Borders is dead

Posted on 20 August 2011

Four reasons why the mammoth book store went under.

Borders has confirmed that it is closing the remaining 399 stores and laying off more than 10,000 workers in the US by September, following news of its imminent bankruptcy that has been reported for at least one month now.

Locally, not as if there is smoke without a fire.

The Singapore flagship store at Wheelock Place has been closed for three days. Word on the street has it that the bookstore chain is two months behind on rental.

The latest turn of events sees the bookstore’s landlord, Wheelock Properties, taking over the retail space at Wheelock Place as the Borders’ flagship store is closing down.

Borders Singapore has said that the incident here has got no link with the closing down of stores in US and Australia.

However, the three reasons cited by the US book company for its demise were: A rapidly changing book industry, e-reader revolution and a turbulent economy

But one can’t help feeling there’s more.

Borders, in essence, became less competitive compared to their rivals, especially in the US, and became a tech dud.

First, between 2001 and 2008, Borders outsourced its online sales to Amazon, during the blossoming years of e-commerce.

The customers went to Amazon and probably, never came back.

And instead of investing in its own online platform, Borders channelled investment to building self-help kiosks in its brick-and-mortar stores where customers could help themselves in locating books.

Obviously, that didn’t work because that wasn’t even a concept remotely close to online retail buying.

In contrast, Borders’ closest rival in the US, Barnes & Noble, went ahead with the strategy of operating a dot com business even though it cannibalised sales at physical outlets.

Result? Currently, Barnes & Noble is the only American retail book store left standing (although it is also bleeding money as we speak).

Second, Borders was the last on the scene with their own e-book reader.

Amazon touts Kindle. Barnes & Noble releases Nook. Apple launches the iPad. And Borders makes something called Kobo that was launched in 2010, arriving too late on the scene.

Third, Borders failed at diversifying its business.

At one point in the first half of the 21st century, Borders made money selling CDs and DVDs, besides books. Then the Internet came along with its streaming services and music and movies became unprofitable.

Lastly, Borders opened too many stores in the US and overseas.

The expansion plan included opening big, lifestyle-themed retail outlets, which meant rent would be tough sustaining.

It also signed plenty of 15 to 20-year leases and they could not drop the unprofitable locations because they were tied down for the long term.

One last point, major or minor this argument is, it has to be made: “Long tail customers” were long abandoning physical bookstores because they could hunt better for obscure, niche, non-blockbuster titles online.

It is, therefore, possible that the Internet dealt a death blow to Borders.

Read the original articles here and here.

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- who has written 2685 posts on New Nation.

Wang Pei can be considered a new citizen of Singapore. She has been here all her life, just that her environment's changed beyond recognition.

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