A Sunday deadline came and went without an offer that would keep the nation’s #2 bookstore chain in business. So reports The Wall Street Journal citing people familiar with efforts to save the bankrupt retailer. The deadline precedes a bankruptcy-court auction scheduled for tomorrow. Absent the emergence of a last minute bidder, Borders Group appears headed for liquidation, where it will join other also-rans, such as Circuit City and Tower Records, on the scrap heap of failed retailers.
A deal that looked to be Borders’ best bet to remain in business fell apart last week after publishers and landlords to which it owes money complained about the structure of the $215-million-plus-debt offer from Najafi Companies (read here). Creditors said the agreement wouldn’t prevent Najafi from taking possession of Borders and liquidating it immediately for profit. They preferred a backup bid from a pair of liquidators that would pay them more. Najafi, whose holdings include Book-of-the-Month Club, said it won’t bid again for the bookseller (read here).
Borders’ CEO Mike Edwards said yesterday that the chain had received some inquiries, so it’s a bit premature to begin saying prayers over Borders’ corpse. However, it doesn’t look good for the 400 remaining stores (down from more than 1,000 at Borders’ peak) and 11,000 employees.
What impact would Borders’ demise have on the book business? Market leader Barnes & Noble, which itself is struggling (see previous post), would be left without a bricks-and-mortar competitor. The failure of its only direct competitor could boost the odds and price of a takeover of B&N by Liberty Media, which in May offered about $1 billion to buy it (see previous post). The media conglomerate led by John Malone said it was attracted to B&N both for its Nook e-reader business and its retail stores, so the elimination of Borders would increase the value of the stores. The WSJ article also noted that Borders’ closure could hasten the decline in sales of hardcover books and paperbacks and boost sales of e-books at Amazon.com and other online retailers, including B&N. Unlike B&N, which has worked frantically to build a viable e-book business, Borders failed to make a significant dent in e-books.
While Borders’ closure would be a plus for B&N, it would be a loss for book lovers, landlords left with empty stores, and publishers with fewer outlets for their titles. I’ve always liked Borders’ stores and selection and would be sad to see the chain close. But pessimist that I am, absent a last minute miracle, I’m afraid it’s probably inevitable.
Bizmology readers: What impact will Borders’ failure have on you and the broader book business? Do you still shop at bookstores or are you all Amazon converts?
~
Photo by Clive Darr, used under a CC-Share Alike license.
EDITOR’S NOTE: Alas, there was no last minute miracle for Borders. In a statement released late Monday (read here) the company said that because it had received no interest from a “going concern” bidder it would sell its assets to liquidators Hilco and Gordon Brothers. Liquidation of some of the company’s 399 stores could begin as soon as this Friday, July 22. :(
Assuming stores in each of the chains follow generally the same presentation, I think B&N does a better job with the ambiance of its stores. While its Nook has probably contributed most to the company’s overall resilience, I think its store layout and design have given it the edge among the brick-and-mortars left out there, particularly over Borders.
There’s a definite and charming personality to, say, the one at the Arboretum here in Austin. It’s both cozy and expansive, busy and yet not smothering. The atmosphere just seems more “booky” and inviting. Borders stores weren’t unpleasant, just a lot more non-descript.
I would go to Borders to find a book I may not be able to find elsewhere, but wouldn’t linger much. There’s definitely a linger-temptation for me in a B&N store.
Definitely sorry to see Borders stores go, but I’m not surprised. Even if they’d matched B&N’s e-book/e-reader efforts, I still think they’d have been on the short end of the stick between the two companies for the above reason.
People still like to go to physical places for things that seem to be falling to digital even as much as books. We will always be social and emotional animals. There’s no digitizing that away. Newspapers don’t carry nearly the emotional attachment (if any) that books do. B&N does a great job of understanding the brick-and-mortar’s draw, its ability to feed that side of us that digital products can’t, and then executing on that.
With borders closing, there will be no bookstores left in Salem, OR. Sad day…
It’s always so sad when a bookstore closes. The thing was, with Borders, it didn’t seem as if they liked books very much. Our local Borders didn’t support authors very well, and as Chris said, they didn’t present much of an atmosphere conducive to browsing.
As for where I shop, I have an ereader but I still shop at bookstores. I buy from independent booksellers too. We already lost our local Borders and I used to go there fairly often. I’m more apt to shop at BookPeople anyway.
Chris, Not only does B&N understand the bricks-and-mortar draw, as you say, but it uses its stores and sales staff to support Nook sales with in-store Nook boutiques. A central element to B&N’s multi-channel strategy is the development of a symbiotic relationship between its bookstores and digital business, with the store driving digital sales and its digital initiatives driving foot traffic to bookstores. Pretty smart!
What I like most about these bookstores is the familiarity and comfort that they carry. I can walk into any B&N in the US and instantly feel like I am at the one back home because of the similar floor plan, same fixtures, and expected art. I’ve moved around because of school and (if I was ever feeling a little homesick) a trip to the bookstore would instantly make it seem like I was back home sitting in the B&N cafe, reading a novel, and sharing a scone with my mother. I know being emotionally attached to a bookstore is not the healthiest thing, but for a short time it served as a familiar place in some unfamiliar cities.
It’s always a sad day in my book when a bookstore closes. The Borders back home was more than just a bookstore. Yes people read and bought books there, but it was also study spot, an after dinner coffee spot, the only retailer to stay open past 9pm, and one of the only places people could get free wifi after Hurricane Ike, all set against the unique background of books. I know I take advantage of those things here in Austin, especially with our 24 hour coffee shops and free wifi virtually every where, but in a place that is extremely cookie cutter, like The Woodlands, those things are truly valued and will be missed.
Anonymous, Bookstores are a vanishing breed. There’s always the library. Or Amazon. — alex
Catherin T. — Many retailers try hard to make an emotional connection with their customers. Sounds like B&N has succeeded in your case. From the sound of Patrice’s comment above, Borders didn’t really connect with her. We had a wonderful independent children’s bookstore here in Austin called Toad Hall, which unfortunately went out of business years ago. I spent many wonderful afternoons with my little girls and bought tons of great books there. Though it has been gone for years, I still mourn it every single time I drive by. I’ll never get over it. — alex
Patrice, I’m a fan of BookPeople too. The only problem I find is whenever I need a particular book — say for my kids’ summer reading lists or even a classic picture book for a gift — they almost always never have it! It makes me nuts. I’m becoming a huge fan of Half Price Books. I can arrive with two big boxes of books to sell and walk out with a couple of paperbacks and $20 in my pocket. What’s not to love! — alex