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Posted on Wed, Feb 16, 2011 : 7:52 a.m.

Ann Arbor bookstore chain files for Chapter 11 bankruptcy

By Nathan Bomey


Borders opened in Ann Arbor, Mich. in 1971 and grew into an international presence, most recently operating about 500 superstores in the U.S. The flagship store has been a downtown retail anchor on East Liberty in the former Jacobson’s department store since 1994. Melanie Maxwell |

Ann Arbor-based Borders Group Inc. — gutted by the Internet, threatened by electronic books and plagued by inconsistent management — filed for Chapter 11 bankruptcy protection today.

The filing — which comes 40 years after Borders started as a used bookstore on South State Street — gives the chain a chance to reorganize by slashing expensive leases and reducing its debt load, actions that could return the company to profitability.

But it also presents the possibility that Borders will fail to identify a sustainable business model over the next several months of the bankruptcy proceedings, an outcome that could lead to its liquidation.

Borders, which lost $604.8 million from 2006 to 2009 and another $168.2 million in the first 11 months of 2010, plans to cut about 30 percent of its 640 stores, equal to about 200 locations — a move analysts view as absolutely critical to its survival. The company is losing about $2 million a week on the stores it plans to close, according to court documents. Borders also indicated in bankruptcy documents that it may close an additional 75 to 136 stores based on extenuating circumstances.


Borders employs about 550 workers at its Ann Arbor headquarters on Phoenix Drive, down from about 1,800 at its peak.

File photo

Borders said in its filing that it had about 18,100 employees, and its network of stores includes about 500 Borders superstores and about 140 small-format locations under the Borders Express and Waldenbook brands. The company will continue to honor gift cards, coupons and its customer loyalty program for now.

The impact on the chain’s Ann Arbor headquarters is unclear for now, but it’s likely the Phoenix Drive building’s 550 employees will endure further cuts. The company said it would continue paying benefits and salaries.

As part of the filing, made in the U.S. Bankruptcy Court's Southern District of New York, Borders said it would close its Arborland store on Washtenaw Avenue in Ann Arbor. The company's two-story flagship store on Liberty Street and its store on Lohr Road are expected to stay open for now.

"Notwithstanding these market conditions, the debtors still have a sizeable core of profitable stores and have been preparing their operations to be competitive in the changing marketplace," Borders chief financial officer Scott Henry wrote in a filing document. "However, in analyzing their cost structure, the debtors have found that they also have a number of stores which are simply unprofitable and are substantially impacting the debtors' overall performance and ability to pay their debts.

"The company listed $1.275 billion in assets and $1.293 billion in debts in its filing. The firm had 72 million shares of common stock that will become essentially worthless.

Under Chapter 11 bankruptcy law, Borders will be given 120 days to propose its own plan for reorganization, though that period can be extended or shortened with court approval. After that period expires, the company’s creditors can propose their own plan — which may clash with Borders’ objectives.

A Borders spokeswoman declined to make executives available for interviews.

"We are confident that, with the protection afforded under Chapter 11 and with the support of employees, publishers, suppliers and creditors, and the reading public, a successful reorganization can be achieved enabling Borders to emerge from the process as a stronger and more vibrant book seller," said Mike Edwards, CEO of Borders Group subsidiary Borders Inc., in a statement.

John Pottow, a bankruptcy professor at the University of Michigan, said he's cautiously optimistic that Borders can emerge from bankruptcy with a profitable business model.

"They’ve signaled to the market strongly that they’ve got a real good plan," he said. "They’re going to hack off a limb to save the rest of the body."

But not all analysts are convinced the company will survive."They’re going to try to restructure and reorganize the company, but that is not going to solve the problem they have in dealing with the problems in the industry," said Jim McTevia, a turnaround consultant with Bingham Farms-based McTevia & Associates.
"They should have started two years ago when they saw the handwriting on the wall, and I think they’re behind the times in doing what has to be done. I do not think there is a market for a lot of physical booksellers in the country anymore.

"Borders said it had secured $505 million in debtor-in-possession financing from GE Capital to help it continue operating in bankruptcy. The firm said the financing was "subject to approval of the Bankruptcy Court and the satisfaction of certain conditions provided in the financing commitments received by the company from the lenders providing such financing."

