Borders Group Files For Bankruptcy

Borders Group filed for Chapter 11 bankruptcy today after the company blamed the situation on a lack of consumer spending and it's inability to sustain operation in a tough, competitive environment.

Instead, the company will reorganize, close a third of its 600+ stores, and use the $505 million in funds it received in loan from GE Capital to pick itself off the ground. Its public shares traded on the NYSE exchange will be delisted.

It owes nearly $140 million to major book publishers including Penguin Putnam, Random House, Simon & Schuster, and Hachette.

But let's face it. Borders was doomed years ago. It has no feather in it's cap to parade around in when the world we live in consumes content digitally.

As a regular customer, I could tell when things started to turn for the worse some three years ago. It reminded me so much of the death of Crown Books with just the way the stores started to look. When you see the aisles widen with more empty retail space, that is a sign of a company heading downhill quickly. The cost of carrying books becomes a burden. Not only that, but the consumer knows they can get books 30-40% cheaper online, if not at their competitors.

But Borders tried and I give them a tip of the hat. They tried to get with the times and sell 3rd party e-book readers. But the mistake there is, why buy imitation at prices not much any different than the real thing. Kobo, Sony or Cruz eReaders? If it isn't a Kindle, iPad, or Nook, why bother?.

Every Borders book store I visited stopped carrying sufficient book inventory.What I mean by sufficient is having a wide assortment of books with more than two items in stock for a title. Over at the Los Gatos and San Jose Santana Row stores, book inventory is pared down. Unless they were on the NY Times Bestseller list, you'd be lucky to find the book you want in stock, let alone in quantities..

The store environment started to change too. Chairs were being removed to get people to stand and buy, rather than sit and read. The CD music section shrunk, with even one store eliminating it entirely.

Selling digital media.and hard copy books in a retail store front is a dying business. Its just like video rental stores. We saw this in the slow death of Blockbuster and your local video store. Here in the SF Bay Area we saw brick and mortar music store, Tower Records, roll over and die. There's no need for the high overhead carrying physical inventory when you can simply buy it, listen to it, or view it online.

The content we immerse ourselves in today is no longer about absorbing it in hard format. Its about enjoying it in a more cost efficient, environmentally friendly, and easily distributable and digested form of soft digital media.

About Kerry Kobashi

Kerry is the founder of KerryOnWorld. He lives in Silicon Valley and has worked as an engineer and project manager. He owns Kobashi Computing a consulting company.