Borders moves toward bankruptcy: Are bookstores going away?
As Borders stumbles, dramatic declines are predicted for bricks-and-mortar bookstores.
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New digital technology hits the market, allowing people to consume media on their own personal digital device. The trend sweeps the country – wiping out traditional bricks-and-mortar retailers as it grows.
It happened in the early 2000s when MP3 technology changed the way Americans listened to music, shuttering record store chains across the country. (Tower Records filed for bankruptcy in 2006).
And it’s happening again, as Borders Group Inc. announced it is filing for bankruptcy as early as Monday.
Borders is the third largest bookstore chain in the US, one of the original big box superstores that offered consumers thousands of books and music CDs in a single location.
After failing to get publishers on board with a plan that would have restructured Borders’ more than $500 million in debt, Borders is turning to Chapter 11 bankruptcy protection, according to The Wall Street Journal.
Borders’ bankruptcy is expected to bring about almost 20,000 lost jobs and 674 Borders and Waldenbooks store closings, about a third of all Borders Group Inc. stores.
“The bookseller suffered a series of management gaffes, piled up unsustainable debts and failed to cultivate a meaningful presence on the Internet or in increasingly popular digital e-readers,” the Journal reported.
E-sales exploded between 2007 and 2009, growing 366 percent, according to the Association of American Publishers. In the same time period, sales of adult hardback titles dropped 7 percent.
In addition to changing the way Americans shop for and read books, Amazon and e-books also undersell Borders’ traditional bricks-and-mortar offerings, a double-whammy to the original big box superstore that once led the market.
Borders was late catching up the online and e-books market and, as a result, has already shuttered 204 bookstores in late 2009.
“Online shopping, and the advent of e-readers, with their promise of any book, any time, anywhere, and cheaper pricing, have shoppers abandoning Borders and Barnes & Nobles bookstores as they did music stores a decade ago,” according to a recent Journal article.
“I think that there will be a 50% reduction in bricks-and-mortar shelf space for books within five years, and 90% within 10 years,” said Mike Shatzkin, chief executive of Idea Logical Co., a New York consulting firm, the Journal. “Book stores are going away.”
Obtaining last-ditch financing isn’t yet out of the question for Borders, but unlikely.
Second leading books retailer Barnes & Noble may buy Borders’ inventory and store locations.
Already, liquidation firms that specialize in holding “going out of business” sales are circling the beleaguered book chain like vultures.
And Borders’ loss spells certain gain for Amazon, e-books, and Barnes & Noble.
One possible upside? The demise of superstore booksellers could revitalize the neighborhood bookstore.
Husna Haq is a Monitor correspondent.