The bankruptcy filing marks the climactic moment of a years-long slide attributable to numerous factors, including a poor Internet sales strategy, a bloated network of superstores, constant turnover in executive management and a sluggish approach to e-books, experts said.

Borders Group coverage

The structural challenges to Borders’ business model are significant. Average sales per square foot at Borders superstores fell 33.7 percent from a peak of $261 in the 1998 fiscal year to $173 in 2009, according to Securities and Exchange Commission documents reviewed by Adjusted for inflation, average sales per square foot at Borders superstores declined 49.6 percent from 1998 to 2009.

During that same period, though, the number of large-format Borders stores doubled, rising from 256 to 511.

Those figures illustrate Borders’ broader problem: Many stores are no longer producing the kind of profits they did at the company’s peak.

That’s why simply cutting stores may not be enough to turn Borders into a sustainable company, experts said.

“If they think they can just correct a few things on their balance sheet and sell off a couple stores, they’re probably going to be the next Circuit City,” Simba Information publishing analyst Michael Norris said in a recent interview, referencing the electronics retailer that liquidated in 2008.

“They need something real tangible in place in order to convince people that Borders is a great place to buy books and other merchandise.”

Although Borders, along with competitor Barnes & Noble, revolutionized bookselling with the creation of the superstore and innovative inventory tracking systems, the company’s slide into bankruptcy court is hardly a surprise.

Borders losses and profits

  • 2010 (first 11 months): $168.2 million loss
  • 2009: $109.4 million loss
  • 2008: $186.7 million loss
  • 2007: $157.4 million loss
  • 2006: $151.3 million loss
  • 2005: $101.0 million profit
  • 2004: $131.9 million profit
  • 2003: $115.2 million profit
  • 2002: $107.6 million profit

The company, which had 35,500 employees as recently as early 2006, has been bleeding cash for years. Destabilized by near-continuous turnover in management ranks, the company lacked a cohesive strategy to respond to the Internet’s ascension, price pressures from and big-box stores and Barnes & Noble’s focused leadership.

In the third quarter of 2010, online sales made up about 2.7 percent of Borders’ revenue.Among the company's biggest mistakes was allowing Amazon it manage its online sales from 2001 to 2008.
“They never really harnessed the power of the Internet,” said David Dykhouse, a manager of Borders’ Arborland store from 2002 to 2007. “As someone once said, the Internet is the comet that killed the dinosaur. I’m afraid Borders is one of those dinosaurs.”In a bankruptcy document today, Borders revealed for the first time that its 2010 fiscal year sales totaled $2.3 billion, a decline of about $500 million from 2009 and about $1 billion since 2008.

In recent weeks, the company started delaying payments to publishers, landlords and other parties in a bid to conserve cash and stave off bankruptcy. The company even convinced GE Capital to provide a new $550 million credit facility contingent upon Borders’ ability to extract concessions from vendors and secure additional loans. But that deal was never finalized.

Borders superstores

This table shows the rise in the number of Borders superstores at the end of each fiscal year and corresponding fall in the average sales per square foot of those stores in the years since the company's 1995 initial public offering, according to U.S. Securities and Exchange Commission records.

  • 1996: 158 superstores ($259 average sales per square foot)
  • 1997: 204 ($261)
  • 1998: 256 ($256)
  • 1999: 300 ($255)
  • 2000: 349 ($255)
  • 2001: 385 ($245)
  • 2002: 434 ($237)
  • 2003: 482 ($223)
  • 2004: 504 ($227)
  • 2005: 528 ($232)
  • 2006: 567 ($236)
  • 2007: 541 ($228)
  • 2008: 518 ($203)
  • 2009: 511 ($173)

Borders, which had about 1,800 employees at its Ann Arbor headquarters at one point in the last decade, has had five CEOs in the last five years. Its most recent CEO, activist investor Bennett LeBow, invested $25 million in the company last summer and was given the top job.

Norris said a series of errors by Borders management paved the way for the chain’s financial crisis.

“This is what happens when you have inconsistent leadership,” he said.

LeBow and New York hedge fund manager Bill Ackman of Pershing Square Capital Management, Borders’ top individual investors, are likely to incur major losses from their investments. Ackman's firm owns 31.3 percent of Borders' stock, and LeBow's ownership fund had a 15.4 percent stake, according to the filing. Bankruptcy typically wipes out the equity of private stockholders. Borders has some 72 million shares of common stock.

