By Edward Nawotka
In today’s story, Philip Downer, former CEO of Borders UK examines why Borders went bankrupt.
As someone who grew up outside Ann Arbor, Michigan, I was always a little proud to point out that Borders was a Michigan company, if only to say to New Yorkers — “Hey, look, people in the flyover are smart, are intellectual, and do read! Of course, that is a little silly considering just how many New Yorkers end up going to the University of Michigan and other schools in the Midwest . . . but I digress.
Borders, to me at least, often offered a more appealing shopping experience than B&N. (This may have something with my personal history with B&N.) As someone who spent so much of my twenties overseas, I was also surprised and delighted to find Borders stores in some far-and-away locales; the Borders store on Orchard Road in Singapore served as a kind of oasis for me while working in Asia.
When in 2008 I was invited to tour the new Borders “concept” store in Ann Arbor, I thought the company was positioning itself adequately for the future. There were lots of digital work stations to help you find your ancestors, download music, work with Lulu.com (if you wanted to self-publish) and even book a vacation. There was a dedicated area for the store to host virtual book signings — in fact, I still have a copy of a Margaret Atwood novel she signed for me that day using her virtual Long Pen. Yes, there were plans afoot to put a Long Pen into every new Borders store post-2008.
But in the wake of the plummeting economy . . . nothing happened. And now this.
So, aside from my wounded Midwestern pride, who else is going to get hurt in this bankruptcy?
BORDERS EMPLOYEES: Borders is closing 200 stores, out of 642. Prior to the bankruptcy they had 6,100 full-time employees, and some 11,400 part-time employees (thanks to PW for the stats). If you take a number proportional, that means you’re going to get some 1,900 full-timers losing their jobs, as well as another 3,800 part timers. That’s a lot of unemployed booksellers.
PUBLISHERS: Yep, publishers are owed tens of millions millions of dollars in back payments, which they may or may not see: Penguin Group (USA) is out $41.1 million, Hachette is owed $36.9 million, Simon & Schuster is not far behind at $33.8 million, Random House will get hit for $33.5 million, and HarperCollins at $25.8 million. And they’re about to get tens of millions of dollars more in returned merchandise flooding into their warehouses, shortly. The remainder dealers must be salivating — though there is a provision in the bankruptcy preventing the liquidator from selling all remaining stock to one vendor who can then return it in bulk to the publishers. Still, expect to see a lot of high quality stuff on Barnes & Noble’s bargain tables — and, ironically, Borders’ own — throughout the rest of this year.
MID-LIST AUTHORS: Without Borders’ previous buying power, publishers are going to lose hundreds, if not thousands, of pre-orders per title. This is likely to eventually lead to smaller print runs and smaller advances, particularly for mid-list authors who would depend on Borders taking stock of one or two copies of their titles. If Borders was good at anything, it was serving the mid-list — they always were somewhat more “literary,” if only in reputation, than their big rival — but that role is going to be significantly diminished, particularly as they are likely to become even more conventional and conservative in their buying strategies to compete with other big box retailers.
READERS: Yes, you dear reader . . . in the short term, vulturing the going-out-of-business sale at your local Borders might make for some interesting bargain-hunting, but you’re going to have one less place to browse books.
OTHER BOOKSELLERS: Any bookseller going out of business is, well, bad for business. It’s going to make it all the more difficult for books to take cultural precedence over television, video games, and the Internet.
BOOK REVIEWS: Yep, you might not give it much thought, but Borders still bought some advertising — often supported by co-op — in local newspapers to promote events. Those ads likely gave the culture editor an excuse to run one or two book reviews per week.
Who wins?
DIGITAL PUBLISHING: The bankruptcy only means that more and more people are going to be pouring their time and money into digital publishing. The emphasis in the book world has shifted from thinking about books bound between covers to “containers” — as in “a book is only one form of container for information.”
$1.99 STORES: What do you think is going to move into that large vacated space where Borders used to be? A Books-a-Million? Maybe, if you’re lucky. The southern chain is talking about taking over several abandoned Borders locations. How about a Container Store . . . okay, bad joke. My guess, a $1.99 shop. And you know what? Wait another six to 12 months and you’ll eventually be able to pick up some of the remaindered Borders stock there too.
Let us know what you think in the comments.