One for the books: Borders chain heads downtown to open stores

Urban stores add a lot to the chain's profits, one company official said.
DETROIT (AP) -- Borders Group Inc. is becoming an urban pioneer.
The book retailer 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.
Urban locations are not always an easy sell, especially for large stores similar to Borders that rely on roomy parking lots. But Ann Arbor-based 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 the 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.
Not obvious places
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 the 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, the 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."'
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.
Scaled down
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.
Opening this summer is a Borders store in Louisville in a new entertainment district called Fourth Street Live. The 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.
Fram said the retail industry is so overbuilt in traditional markets that retailers soon will have no choice but to seek downtown locations.
"I think you have to if you are going to grow," he said.