LeBow and Ackman have declined repeated interview requests over the last year. Ackman recently told Bloomberg BusinessWeek that Pershing would lose $125 million on its Borders stake.

Borders’ bankruptcy also deals a tough blow to the publishing industry. Industry estimates indicate that Borders accounts for about 8 percent of total book sales in the U.S., down from 15.6 percent in 1996, according to a 2000 report by Daniel Raff, a professor at the University of Pennsylvania’s Wharton School.Borders accounts for about 14.3 percent of sales at physical bookstores in the U.S., according to a report by IBISWorld.

Meanwhile, many private landlords who lease property to Borders are likely to lose those lucrative deals. Borders has annual lease obligations of about $1 billion.

In addition, an untold number of smaller creditors will face losses during the bankruptcy process.

According to interviews with bankruptcy experts, the filing could have any number of outcomes, but the most likely scenarios are:

—Borders could successfully make cuts to its lease obligations and convince lenders to accept equity in exchange for eliminating debt, finally emerging with a profitable business model.

—The firm could sell off its assets to Barnes & Noble or another player like a private equity firm with a tolerance for a restructuring effort. Under this option, Borders could use the Section 363 provision in the bankruptcy code, a provision that allows the valuable assets to be packaged together so that they can be sold to an outside firm or emerge as a new company. In that scenario, the old assets would stay in bankruptcy and be liquidated. This is what happened during General Motors’ 2009 bankruptcy filing, for example. In December, Ackman said he would be willing to help finance a Borders bid to acquire Barnes & Noble, though the idea hasn't gotten any traction yet.

A sale or merger would place the future of Borders’ Ann Arbor headquarters in doubt.

"My experience is when companies strategically merge in bankruptcy, they don't need two headquarters," Pottow said in a recent interview.

—The company could be forced to convert its Chapter 11 reorganization filing into a Chapter 7 liquidation, which would involve a sale of all of its assets and the death of the company.

From family business to industry shaker

Regardless of the final outcome, Borders will be remembered as a company that changed the way books were sold.

Borders started as a uniquely Ann Arbor company. Brothers Tom and Louis Borders launched the company in 1971 as an 800-square-foot used bookstore called Borders Book Shop on South State Street in the shadow of the University of Michigan.

Fueled by an insatiable appetite for books among readers in Ann Arbor, Borders’ momentum picked up speed when Louis Borders developed innovative software that improved inventory management and sales projection capabilities.

To run the system, the company effectively leased space on an IBM 360 mainframe computer, Raff said in a recent interview.

The system allowed the Borders brothers to maximize profits by ensuring that their store had the most appropriate mix of inventory to meet seasonal demand and local tastes.

“In all of this they were typically 2-3 years ahead of their competitors,” Raff wrote in his research paper about the history of book superstores in the U.S.

The success of that inventory system and the company’s innovative large-format stores eventually powered a national expansion.

The large-format store, which featured a couple hundred thousand book titles, was new to the industry and caught many smaller, independent bookstores off guard.

Borders is credited with popularizing the concept of a big, communal space where customers could browse a wide selection of books and even stick around to read a page, or two, or more.

Raff emphasized that the emergence of Borders was a seminal moment in the nation’s book-buying habits. Until Borders arrived, many books were very difficult to find, he said in an interview.

“It certainly seems to be true that in its heyday, it improved the intellectual standard of living in lots of places of America. It made it possible in lots of places where it had never been possible to get in a car and drive for 20 or 25 minutes and be in a bookstore that had a pretty broad range of intellectually stimulating stuff you could read,” Raff said. “Borders really put that on the map. That was its accomplishment, and it’s actually a big deal and something that all concerned should feel proud of.”

By 1992, with about 21 large-format stores, the Borders brothers wanted to move on — and they sold the chain to retailer Kmart Corp., which had acquired small-format bookstore chain Waldenbooks in 1984.

Kmart merged Borders and Waldenbooks into a subsidiary called Borders-Walden Group.

In the 1993 fiscal year, the first full year in which Borders was owned by Kmart, the company's superstores reported sales of $224.8 million. At the time, however, Waldenbooks had about 1,000 locations and accounted for five times the revenue of Borders superstores with $1.145 billion.

