Waldenbooks: Eight Decades in Reading

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Books have always been a cornerstone of American culture. Reading is a pastime much older than baseball, and literacy is more patriotic than apple pie. Purchasing books has been possible through booksellers, of which there have been countless over the centuries. One of the many massive bookstore chains was called Waldenbooks, which was around for nearly 80 years and peaked at over 1,300 stores in all 50 United States. [2] Let’s talk about how they got there and what happened to them.

(Center left) Filene’s in downtown
Boston, MA

The story begins in the early 1930s, at the height of The Great Depression, a period of worldwide economic depression rivaled only by some of the most notoriously severe financial crises in recorded history. In the United States, the ‘20s was a decade of great opulence, so, suddenly, many of the well-to-do were now homeless and destitute, and that became the national image. If not now more than ever, people needed a means of entertainment, and most people read books, which were not cheap to make. Most public libraries allowed the general public to borrow books, but, where a lot of public libraries were non-profit, there was a special kind of private library where customers could rent titles for a nominal fee. These were harder to find, more upscale with rarer and higher quality stock, and more specialty services available to patrons. Two men named Lawrence Hoyt and Melvin Kafka saw a market gap and decided to fill it. They had a mission of giving people the means of low-cost, high-quality reading material.

The company was born in March 1933, on the day that Hoyt walked in on the head of Filene’s department store to pitch the concept. They would run a leased book department in their Boston flagship store, in which they would run their library. They would rent out the most popular books at three cents a day. When the executive inquired about the name of his new company, he realized it didn’t have one yet. Being a fan of Thoreau’s literary classic “Walden,” and having grown up near the Boston area Walden Pond that served as the book’s setting, it was suddenly a perfect storm of imagery in his mind. He had no issues coming up with the name right on the spot. “The Walden Book Company,” he said, and the name stuck. [21]

An Icon is Born, Books Go Big

Three locations were opened in total, with the other two at Read’s department store in Bridgeport and G. Fox & Company in Hartford, Connecticut. Hoyt had a history working for Simon & Schuster and was well acquainted with the publishing industry, which gave them an upper hand. Soon there were dozens of locations throughout New England. The company went public later in the decade.

In America, before World War I, the idea of a company going public was yet to be conceptualized. Stockholding was a sort of closeted, mysterious inner circle that was hard to enter unless you were one of the nation’s super-rich and powerful. After seeing how war stocks and Liberty Bonds supported the troops during the war, publicly owned company stock normalized in the United States. This form of investing created a new kind of American culture, and, after that, trading was at an all-time high. However, Hoyt and Kafka happened to wait until after the hype and subsequent market crash to go into business for themselves. While some at the time may have thought the two were crazy to start a business during the Great Depression, they may have just chosen the best time to do so.

After World War II, Walden was going on twelve years old, employed around 15 people, and did business inside over 200 department stores. With the 1950s came a cheaper alternative to traditional books: paperbacks. With hardback books, publishers were spending obscene amounts of money in production, but these slimmer books cost pennies to produce and sold for as little as 25 cents apiece. Also, these books were much more accessible for a more overall affluent country, meaning rental was slated to soon be obsolete. This led Kafka and Hoyt to consider a retail conversion of their libraries, an idea that wouldn’t be realized until after Kafka would retire. He left Walden in the hands of Hoyt, who would lead the organization at full speed. [1] By the 1960s, their reach had grown throughout several Northeast and Mid-Atlantic states.

