Did Borders Go Bankrupt Because People Aren’t Reading?

The bookstore chain is closing down most of its Chicago stores and about half its stores in the Chicagoland area. But buying and business habits are as or more important than reading habits in the decline of the company.

So you probably know at this point that Borders filed for bankruptcy and is closing five of its eight stores in Chicago, and almost half of its 30 stores in Chicagoland. While I never shared the romance with it that Mary Schmich did–my gateway to Chicago and big cities generally was Hyde Park, and after the Seminary Co-Op it’s hard for a bookstore to impress me–I did appreciate that at least one of the two downtown locations regularly stocked my somewhat odd impulse purchases, like Eula Biss’s Notes From No Man’s Land or Ishikawa Masayuki’s Moyasimon 2: Tales of Agriculture, to name a couple recent examples. So while I’m sympathetic to claims that it was bad for small bookstores, it did maintain a respectable mid-list selection.

I’ve seen claims that Borders is going bankrupt because people aren’t reading, but this jumped out at me (via Sarah Weinman at Daily Finance):

During the quarter, we continued to have a challenge on the top line. Specifically in the first quarter, our bookstores generated negative comp store sales of 11.4%. Our core categories excluding multi-media performed better, declining by 6.8%.

In other words, DVDs and music actually seem to have done worse than books. Which wouldn’t surprise me; my casual observation is that my peers are making a slower transition from meatspace to digital with books than CDs (duh) and DVDs. Not that Borders hasn’t had struggles with e-books and the electronic marketplace; Barnes & Noble has done well while Borders.com sales fell year-over-year.

And then there’s four CEOs in three years, not to mention mountains of debt.



3 years ago
Posted by Andrew Patner

The Wall Street Journal, which has been ahead of the competition on this story, has pointed out for a while that Borders Group, Inc. also handed over their Internet division to Amazon.com 10 years ago (oops!) and engaged in an aggressive stock buyback plan to make earnings per share look better. *All* stores *in* the city of Chicago to be closed except for the Loop. That new $505 million cash infusion from GE Capital is going to go for something, though.

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