But executives believed that Borders was the stronger brand — and the company was renamed Borders Group Inc. when it spun off from Kmart and became a public company in 1995 under CEO Robert DiRomualdo.

By 1997, sales at 158 Borders super stores totaled $979.1 million, nearly equal to the $979.7 million at 961 Waldenbooks locations.

Borders added superstores for 14 consecutive years from 1992 through 2006 at a pace of a few dozen a year. The chain had 158 locations at the end of its 1996 fiscal year, 349 by the end of 2000, 482 by the end of 2003 and 567 at its peak in 2006, according to SEC filings.

That expansion boosted the company’s total revenue to more than $4 billion at one point. But it also shackled the company with huge lease obligations that helped drive the company into bankruptcy.

The company’s annual rental costs equal about $1 billion, more than 35 percent of its total revenue.

Simply cutting hundreds of stores was not an option outside bankruptcy, a process that allows companies to cut or renegotiate contracts with the approval of a judge.

Leases on 369 Borders superstores don’t expire until 2017 or later, which illustrates the chain’s long-term challenges.

Internet undercuts Borders’ business model

The high costs associated with operating a physical network of stores are a key reason why Borders filed for bankruptcy.

But the chain’s fundamental business model was undercut by the Internet — namely, Amazon, which rose in prominence in the late 1990s and early 2000’s as brick-and-mortar retailers were finally starting to take the Internet seriously.

In 2001, Borders struck a deal with Amazon in which the web retailer would sell Borders books through That relationship lasted until 2008, when Borders finally exited the deal and launched its own website.

But the decision to outsource online sales to Amazon was later viewed as a potentially fatal error.

“It didn’t serve them very well,” Norris said. “It basically meant that Borders couldn’t control the entire relationship with the consumer. They just got a cut of (each Internet) transaction.”

In 2008, Borders cut its ties with Amazon and launched its own website, But the site hasn’t generated enough sales to make up for declining sales at its physical stores.Amazon's rise is undercutting the bookstores industry. There were 30,714 bookstores in the U.S. in 2010, down 21.6 percent from 2001, according to IBISWorld.

Meanwhile, Borders’ e-book strategy came under scrutiny from investors as Amazon’s Kindle, Barnes & Noble’s Nook and Apple’s iPad soared.

Late to the digital game again, Borders contracted with Toronto-based Kobo Inc., a division of Indigo Books & Music, to design a customized e-bookstore. That system was launched in summer 2010, and Borders said it wanted to gain a 17 percent share of the e-book market within a year.

Instead of investing in development of its own e-reader, Borders opted to sell e-books through the system for use on any digital device. The company started selling a selection of e-readers in its own stores.

To boost its financial position, Borders tried a variety of revenue-generating strategies:

—The company invested heavily on sales of music and movies only to acknowledge in 2009 that it could not compete with the Internet and big-box stores in the CDs and DVDs market.

—In response to Barnes & Noble’s successful loyalty program, Borders introduced its own rewards program in 2006, but it was initially free, unlike Barnes & Noble’s paid program. Big coupons distributed through the Borders Rewards system didn’t generate new foot traffic.

“Customers that were normally coming in and buying things started coming in with 30 and 40 and 50 percent coupons, and at that point I thought they killed off their core business,” said Dykhouse, a former manager at Borders’ Arborland store.

—In recent months, Borders turned to children’s toys and games as an opportunity to generate revenue, even striking a partnership with Build-A-Bear to sell stuffed animals in superstores.

Dykhouse said Borders should have focused on “just becoming the best damn bookstore.”

“I hate to see the book industry changing like it is, but it’s inevitable,” he said. “There are libraries, there are still going to be book stores, but they’re going to have to be very, very savvy. I wish Borders well. I wish Barnes & Noble well.

“They are outposts at the edge of civilization in a way.”

Contact's Nathan Bomey at (734) 623-2587 or You can also follow him on Twitter or subscribe to's newsletters.



Mon, Mar 7, 2011 : 6:50 p.m.

Borders main interests in the early days put alot of small independent bookstores out of business with their "new model". Amazon came in with their "new model" and put Borders out of business. The last time I set foot in Borders was to protest their newest store on Lohr Rd. Built with out of state materials and workforce! Fat lot of good it did to go cheap on construction costs. With the number of CEO's that Borders went through in a few years is nothing short of ridiculous. Glad to see that corporations like them don't always win.