The Rise of Retail and Exploits in Bookselling

The team restarted talks on alterations that would keep in tune with the changing book industry, and it only made sense to try retail bookselling. They would open a test bookstore in Northway Mall, a new shopping center being built in Greater Pittsburg. Starting as an addition to an already existing strip center, Northway would be the first indoor shopping mall in Pennsylvania. It would open in August 1962, and “The Walden Book Store” would be one of their first tenants. This store marked a big change in company direction. The next year was their 30th Anniversary and they continued to focus on retail growth as competition in the bookselling market became more prevalent. The Dayton Company, which was one of the largest department store companies in the country at this time, and had just recently launched Target, announced that they would enter the bookselling business with the launch of a new chain called B. Dalton Bookseller. With Dayton as a new competitor, Walden would need to grow their retail division faster than expected, and they would eventually ditch book rental altogether. [1]

By the end of the decade, Walden had around 250 retail outlets from coast to coast, and company sales had inflated to $4.4M. This profitability was not lost on the leaders of retail conglomerate Broadway-Hale (later Carter Hawley Hale), who was the largest department store operator in the West at the time. They ran several chains including Neiman-Marcus, and they would buy up Walden as well. Lawrence Hoyt would relinquish his position in the company to his son Russel, who would increase the rate of growth to where a new store was being opened every week. Under Carter Hawley, Walden would follow a similar plan to B. Dalton, focusing on mall-based expansion, and began a companywide name change to Waldenbooks.

One of their East Coast contemporaries was Barnes & Noble, which had been around since the 1880s. They had become the nation’s largest wholesale and retail dealer in textbooks, but in recent years had fallen into disrepair. Following a 1971 buyout by a book savvy young man named Leonard Riggio, they were reorganized. By five years later, they had sales of $32M and operated 21 campus bookstores. This time, under Riggio, things were different, and the company was now begging for expansion. [7]

Mr. Harry Hoffman

Waldenbooks opened their 500th store in 1978, operating in 44 states. Harry Hoffman would join the company as the next president, and soon, Waldenbooks had become the largest bookstore chain in the United States. Hoffman’s background in bookselling would become a major asset to the company, and a total of 90 new stores were opened in 1980 alone. [1] Directly behind them was B. Dalton, who was the largest in sales with $174M. As Walden’s 45th Anniversary approached, construction began on their new two-and-a-half-story corporate headquarters, which housed their 275 employees. Waldenbooks also became the first bookstore to link all their computerized cash registers to a centralized warehouse, which gave quicker control over inventory and made knowing what to order a lot easier.

Regarding inventory, they received a lot of criticism for focusing on best sellers and your average blockbuster novels, which sacrificed a platform for more serious works. Hoffman owned it, restating that was exactly the kind of business they were in, and the numbers spoke for themselves.

Massive Milestones, Big Buyouts, and Kmart

Carter Hawley received an offer from The Limited, who gave a bid to take over the company. A big draw was Waldenbooks, who had become the only American bookseller with stores in every state with their 735th store. They were also being eyed by the General Cinema Corporation. They operated a few hundred theaters throughout the United States but had stakes in a diverse crew of industries, and would buy a stake in Carter Hawley – which would grant access to Waldenbooks, the subsidiary they were most interested in. [5]

In the eleventh hour, Kmart would enter the ring. They had over 2,100 stores across the United States and Canada and did something like $5 billion in sales. They offered $295M, as well as a $5M bonus for exclusive access to Waldenbooks, a proposal that couldn’t be refused. The Limited said Carter Hawley just lost its best asset, but they responded, claiming they would have sold it either way due to slowed company growth. [6] Regardless, the deal was closed, and Waldenbooks was now a Kmart company.

Industry Diversification, Superstore Fever, and Company Merges

Kmart store c. mid-’80s

As the third-largest bookseller in the country, Barnes & Noble had become quite the operation, with 35 bookstores, shops on more than 100 college campuses, and $225M in sales. That year they announced they would buy B. Dalton, who had grown to over 800 stores and had estimated revenue of $538M. This gave Barnes & Noble a boost past Kmart as the largest bookseller in the country. Despite this, Waldenbooks pushed to reach a milestone of 1,000 stores. Following the acquisition, Kmart announced they expected to keep Waldenbooks growing, with an expected 45 to 50 new stores in 1984. [6] They would purchase the Brentano’s chain, an upscale bookseller who’d recently emerged from bankruptcy with a total of three stores, and they would work to grow these stores massively. They started their own publishing company called Longmeadow Press. Waldenbooks would add VHS tapes to its shelves that year. They could obtain practically any movie title, no matter how obscure, however, they did not do rental. [13]

