Text and image by: mavenimagery
The recent announcement of the bankruptcy filing by Borders should not surprise anyone. It certainly didn’t surprise anyone who reads the newspapers. The back-and-forth events of Borders trying to stay solvent have been front page news for months. Coverage has read like a gossip novel. In case you don’t read gossip novels, they tend to read as follows: Kate needs money so she meets up with the richest guy in town, Brice. Brice thinks Kate is cute and the dating process begins. Brice soon realizes that Kate is missing some very necessary attributes; he dumps her unceremoniously.
Borders is a lot like Kate. They needed money to survive. Our Brice in the story is Barnes and Noble. Alas, the dating process did not go well and the two companies could not work out a resolution. Last week Borders officially announced that they declared bankruptcy and were closing 250 stores.
Since the declaration, I have received a number of phone calls from people ranging from sadness, blame, to outrage. Let’s start with sadness first. It is always sad when a company declares bankruptcy. The consumer that I was talking with was sad because the bookseller was required to close a large number of locations; she will have to find a new bookseller. Here is the real sad part of the story. Borders as a business did not have a fiscally sound strategy. They continued to get themselves deeper in debt. Once they declared bankruptcy they are protected from their creditors. The incredibly sad part of this story is that their creditors are not being paid.
Some people have told me that the reason Borders went bankrupt is because of the popularity of e-books. According to a 1BIGresearch survey, the percent of e-readers (regardless of the brand) are less than 4%. E-readers cannot be the demise of the bookseller. The blame must lie in another area within the company. Whenever companies go bankrupt, it is typically because they don’t have enough money to pay their creditors. So, stop justify a failure, and grab a cup of coffee from nearby Starbucks.
Now let’s talk about the outrage. A consumer called me and told me that she was outraged – yes outraged – that “her” Borders is being closed. Furthermore when she called the location and asked the exact date of the location, the sales clerk was rude and said “we don’t know” and then hung up. I have a suggestion. Switch your outrage from the employee who just learned that she is out of a job in the worst economy in decades to Borders; the company responsible for putting its employees out of work. On a side note, the Borders that is closing is in Michigan – one of the hardest hit states in the nation. Try getting another job in that area!
The reality of the bookseller business is a challenging industry. I often think that three movies in particular characterize the retailing industry in general and booksellers in particular. These movies include: “The Gladiator” – - truly a blood sport – - where companies must be highly competitive to survive; “Wall Street” – - greed is good – - the company needs a large cash flow to survive; and “Mary Poppins” – - a spoon full of sugar makes the medicine go down – - where customers are happy and want to repeatedly come back to you and only you. All three characteristics are needed to survive in the retail industry. The faint of heart need not enter this challenging world.
I wish all the Borders employees well as they search for new employment. Don’t wait to get your resume in the mail. Borders – may you rest in peace. As for Borders’ consumers, there are some very big booksellers that are more than willing to serve you. You may have heard of them: Barnes and Noble and Amazon.com.
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