Kai Petainen

Fri, Feb 18, 2011 : 11:08 p.m.

article about Borders here... <a href="" rel='nofollow'></a> Did Insider Selling Foretell Borders' Demise?

Left is Right

Fri, Feb 18, 2011 : 3:08 p.m.

Unfortunately, Borders has been victimized by absolutely sclerotic upper management ever since its sale to Kmart (with the possible exception of current management). Bringing in a grocery guy to run a bookstore chain was kind of like bringing in John Scully from Pepsi to run Apple. After its initial success, Borders failed to innovate. This is the result. Hope they recover with a viable strategy for the future.

Richard C

Thu, Feb 17, 2011 : 2:40 a.m.

I desperately wish Borders well. Borders Books, Dawntreader, and Davids Books have provided me with nearly all of my library. I don't understand the appeal of Barnes and Nobel. I still think of them as the company that push the old student union book shop out of the basement of the Michigan Union - which only shows how long I've been here and that I'm a curmudgeon. I fear that Borders is a victim of corporate/MBA bungling.


Thu, Feb 17, 2011 : 12:12 a.m.

And how is the Ann Arbor News doing ? Similar extensive and in depth analysis of AA News soon ? Seems that this would be a great community for a daily paper. How's revenue? Really enjoy Borders and staff. Good luck.


Wed, Feb 16, 2011 : 10:20 p.m.

Borders had been in business on State Street only about 4 years when I arrived in Ann Arbor. I was very impressed right away: they had a computerized inventory and ordering system - something I'd never seen before. Sadly ironic: that Borders Group decided to expand their super stores just as the Internet Age was beginning. Who knew?~ eh? I'm really bummed out over this: even recently, I found it a wonderful advantage to be able to reserve a book or books on line and then walk over to Borders to pick up my order. But even that advantage began to tarnish: several times I found they didn't have the books they SHOULD HAVE HAD - like pop science books published by the University of Michigan &quot;right around the corner.&quot; If I had multiple back orders: their system called for treating each back order separately. Their &quot;customer loyalty&quot; system kept losing my identity!? Not often mentioned: when a small business goes under: that effects relatively few people. But when a big corporation goes under like Borders has: that effects the city and the whole state and sometimes the whole country.


Mon, Mar 7, 2011 : 6:54 p.m.

Borders.........the whole country? Maybe the whole World?


Wed, Feb 16, 2011 : 9:58 p.m.

&quot;The company was able to convince GE Capital to provide $505 million in debtor-in-possession financing, which will help the firm continue to operate during the bankruptcy process.&quot; &quot;Borders said it had secured $505 million in debtor-in-possession financing from GE Capital to help it continue operating in bankruptcy. The firm said the financing was &quot;subject to approval of the Bankruptcy Court and the satisfaction of certain conditions provided in the financing commitments received by the company from the lenders providing such financing.&quot;&quot; &quot;Subject to...&quot; are the key words here. Insofar as I can tell, they have not satisfied those &quot;certain conditions&quot; and may not be able to do so going forward. I say &quot;game over&quot;. Amazed to see how much wishful thinking abounds as this slow-motion toilet flush swirls around the bowl.


Wed, Feb 16, 2011 : 8:03 p.m.

I once went into a Borders outlet a few years ago and was surprised about the poor quality of its inventory. Almost no best-selling books and most of what was being sold was drastically reduced in price. I could not figure out how that outlet could produce any significant revenues. It eventually closed. It appears that Borders was a badly operated distributor. My sympathies to the employees losing their jobs, but I hope better upper management takes over.


Wed, Feb 16, 2011 : 7:21 p.m.

Maybe a movie studio can buy the downtown location and turn it into a House of Ideas that pumps out Twitter-messages and rainbow unicorns that all bring in loads of invisible ipad money on their backsides.


Wed, Feb 16, 2011 : 7:19 p.m.