Capitalizing on the video game and computer software market, a booming industry at this time, B. Dalton launched Software Etc., selling software in their locations as a store-within-a-store. Walden sold computer software as well, so with a toe in the market already, they started the Waldensoftware chain in June 1987, opening with 7,500 different software titles for sale. One of their competitors in this new market was Babbage’s. Waldenkids would come next, a chain that would exclusively sell educational toys and books for children 12-and-under. With backing from a big company like Kmart, it became clear that they wouldn’t give up the fight for first place.

By the close of the decade, Waldenbooks had broken $1 billion in sales. Under Hoffman, they started the Preferred Reader program, a frequent buyer club that gave points for every purchase made by customers who opted for an annual membership fee. It was the first of its kind and hit five million members by the end of 1990. [1]

An issue was that shopping malls weren’t as popular as they used to be. Department stores lost a lot of business, and so did the malls they anchored. During the 1970s, 37 new malls were opening every year, but in the 1980s, this construction dropped to a depressing low of 20 a year. Superstores were more popular, and prime spots weren’t popping up like they used to. Being a mall-based retailer, Waldenbooks had to find another means of market domination, and diversification became the answer. Hoffman would dabble in discount and a larger store format, opening Waldenbooks & More. These mini superstores had double the books, a broader product range, and ran about three times the size of the average Waldenbooks. [11]

Borders Bookstore in Beverly To Become Senior Health Care Facility -  Beverly - Chicago - DNAinfo
Borders Books & Music superstore

At the same time, Barnes & Noble began a superstore initiative. These stores would be massive, featuring cafes, reading nooks, a wide variety of inventory, and children’s areas, carrying around 150,000 books. In Walden’s case, their largest unit was Waldenbooks & More, which had 30,000 books in stock. Another superstore bookseller was Borders Books & Music, credited with creating the super bookstore format. They had about 21 stores similar to Barnes & Noble’s and served a higher class of shoppers than most others in the industry. They had a revolutionary inventory system so powerful that it could accurately predict what consumers wanted, envied by much of the industry.

Cumello’s Commandments and Borders-Walden

Harry Hoffman would retire in 1991 after a dozen-year tenure with Walden. With his know-how, he oversaw the openings of 800 new stores and brought the company to $1 billion in revenues. There were 26 Waldenbooks & More and 61 Brentano’s stores. When he left, the company he was integral in shaping headed sky-high, despite low-profit margins. Not all his ideas were gold, but his fearless aggressiveness did a lot to make Waldenbooks what it was, and his position made him one of the most powerful businessmen in the country. When his replacement Charles Cumello stepped up, he saw a company that needed to get “back to basics,” and that it was necessary to scale back sidelines such as toys, games, and movies. This movement went over big and set a new trajectory for the company. Mall-based retail sales accounted for a mere 20% of the bookselling industry, and superstores like Barnes & Noble were taking all the business. By downsizing, they were able to introduce their own superstore called Basset Book Shops.

In 1992, Kmart announced they would purchase Borders. The fact that they served a different class of customers than Kmart raised concerns. Regardless, Borders and Kmart had mutual needs. Borders wanted to be a national bookseller and to grow their fleet in a major way. Kmart wanted a bigger foothold and more relevance in the bookselling industry, and they had all the money and real estate to make both their dreams a reality. Kmart’s numbers had gone big after strategic acquisitions from OfficeMax, Builder’s Square, and Sports Authority, and they were ready for this move. It was a transaction valued at around $180M. [14] The Basset Book Shops were eventually converted to the Borders name.

