Borders Goes Bankrupt

By  |  Wednesday, February 16, 2011 at 5:03 pm

Borders, the second-largest bookstore in the United States, has filed for bankruptcy and will close 200 of its 642 stores. It may close another 75 if the company can’t get concessions from landlords.

You might think Borders was the first major casualty of the digital book boom, but the store’s problems may actually be tied up in the previous digital revolution. An Engadget commenter who claims to be a former Borders employee makes a good point to that end:

“Borders made a big commitment to selling CDs & DVDs — large sections of the stores were devoted to this content in the 90s and early 00s. new stores were designed and built in an effort to give multimedia a large segment of the store space.

“In the end, Borders has failed because [its] stores got too big and the demand for CDs and DVDs dropped — there was just no way to pay the bills.”

Even Best Buy is cutting back on CD and DVD space these days, but while the electronics retailer has plenty of other hot products to populate its shelves, such as video games, computers, smartphones and tablets, Borders can only fall back on books. And that’s going to get trickier as e-books become more popular.

If Borders wants to survive now, it will need a better digital book strategy than the one it has.The couple stores I visited recently kept their Kobo and Cruz e-readers locked away, with no area for hands-on demos. By comparison, my local Barnes & Noble has a Nook kiosk at the front of the store, with an employee standing by to answer questions. I don’t expect Borders to develop its own e-reader now, but it should at least try harder to sell its partners’ hardware.

Not that it necessarily matters; Kobo, whose digital book store powered Borders’ e-book service, is taking the news in stride. Kobo Chief Executive Michael Serbinis wrote in a blog post that “Kobo is an independent, financially secure company,” and that Borders’ e-book sales represented “a minority of Kobo’s worldwide sales.” I get the sense that Borders needs Kobo a lot more than vice versa.

 
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6 Comments For This Post

  1. tom b Says:

    I am concerned that with CD sales plunging, the medium may fall to downloaded MP3's. I'm a huge Apple fan, but shiny discs sound better and present the convenience of not having to manage tens of thousands of digital files– a nightmare, in my view.

    I think part of the trouble with the music industry is the sheer lack of talent. How many Grammy's have gone out out drugged out rap dudes and fluff. I am gratified, at least, that Justin Bieber went home empty handed!

    Same with movies. My local DVD rental place folded recently. I have little interest in downloading movies when my local, LOUSY Time Warner service tops out at 3 mBits/sec. The only alternative in my market is DSL, which would be worse.

  2. John Says:

    I'm a Borders employee. I don't know what stores you visited, but almost all (with the exception of Borders Express stores) have Area-E tables set up with demos you can try out for each of the e-readers we sell. I work at a Borders Express and we actively try to sell the e-readers; only problem is, no one wants them. You stating that we should, "try harder," shows how little you actually know. My store has sold around 25 Kobos since we've started offering them. Wanna guess how many we've taken back in returns? Around 15. They're not quality e-readers. The Cruz is a complete joke; the lag has caused customers to return them to my store. The problem is not with the employees selling the product, its with the product itself.

  3. Harry McCracken Says:

    E-books surely haven't helped Borders, but my sense is that the company simply overexpanded and might have been in trouble no matter what. Until recently, there were four Borders in San Francisco–including two about a third of a mile from each other–vs. a single Barnes & Noble.

    –Harry

  4. JaredNewman Says:

    I'm no audiophile, but I never liked the idea of paying for a digital music file that's already degraded from its original quality. I also enjoy listening to full albums, so for a long time I continued to buy CDs instead of MP3s.

    Now I've taken up subscription music services instead. I never wanted to build a collection of lossy MP3s anyway, so now I don't have to worry about having a collection at all.

  5. jltnol Says:

    @ JN Like you, I too am an audiophile… i own a recording studio. And like you, I don't care much for listening to low bit rate mp3 files, given all the options, so I ripped all my CD's at a native aiff files… no compression.

    Managing thousands of files for me at least is MUCH easier than managing thousands of physical media. When a hurricane is approaching, I grab one hard drive, and all my uncompresses music is with me. How would you save your collection in an emergency?

  6. Darcy Clarkin Says:

    When I have read this news, I was really saddened. Anyway, I just wish there will be a good time for them in the next years.