Sunday, September 25, 2011

After the Borders Liquidation

The Borders Books liquidation might have gone on longer. There was talk in July about some stores staying open. Another bookstore chain might buy 10 or even 30 of the stores, it was thought, even without the ability to buy the merchandise. Or, in places where building owners made extraordinary concessions, a few stores might carry on their liquidation into December to draw Christmas shoppers into shopping centers. But none of that happened. From everything I am hearing, the last Borders stores in the United States closed one week ago. And they were effectively cleared out long before the discounts reached 90 percent in the final days. A friend wrote of finding “novels and manga” at mid-month in the last local Borders store to remain open. There was no hiding the fact that less than 10 percent of the merchandise remained. Christmas shoppers and bargain-hunters were more than willing to show up in August at Borders, so there was no need to extend the clearance sale for another quarter to try to move more of the merchandise.

If anyone still has a Borders gift card, hurry over to for your last chance to buy anything with it. The Borders trademark and web site will be sold, probably tomorrow, to Barnes & Noble, which bid $14 million at an auction last week and only needs to clarify its privacy policy to close the deal in bankruptcy court.

Other bookstores that survived the Borders liquidation will start to see their revenue recover. Customer traffic won’t pick up right away, but by March, many readers will have exhausted their liquidation purchases and will go looking for more books to read. Another six months is a long time to ask an already suffering bookseller to wait, and when customers return to the local bookstores in the spring, they will find a few more of them closed.

About 11,000 U.S. Borders employees lost their jobs this month. That is a barely noticeable fraction, half a percent, of the more than 2 million U.S. workers losing their jobs during the month. When a book is sold, the retailer, its employees, and the building owner get the lion’s share of the money, but cutbacks are also needed in banking, transportation, and publishing to cover the lost revenue from Borders. Many of those cuts have already taken place; it was after last year’s disastrous Christmas season that Borders could no longer be counted on to pay its suppliers.

Book-lovers might be saddened by the Borders closing, but was it avoidable? Hardly. Borders’ former CEO was trying to work out a plan in December, as he told The Detroit News in August:

If only we had three or four years to restructure, and a patient investor, and the publishers were willing to cooperate, it could have been done.

In other words, by that point, it would have take a series of five or ten miracles to save Borders. Management sought valiantly but failed to come up with even one.