RSS
The Borders bankruptcy: 3 reasons it was inevitable
It takes more than a savvy marketing strategy to save a business that doesn't realize times have changed, says Mya Frazier in Forbes
 
Once a big dog of book sales, Borders fell victim to competition from Costco and Walmart, not to mention e-books and online retailers.
Once a big dog of book sales, Borders fell victim to competition from Costco and Walmart, not to mention e-books and online retailers.
Getty

Borders, the bookstore chain that once ruled American malls and shopping centers, filed for Chapter 11 bankruptcy yesterday and announced it would be closing 200 of its sprawling stores. In Forbes, Mya Frazier says there are are three lessons to be taken from the Borders bankruptcy: 1) "All Goliaths eventually become Davids"; 2) Retailers must adapt to new technologies or be "swiftly" punished; and 3) It takes more than marketing to save a struggling business. Here, a brief excerpt:

We are currently in the chain-store era of American retailing. It’s an era defined by its vicious and inevitable churn. And the bookstore category is no exception. As recently as two decades ago, one out of two books were sold in a bookstore, according to research firm Ipsos. And there were once as many as 5,000 independent booksellers in America.

In the '90s when Borders and Barnes & Noble went on a growth tear and consolidated the market, the independents lost share to the big-box chains and shuttered by the thousands. And then the mass-market retailers got into the bookselling business too. Whereas Borders and Barnes & Noble were once the Goliaths — the evil big-box chains driving competition and undercutting smaller independents — the Costcos and Wal-Marts of the world began undercutting the bookstore chains. With more than 600 stores, Borders was certainly big in its category, but up against this new competition, it was facing an entirely new form of competition from an entirely different retail category. The staggering capacity for volume at these mass-market retailers, combined with the exploding growth of digital book sales at Amazon.com, proved too much for Borders. And since the product — books — are manufactured by a publishing industry that doesn’t really care where its books are sold, as long as they sold, that means pricing pressure will continue to remake the competitive landscape.

Read the whole thing in Forbes.

 

THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER

Subscribe to the Week