Borders Partners With Build-A-Bear, Drops E-Reader Prices

Just days before reporting its newest quarterly earnings, Borders (BGP) is trying to show investors it's doing anything and everything possible to stay in the book-selling retail game -- no matter how unusual or ill-timed those moves may seem.

The company announced Monday that starting September, most of its 500 stores will sell items from Build-A-Bear Workshop, which manufactures stuffed animal toy kits for children.

For Build-A-Bear, it's another retail opportunity: The company already announced a previous partnership with arts and crafts chain Michael's. For Borders, it's another sign the second-largest book retailer is moving away from the once-core business of selling books in stores and relying on other revenue streams to keep it afloat. "As more books are bought online or in digital format than bought at retail, it creates really the ultimate strategic challenge in terms of redefining the bookstore," CEO Mike Edwards told Bloomberg. "We are totally rethinking it."

As part of that so-called rethink, Borders is also cutting the price of two of its e-reading devices, the Kobo and Aluratek, to $129 and $99.99 respectively, and making those and several other devices available in stores for customers to try and buy starting next month. The price cuts, especially for the WiFi-only Kobo reader, are about the only strategy Borders has left to compete with Amazon (AMZN), which sells a WiFi version of its newest Kindle at just $10 more and a 3G version at $189, and Barnes & Noble (BKS), which offers two comparably priced Nook devices.

Borders' desire for change also extends to its Rewards program. Customers now have two options: For no cost, they get 30% off the list price of hardcover bestsellers and free shipping for online orders of $25 or more; for $20/year, customers will receive 40% off hardcover bestsellers, 20% off select hardcovers, 10% off most everything else -- and free shipping for virtually all online orders.

"We saw a great opportunity to differentiate Borders in the marketplace by offering the choice of a paid program or a free program," said Edwards in a statement. "Beginning tomorrow, the new Rewards program will provide members with more relevant content, benefits and discount offers. It's yet another example of Borders' commitment to creating an outstanding customer experience."

But all the trumpeting of new opportunities and partnerships can't change the downward trajectory Borders has been on all year -- exacerbated by Monday's news that the company would close a 23,000-square-foot flagship store in San Francisco. "We make decisions on a case-by-case basis to close stores that do not meet our financial objectives, and unfortunately this store was not meeting those objectives," said company spokeswoman Mary Davis to the SF Examiner. With other stores in the same boat, more closures are almost certain to happen, offsetting the spin of increased discounts and teddy bear picnics.