I'm sorry to see Borders go, but it's no surprise. They had the resources and ability to expand their online presence and advertising but apparently not the foresight. That's a shame. It brings to mind local stores like Nicola's Books or Stadium Hardware in Ann Arbor. Both continue to thrive in the face of competition from big box stores in the area. These types of local businesses provide what can't be found online or at big box stores; Knowledgeable staff and the ability to meet customer needs personally. And if they don't have what you are looking for they offer to find and order it for you without extra charge. There is still a need for brick and mortar stores, it just requires a different way of thinking about your customers. I used to enjoy perusing the tech books at Nicola's. They discontinued that section some years ago and when I asked why, they told me that most or all of the information in those books could be found online for free, and even suggested some websites where I could likely find the info I was looking for. They made no money from me that day but they earned a loyal customer, and they are the first (and now the only) place I look locally for books.


Wed, Feb 16, 2011 : 6:25 p.m.

Think of it as evolution in action.


Wed, Feb 16, 2011 : 6:16 p.m.

you have to sell your products and pay your bills to stay in business.Board em up.MOVE ON

John B.

Wed, Feb 16, 2011 : 8:04 p.m.

...and you've owned how many businesses? Zero, you say? Sounds about right....


Wed, Feb 16, 2011 : 6:07 p.m.

When Borders moved from it's long-time home at 303 S. State St., it confirmed they'd lost their soul. Heady with the rise of scale and profits, they put mass merchandizers at the helm of a cultural enterprise. Powell's in Portland never lost sight of what they were all about - and in it's day, Borders was every bit Powell's and then some.


Wed, Feb 16, 2011 : 5:57 p.m.

Arborland is on the verge of becoming a &quot;ghost mall&quot;. Starbucks should move into the Borders vacancy there...Lord knows they never have enough seating at their cramped Arborland location.


Wed, Feb 16, 2011 : 5:53 p.m.

Clean your bathrooms, Borders. They are disgusting.

Gene Alloway

Wed, Feb 16, 2011 : 5:53 p.m.

Townie1 is correct. Borders could not and cannot compete head to head with Amazon - it is doubtful B&amp;N can in the long run. The $7.99 (including shipping) of NYT bestsellers at Xmas time shows one that the most popular books make money for publishers and authors, but are just loss leaders for everyone else. But Borders could have, as the old saying goes: &quot;hit 'em where they ain't&quot;. Borders could have made available a wide number of books for a more sophisticated audience at prices comparable to Amazon's. They could have even carried books not available at Amazon (yes, those do actually exist). That would mean less buying thru distributors, more knowledgeable staff, and more consideration about where one would place a store. This does not lead to record breaking profits, even when it is profitable. Such an approach does mean that they either would have had to expand differently, or change strategies from super stores to smart stores beginning in the late 90's, as sales started to decline. This strategy was impossible before that time, because they were under first under Kmart and then a hot new publicly traded company. Now perhaps, facing dissolution, they may be able to pay off debts and find a path like this to regain their uniqueness as a brand. I just wish they would have followed more of a Zingerman's or Blackwells model from the beginning, preserving quality while expanding slowly. But you make money faster by selling out to Kmart.


Wed, Feb 16, 2011 : 5:52 p.m.

There was a time in Borders' history when the inventory system would see a section of a given store (fiction, history, cooking, etc.) that was selling well, and the system would automatically suggest other titles for the buyer to consider for that section. In other words, when a section was doing well in a particular store, the selection was increased. Inventory increased, but so did sales. That was what kept customers coming back, and kept their interest. That was Borders' strength in its heyday. That system was gutted, and the slow decline began.


Wed, Feb 16, 2011 : 5:40 p.m.

How do you reorganize a giant book store in this day and age? I've tried to imagine what &quot;future book stores&quot; might look like - but are they even needed now? There must still be some hope for Borders. Afterall, humans are social beings so not everyone is going to want to stay home downloading novels to their Kindles. The majority of people still go to the theater despite the fact that movies can be viewed at home. So what does Borders do to survive? Possibly provide a smaller, cozy cafe like atmosophere (couches, chairs, fireplace, study area...), reduce book inventory and support the sale and repair of electronic readers, host author signings and readings, provide reviews and recommendations, welcome book clubs... ?? I don't know and I wish I did. I just hope Borders can turn this all around.


Wed, Feb 16, 2011 : 4:16 p.m.

