Sales at Borders's first "new concept" store, which opened last month in Ann Arbor, Mich., are higher than expected, according to Borders CEO George Jones, who spoke yesterday at the AAP annual meeting in New York City. Shelf Awareness also spoke with him at length before he was interviewed before the group by David Young of Hachette Group.

A main reason for the boost is an aspect of the store that initially didn't receive as much attention as some of its new electronic features: the store displays many more books face out than a traditional Borders. In fact, the new store has 20% less inventory than the usual Borders, but its sales are up "in double digits," Jones said, primarily because of the faceouts.

Themed displays and multimedia displays, particularly in areas like travel and cooking, are also helping boost sales. Some electronic elements of the new store, like CD burning, are proving more popular with customers than they did in beta testing without the setting of the new store.

Borders will open its second new concept store later this month in Las Vegas, Nev., and will open 14 of them altogether this year, most of them during the summer. During the next three years, Borders will roll out key elements of the new concept store to its more than 500 U.S. superstores--but not rebuild them. Jones emphasized that the stores have space for features from the new concept store--the music sections are being reduced because of slumping music sales.

As it concentrates on refiguring its existing stores, Borders will open fewer new stores than it has in the past.

The company is culling inventory at all of its stores to accommodate an increase in faceouts. Most affected titles sell perhaps one copy a month in each store. Because in April Borders is "taking back" its website, which it had outsourced to Amazon.com, the stores should be able to make up for the absence of these titles, Jones stressed. Customers will be able to find the books via Borders.com kiosks that will be in the stores and have them delivered in two days for either pickup at the store or delivery to the customer. The online operations will cater to customers with Long Tail tastes, as it were.

Jones emphasized that Borders plans to integrate its newly regained online operations with its bricks-and-mortar stores. "Online we will drive traffic into the stores, and in the stores, we'll drive people online," Jones said. "There won't be a huge gap between the two sides of the business."

Jones also noted that the company is creating an allocation department so that buyers will no longer have allocation responsibilities. "We have more buyers than our major competitor [read: Barnes & Noble], but ours are spread more thinly because they also have to allocate titles." Buying and allocating are different skills, he continued.

Borders currently has 16,000 individual coop contracts, which had led Jones to suggest that publishers work with Borders to promote fewer titles in more concentrated, major ways. Borders, he emphasized, has increasing ways of making some titles major sellers, particularly as it increases factouts and themed displays, as it takes back Borders.com and as its membership program continues to grow (it now has 25 million members).

Asked about Borders's publishing program, Jones said that the company had proven it can create national bestsellers out of the books it publishes. But, he noted, "I don't care if we publish or don't publish. What's most important is getting exclusives."

Asked about pricing on mass market books, Jones stated that the current economic environment makes this likely not the best time to raise the average mass market price from $7.99.--John Mutter