Wednesday, January 12, 2011

If You Thought Davis-Kidd Was Bad, Wait for Borders

Posted By on Wed, Jan 12, 2011 at 1:00 PM

WKRN is reporting that Borders is going to close their La Vergne distribution center in July. Left unsaid in the story is whether there will even be an entity called Borders to lay anyone off come July.

Mobylives is doing some of the most extensive, but easy to understand, coverage of what looks like the slow death of Borders, for those of you who want to follow along at home.

But the short version is that last month Borders went to the major publishers and said, "We can't pay you right now, but please still keep sending us stock." It looks like there was some behind-the-scenes maneuvering, and Barnes & Noble went to the publishers and said, "We want whatever deal you gave Borders — and we bet the independent booksellers will too."

Publishers couldn't have every bookstore in the country paying them only whenever Borders got around to it, so that solution to Borders' woes seems to be cut off.

As Mobylives reports:

While publishers wait for a more detailed “turnaround plan” from Borders this week, more and more are coming to support the bankruptcy idea — as Milliot details, “Indeed, there appears to be a growing sentiment that Borders’s best option might be to file for a prepackaged bankruptcy. Such a filing would need creditor and shareholder support, but would be cheaper and quicker than a regular Chapter 11 filing, and it would give Borders the chance to shed unprofitable leases, something Borders is eager to do since expensive leases are one of the retailer’s biggest problems.”

There are lots of reasons Borders hasn't been successful, unprofitable leases being one. But some of us remember when Borders' online presence was literally Amazon.com — Amazon sold for Borders online. Oops. Using that logic, Borders could just have Barnes & Noble sell for them in the real world. As large as it is, Borders has been unable to adjust to the realities of people buying books online. While everyone else was building up their internet stores, Borders was opening new physical locations.

Now, for those of you who hate Borders, this all may sound like good news and hilarious entertainment. But I invite you, for a second, to consider how many publishers will be able to adjust to having 600 fewer bookstores in America, should Borders go under.

That's the real concern. If Borders goes down, who are they dragging with them?

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