The book industry was unique in that it had exponential growth that didn’t seem to stop. As people age, they read more. Just about when these booksellers were cropping up, national initiatives for more literacy were coming into popularity worldwide. For stores like Waldenbooks, sales were still slow, despite this profitability. Kmart would merge them with Borders to create the Borders-Walden Group, partly hoping that a merger would help lift Waldenbooks out of its current funk, some of the business rubbing off on the older chain. What happened in actuality was a mass exit of Borders executives, leaving Kmart in a similar situation as before, with no growth plan and way more responsibility.

Through ’95, Walden made moves to downsize and closed over 180 underperforming stores. Borders would open 32 new locations, totaling 82 superstores. [15] That year, Borders divorced itself from Kmart, taking Waldenbooks with it. The spun-off company was named simply Borders Group. The resulting firm had more stores than Barnes & Noble but had less sales. Unfortunately, Cumello would leave the company after this. The Group went public and soon became a wholly independent entity.

Life after Kmart, Borders Group as an organization

As far as Borders Group was concerned, Waldenbooks shrinking was a good thing. By continuing to close more of their locations, they stayed lucrative enough to fund Borders’ superstore expansion. This transfer of power became the company’s main drive. A Waldenbooks website went up that year as the chain went from 1,000 units in 1997, down to 800 by the next year. The Group went international with a store in Singapore and over 40 stores in Europe, Asia, New Zealand, and Australia. [19] Despite this growth, there were a few problems right off the bat. One was that Borders music sales were all in CDs, and they weren’t as worried about digital as they should have been.

Barnes & Noble was playing a market at least ten years into the future and put a lot into online and digital, and it paid off in a big way. They announced a website and a bookselling collaboration with AOL. All of this was well-timed to compete with newcomer Amazon, which started two years earlier as an online book retailer and would become a major threat to the current industry. Another problem was that Borders was losing value quickly, and projections weren’t any better. Following Cumello, the company went through four different CEOs, none of which had bookselling experience prior to joining the company. By 2000, they were working on how to turn the ship around. Merrill Lynch was brought in, and serious talks of buyouts or further mergers were on the table.

Borders Online, which went up in ’98, failed to meet expectations and had become a money pit. They struck a deal to contract the site out to Amazon, where they would instead feature their competitor’s books and music selection. Conceding Borders.com to one of their top competitors would quickly prove to be a fatal mistake, as Amazon didn’t show as much interest to promote Borders as they did take the free exposure. “Termites don’t team with Orkin,” said Michael Norris of Simba Information. [18] This partnership would end after five years.

The store deficit continued to shift, and, by 2004, there were 700 Waldenbooks to 450 Borders. [2][16] The main issue was that the Waldenbooks name had been cheapened and was unimportant compared to Borders. One customer said, “Obviously the Borders name is more quality than Waldenbooks…” and that, “I think the staff knows more about books.” [17] It remained the Group’s easy cash-cow.

After the company cut ties with Amazon in 2006, the Borders website was set back by over half a decade, in addition to the time they missed by taking so long to join e-commerce in the first place. Coincidentally, 2006 was the last year Borders turned a profit. [18] Meanwhile, Barnes & Noble was raking in hundreds of millions of dollars yearly through their website. They set up a new Borders Online, which would get them back in the online race, but now, new problems came into play. In 2008, The Great Recession would strike hard and left the Group with serious debts to vendors and landlords. By next year, half the Waldenbooks stores that existed just a decade earlier no longer operated. On the New York Stock Exchange, Borders stock was selling at just over a dollar. They’d reorganized the company multiple times by this point, and Borders was nearing the end of the line.

