The Ripple Effect of Borders' Bankruptcy

I’m always amazed at how much traffic is generated when a business like Borders declares bankruptcy. Most of the pundits who are flooding the media with statements and speculation have been talking about the bookstore giant for years. I suppose the facts of the debt vindicate some of the speculation, but as a bookseller, I’ve been weighing the economic impact of all factors in the book industry, including Borders’ condition.

There’s a lot of sideline speculation about the future of the print book and bookstores. E-books, online purchases, and cultural changes are important factors, but the big story today is Borders. The question I’ve been asked is how Borders’ bankruptcy will affect independents as well as independent publishers. Simply, it’s anything from great to a total disaster.

First, Borders is declaring Chapter 11, which means they will still exist during and after the process is complete, and they will still be a major competitor to the independent bookseller. The independents near a closing Borders will have an opportunity to attract those customers. The Borders near my store isn’t closing, but I could be hiring an employee or two. Sadly, the employees losing their jobs will suffer greatly.

The good news for a number of independents is additional sales, but there is also the relationship with publishers. We now know the level of debt faced by some of the big publishers. They will probably get something out of the bankruptcy process, but will have to deal with those losses as well as lower distribution to a much reduced reseller footprint. I’ve been in the business for nearly 30 years, and my speculation for independents is that selection and distribution will not change significantly. I’m willing to bet that publishers will refocus their efforts to support independents. There’s a list of independent publishers that were invested in Borders, and the amounts don’t look good. If they begin to fail, I wonder if the big publishers will pick them up. There aren’t as many independent publishers as I thought, but it’s significant.

The basic rule of success in retail is high turnover of merchandise. That’s the advantage for the independent, because the small store has to be focused on inventory and what the customer wants. In recessions, we can use the same space to sell lower priced used and remainder books, and sidelines, to maintain or increase high turnover and margin. Borders and B&N are so large, all they can do is reduce inventory. Reduced inventory means paying for unused space, and Borders tried sidelines that ultimately didn’t work.

Independents will still close, not because of Borders’ bankruptcy, but from the struggle of online competition and e-books. I’m optimistic. Publishers succeed by signing successful authors, and would be foolish to cut back. Booksellers succeed with a good selection of books from publishers and focusing on customer service. Those that adapt to changing times will succeed and there are opportunities for success. I believe reading will increase among all ages with the advent of e-books. Young adults are hooked into technology and I think having a book in that format will encourage them to pause their video game and texting (maybe not) to read a few pages. Some are concerned that authors will lose readers because a Borders store will close. There will be some loss, but I can’t imagine people will stop reading, they will find another way to buy their books. As long as people want to meet authors, and book groups want someplace to meet, there will be brick and mortar bookstores.

Borders Stores Closing List

Borders Bankruptcy Filing

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