Bookstore giant Borders has begun the process to liquidate its 399 remaining stores across the US. Having filed for bankruptcy last February when it closed a third of its outlets, Borders subsequently failed to find itself a bidder.
According to Publishers Weekly, private equity firm Najafi Companies had made a $215 million bid earlier this month, but the chain opted to sell itself to liquidators Hilco Merchant Resources and Gordon Brothers Retail Partners LLC.
At the time of filing for Chapter 11 bankruptcy protection last February to reorganize the business, the book retail chain owed its creditors more than $270 million. Its largest individual debt was $41.1 million owed to Penguin Putnam. The Street listed its following top creditors as: Hachette owed $36.9 million, Simon & Schuster at $33.8 million, Random House at $33.5 million and Harper Collins owed $25.8 million.
While the store closures, to be completed by the end of September, will put 10,700 Borders employees out of work, the fallout will reach other businesses connected to the chain store, such as publishing houses that worked directly with the chain. Authors could also feel the effects of the closure, especially those reliant on the stores to provide a platform for their work.
In particular, Borders represented a springboard for writers to showcase their literary offerings in the form of children’s books and poetry readings.
4 Decades of Business
The closure comes after four decades of business that saw brothers Tom and Louis Borders grow the family name from a single store in Ann Arbor, Michigan, to a multinational household name, second only to Barnes and Noble in the US.
Its closure points to changing trends in book retail due to the widespread digitization of the publishing industry. In this phase, the ironic twist is that Borders, a colossal corporation that small bookstores would have been hard pressed to compete with, is in turn almost transformed into noble little guy grown outdated in the sleek online world of the future. Two camps remain, one of readers lamenting a shrinking past where buying a book was a physical browsing experience ending in a face-to-face purchase, and the other of e-readers happy to save on shopping time and space to curl up with their Kindle at night.
Ever-growing numbers of readers are going digital: The Guardian recently reported that Amazon has been selling 105 e-books for every 100 printed copies in the US since April 1. In the UK, over the same period, Amazon sold more than 240 e-books for every 100 hardback copies from e-book offerings of over 650,000 titles through its UK website.
Retail Real Estate for Rent
DJM Realty, a subsidiary of Gordon Brothers, faces the task of finding matches for the prime real estate Borders leaves behind. Retail Traffic reported the chain’s property portfolio to total 10 million square feet of retail space, with 43 of the stores custom designed with a double-level feature, which could necessitate a $1 million investment per location before renting the spaces out; and so makes it likely that many of the superstores will end up back in the hands of developers due to the difficulty of marketing multi-level commercial spaces.
Key Statistics – Publishing Industry in the US (source: Association of American Publishers; July 21 Report)
- For May 2011, sales of adult softcover books were down 18% to $473 million over figures from 2010; hardcovers took a 23% slide, falling to $386 million.
- Sales of e-books were up 160% over last year, hitting $390 million from $150 million last year.
- Amazon customers have access to more than 950,000 e-book offerings by the company, which represents approximately 65% of the market.
- Apple customers enjoy access to more than 150,000 e-books at the company’s iBookstore through 20 million iPads and more than 160 million iPods and iPhones. The company holds a tenth of the overall market.