According to information provided by Hoover's, Inc., Gary Hoover's business information service and publishing house, Barnes & Noble had more than $1.6 billion in sales in 1995, but a net income of only $25 million. The company reported losses from 1992-1994.

In 1971, the same year Riggio bought Barnes & Noble, brothers Tom and Louis Borders opened their first bookstore in Ann Arbor, Michigan. Annemarie McCracken, community relations coordinator at the local Borders Books and Music, says their success led them to open other stores across the country and eventually sell the chain for a tidy profit to KMart in 1992.

KMart, which also owned Waldenbooks, combined its bookstore companies to form Borders Group Inc., which was spun off into its own publicly traded company in 1994. McCracken says the Borders brothers retained a share of the stock but are no longer involved in the day-to-day operations of the company. Tom Borders moved to Austin recently, but did not respond to a request for an interview.

Borders Books and Music opened in Austin earlier this year at Research Blvd. & Great Hills Trail, just a few hundred yards from a Barnes & Noble superstore. "Everyone will tell you one thing -- people from Borders will tell you that they find a spot and then Barnes & Noble comes in right behind them, and Barnes & Noble will tell you they find a spot and Borders comes in right behind them," McCracken says. "I think the fact of the matter is that it's a good spot. We're able to support two bookstores here. Our sales haven't been bad. The Barnes & Noble across the street is the best one in Texas in terms of sales, but to tell you the truth, it's not hurting us that much."

McCracken says that Borders tries to adapt its bookstores to the community. In the technology corridor of North Austin, she says, it's natural that the store would have a focus on computers. "We are in our own little Silicon Valley -- we've got IBM, Dell, TI, and 3M all within a seven-mile radius of us," McCracken says. "We try to cater to that with our computer books, computer events, and multimedia."

Like Barnes & Noble, Borders carries a selection of music and CD-ROMs, and features a coffeehouse. According to Hoover's, Inc., the Borders Group operates 1,053 mall bookstores and 81 superstores across the country. The company reported sales of $1.5 billion in 1995 and a net income of $9 million. In 1994, Borders reported a loss of $38 million but has been profitable in previous years. -- K.P.

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