That year, Barnes & Noble released their new e-reader, the Nook. Despite Borders’ competing products like the Kobo, the average customer had no idea they even carried e-readers. Many believed this was the final nail in the Borders coffin, but it was only one of the dozens of nails. In 2011, e-books outsold paperbacks for the first time, Barnes & Noble and Amazon were at the forefront of this movement. That year, Borders announced a Chapter 11 filing, seeking bankruptcy protection and another company reorganization. They had 642 stores, about 20,000 employees, and projected 200 closures. According to the filing, their situation was far worse than anyone could have imagined. They had $1.28B in total assets and $10,000 more than that in debt – $41.1M was owed to the Penguin Group, $33.8M to Simon & Schuster, $33.5M to Random House, etc. [20] As they unloaded their bloated investments, Borders said they could only keep sixty of the Waldenbooks stores open at most.

borders group 1971-2011 | culture wedge
Borders store in mid-liquidation

These downsizes didn’t help, so Borders Group entered Chapter 7 bankruptcy, in which they would be salvaged for all it was worth. In many cases, a company can still be resurrected from this state, but in their case, it resulted in full company liquidation. Their rival Books-A-Million, which was now the second-largest bookstore chain in the country, was one of the few companies to buy pieces out of the dying Group. The largest, Barnes & Noble was next, purchasing assets such as the Borders and Waldenbooks trademarks, and assuming their customers. At 9:00pm on Monday, September 26, 2011, the last Borders store was closed.

Lessons and Final Words

The first of Borders’ problems came immediately after they and Waldenbooks were spun-off, starting as growing corporate fat and what seemed like an aversion to digital literacy. Contrary to most statements, I believe it wasn’t so much their late adoption of a website that was the flaw – a lot of today’s big-name companies took a long time to adapt to the internet, and it’s easy to say that someone should have done something when history has already proven your point accurate. It was their outdated stores that made a dangerous mix of negligence. If you walked into a Borders in 1995 and again in 2005, there would be little change in product lines, décor, and general business practices. The company had a consistent issue with thinking ahead, allowing competitors to leave them easily outsmarted. To go from the revolutionary chain that it was in the early ‘90s, to what they had become by just a few years later was sad and disappointing.

            A case point in their lack of foresight was the two Amazon partnerships. If Amazon were another brick-and-mortar store that competed in a completely different market, their collaboration would have had some merit. However, a worldwide online retailer with exponential growth potential was not a good bedfellow for an aged bookseller, especially when Borders Online was redirecting millions of customers to an advertisement for the cheaper, more convenient alternative. Neither time did they express the foresight to think what kind of competitor they might (and did) make. Then, they put all their efforts into unscrupulous growth, most times competing directly next door to a more relevant retailer like Barnes & Noble.

            Another misstep was the underestimation of the power behind Waldenbooks as a subsidiary and a company. They came into existence in one of the worst economic downturns in history and made steady business, went on to nail twenty years of bookselling and retail by the time of the Carter Hawley buyout, and continued to outperform all other competition for over a decade before the Kmart buyout. They reached sixty years of existence before Borders Group for a reason. They had a lot of know-how and were smart enough to know where to stop when it came to expansion and when it was time to turn to diversification, majorly due to Hoffman and Cumello’s leadership. From the get-go, Borders was so dead set on becoming a national chain that they ended up crippling themselves. With the Darwinian nature of retail, “survival of the fittest” is a term that rings as true as in the animal kingdom. Sadly, as for Waldenbooks, their end came prematurely as a casualty in the fall of a giant.

Would you like to cite this article?

Go ahead and use one of these!

APA: Nuelle, A. (2021, July 21). Waldenbooks: Eight Decades in Reading. Post-Mortar. https://postmortar.org/2021/07/21/waldenbooks/

MLA: Nuelle, Alex. “Waldenbooks: Eight Decades in Reading.” Post-Mortar, 21 July 2021, postmortar.org/2021/07/21/waldenbooks/

Chicago: Alex Nuelle, “Waldenbooks: Eight Decades in Reading,” Post-Mortar, July 21, 2021, https://www.postmortar.org/2021/07/21/waldenbooks/.

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