What do our customers really want?

Customer satisfaction is a driving force at Borders Group. So we're always asking customers what they want and how they'd like us to improve their shopping experience. Then we translate those insights into new ways to strengthen our customer relationships and increase sales.

For example, we know many customers identify strongly with different categories in our stores — cooking, business, or health, for example — each with distinctive buying patterns and reasons to purchase. Through our category management initiative, we collaborate with our vendor community and tap directly into customer preferences, tailoring our inventory and the way we display and promote our selection based on what customers of each category desire most.

By the end of 2004, we will have completed category management implementation throughout our domestic Borders superstores as well as in portions of Waldenbooks stores and our International locations as well. Customers appear to like the improvements they've seen, as we have experienced positive sales and share growth in categories we have managed this way for a year or more.

Among other things, the concept of category management led us to pilot a new store design that we launched in September 2003. The new floor plan creates distinct boutique areas within each store for fast growing categories such as gifts and stationery and DVD, and makes it easier for customers to find exactly what they want more quickly or to browse for hours without ever feeling lost. Plus, it brings our store look up to date and makes our locations even more appealing.

As part of our strategy to help customers connect with us wherever their busy lives may take them, Borders Group is also expanding into airports and outlet centers.

By leveraging alliances and technology, we can address varied customer needs more quickly and cost efficiently. During 2003, for example, we extended our agreement with Amazon.com, which powers the Borders.com and Waldenbooks.com e-commerce sites. In addition to traditional delivery options, online customers have the added convenience of being able to pick up their purchases at a nearby Borders store.

We're also making it easier for customers to stay plugged in to their digital lives through our growing alliance with T-Mobile. By the end of 2003, nearly all of our domestic superstores were equipped as T-Mobile Wi-Fi Hot Spots, helping to make Borders a preferred destination for a growing number of wireless computer users.

Title Sleuth® information kiosks at Borders stores help customers perform more than 1.5 million searches per week to locate titles within our stores, at nearby stores or to order items for delivery and pick-up later.

Ultimately, what our customers tell us they really want is the title they desire, delivered by someone knowledgeable who really appreciates having their business. Through more efficient inventory handling, we're working on getting the right products in the right stores at the right time. And then we're reinvesting capital back into training and enhanced customer service to deliver more helpful and personalized attention throughout our stores.