Borders bookstore is starting off the year in a bad situation. The New York Times reported that the bookstore chain has told major publishers last week that it needs to delay payments that it owes to them, and this is adding to the fears that the bookstore won't be able to come back from their recent decline in sales.
A few weeks ago, Borders executives said that they are planning to discuss plans with publishers at a meeting in New York. They are saying that they want to start a discussion with the publishers in order to work out payment arrangements as part of an overall plan to refinance.
In addition to their financial woes, the chain has recently lost two top executives. Borders recently announced resignations from Thomas Carney, the company's general counsel and Scott Laverty, the Chief Information Officer.
A spokesperson for the chain was quick to say that the company is not in a liquidity crisis and that all of their stores are well-stocked with merchandise, and that this situation will not impact the shopping experience for customers. They said that Borders executives are just in discussions about potential refinancing, and aren't going out of business.
As digital books have become more popular, the traditional brick-and-mortar bookstores are certainly feeling the sting. Many industry experts are even saying that the number of bookstores will decrease in the coming years. And for Borders, they are especially vulnerable. Publishers have been worried about them, because they have been suffering from losses in revenue for years and they reported worse third-quarter earnings in December. If Borders were to go out of business, publishers could stand to lose tens of millions of dollars, along with the selling power of 675 retail stores.
While many book chains are suffering right now, companies like Barnes & Noble have started devoting retail space to non-book items like toys and games for children. Additionally, they offer electronics like the Nook. Although Borders also offers an eReader, the Kobo, they haven't gained nearly as much traction with users as Barnes & Noble's Nook or Amazon's Kindle.
While Borders is blaming their poor sales on digital book purchases and stiff competition from big box stores and online vendors, their competitor, Barnes & Noble, says that they have achieved record-setting sales over the holiday season, and have seen an increase of 9.7% during the nine-week period that ended Jan 1.
Although the Nook certainly added to those sales, it doesn't hurt that Barnes & Noble offers a great customer experience. In my local area, there is a Borders and a Barnes & Noble almost side by side. While Borders is almost always nearly empty, their competitor generally always has many shoppers who are just browsing and enjoying the atmosphere. The comfy chairs and easy to understand lay out makes the bookstore feel inviting. The times that I went to Borders to find something specific, I have run into problems finding someone who could answer questions or help me find the book I was looking for. It seemed that almost any question I asked, the answer was always a suggestion that I look for the answer online or just order the book online. And of course, if I had wanted to order the book online, I most likely would have started at Amazon and looked for the cheapest copy. The reason I opted to go to the bookstore was that I wanted the book right away, and I wanted to browse other titles and ask some questions.
No one wants to see Borders fail. If a large chain bookstore goes under, it will hurt the publishing world across the board. So many small bookstores are barely holding on, and an event as terrible as Borders going under would send shock-waves across the industry that might knock a few of them off of the map entirely. But, in my opinion, if Borders wants to make a comeback, they are going to have to give customers a reason to go into their store, and then make them want to stay.
What do you think about Borders financial troubles? Let me know in the comments.
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By Melissa Kennedy- Melissa is a 9 year blog veteran and a freelance writer, along with helping others find the job of their dreams, she enjoys computer geekery, raising a teenager, supporting her local library, writing about herself in the third person and working on her next novel.
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