Borders Group files for chapter 11 bankruptcy protection; secures $505 million in debtor-in-possession financing
In a widely anticipated move, Borders Group has filed for Chapter 11 bankruptcy protection, filing in bankruptcy court in the Southern District of New York. The move will result in 193 of its 642 stores being closed.
The universal explanation of Borders decline lies with its failure to adjust to the move to online retail selling of books and music. Unlike its rival Barnes & Noble, Borders was late to introducing its own e-reader, partner with a company to promote the Kobo, a device that has not proved as successful as the Kindle, or even B&N’s NOOK.
For six years, starting in 2001, Borders outsourced web sales to Amazon, before finally opening is own online retail store in 2008. But then it was too late. Additionally, the Borders either could not, or decided it would not compete aggressively on price. This is especially apparent in high priced books such as cookbooks — and example, Bouchon by Thomas Keller is priced at the publisher’s suggested price of $50 on the Borders website, it is $31.50 on Amazon.com.
On a personal note, the Ann Arbor-based Borders has always been my bookstore of choice. Its store located just outside the University of Michigan campus was always one of my stops — along with Schoolkids Records, which itself recently closed. At the time, Borders was an unique Midwest institution, the kind of huge bookstore that we imagined existed only in some place like New York. The company was founded by two brothers in 1971, who themselves were students at UofM. The current flagship store in Ann Arbor may not be in the original location but it is still referred to as Borders #1.
The original Borders company was sold in 1992 to Kmart – ’nuff said.
This is TNM’s 1,000th post. Launched officially on January 4th of last year, this site would have hit this milestone earlier were it not for the decision to close shop at the end of June. You, the readers of TNM, convinced me to start posting again in mid-July.
In the past year we have seen the introduction of the iPad and the rise of Android phones. Soon will come a rush of tablets that hope to compete with Apple’s device.
Unfortunately, we have not seen much recovery in the media industry. Some top tier consumer magazines have seen their ad pages increase this year, while many others have continued to struggle. B2B media was already in the dumps last year and, if anything, things have gotten worse. At the last B2B media company I worked at, management has so decimated its own sales capability that some magazines are produced with less than a dozen ad pages — and most (all?) of their BPA audits have been eliminated (though I see that this has not stopped them from continuing to display the BPA logo).
In other words, we as an industry are still struggling to define our futures. For many stubborn owners and executives, the fight is about print, postal rates, and employee expenses. Those publications will die off (I don’t make predictions here, but that one was a no-brainer).
For those who see the rise of tablets and mobile platforms as an opportunity to rethink their business, launch new ones, and reinvigorate ones, TNM remains here to discuss the news and express our opinions.