Time and time again we see corporations unwilling to revise their business strategy and continue with the business plan that was viable 20 or 30 years ago, when most families didn't even own a VCR and the only people who read books electronically were the students in &quot;Ender's Game&quot;. But it all comes back to the reality that if you're unwilling to cannibalize your own business in order to innovate, somebody else will do it for you. Apple is the perhaps the best example: after inventing the personal computer market they're now the process of destroying it. The funny thing is, there was no shortage of opportunities for innovation the media distribution market for the past decade. Sure, Amazon had the discount printed-book market locked up. But why not embrace tech like eBooks or Blu-ray, since it's still very difficult to download high-def content via the internet. Brick and mortar distribution as of three or four years ago would have been a perfect fit. People are always willing to pay for quality, at least when the price is right. Leverage the presence in downtown shopping areas, and cater to people who are coming in looking for a great book to read, not just a couple shelves of this month's bestseller list.

Gene Alloway

Wed, Feb 16, 2011 : 5:32 p.m.

I am not a regular ebook reader, but centering a brick and mortar store on selling ebooks never has seemed a good idea to me. It is just to easy to download them wherever, and chains simply aren't wiling to invest in good knowledgeable staff anymore.

Tom Joad

Wed, Feb 16, 2011 : 4:13 p.m.

I owe loyalty to my wallet. I shop at Amazon. If you can't compete you're gone. 1800 employees at one time in their HQ, for what? Obviously just hundreds of employees sitting on their butt. There will always be someone ready to provide goods and services. Those who do so at the best price will get the customers. Simple as that...

Gene Alloway

Wed, Feb 16, 2011 : 5:30 p.m.

Reminds me of a bumper sticker I see around town: &quot;Lost your job yet? Keep buying from China.&quot;


Wed, Feb 16, 2011 : 4:30 p.m.

It takes a lot of headquarters folks to keep a fortune 500 company running. Buying, marketing, real estate, store operations, cafe operations, finance, accounts payable, purchasing...the list goes on Before you deride, you should understand.


Wed, Feb 16, 2011 : 3:44 p.m.

They could never match Amazon on price. Borders had to maintain physical stores, and had to charge sales tax on pretty much every order. Amazon used it's lack of presence as an advantage and its ability to cheat on taxes to systematically undermine the big box model. It just happens that books are very easy to buy online. Each book is pretty much identical to others of the same edition. So you can go to Amazon and get an identical book, without paying sales tax, and with cheap (or free) shipping. If TVs, computers, and appliances were as easy to ship, Amazon would be eating Best Buy's lunch as well. They already buried Circuit City. With electronics getting smaller, Best Buy might be headed for problems too. Their third-quarter results last year were down: &quot;The quarter was hurt by weaker-than-expected sales of TVs, computers, and entertainment software as Best Buy faces increased competition from online retailers such as Amazon and rival stores such as Wal-Mart and Costo, all of which can offer lower prices.&quot; [<a href="" rel='nofollow'></a>]


Wed, Feb 16, 2011 : 3:33 p.m.

I bet the gourmet cheeseburger chains, the CVS/Rite Aids, the fast fresh and healthy burrito and sub sandwich chains are positively salivating at the prospect of all that prime downtown retail space in Ann College Food Court Arbor's heart. All we need now is a dorm high rise to take the place of the Michigan Theater.


Wed, Feb 16, 2011 : 7:15 p.m.

I bet you're right.They would provide jobs .And I bet the same people who are saying they feel sorry for the people who lost jobs would be them same ones complaining.

Gene Alloway

Wed, Feb 16, 2011 : 5:38 p.m.

I agree. South State now seems to have little identity different than any one of a thousand other streets in the country.


Wed, Feb 16, 2011 : 2:49 p.m.

Inventories were steadily, relentlessly cut to tell an inventory turn story to Wall St., rather than defending slower turns, by telling the truth that the Borders customer wanted to be delighted to find something new in his or her favorite reading area, something he or she couldn't find at Costco, on each and every visit. Once category management was introduced, that notion of the imperative to keep sections fresh with deep inventory went utterly out the window. Once the core customer lost that delightful experience, she came back less often, and average ticket declined. She couldn't be won back with a coupon. When was the last time you went to your favorite section in a Borders store and found something unusual that you just had to have because you hadn't seen it anywhere else? Bet it was before the new millennium.


Wed, Feb 16, 2011 : 2:47 p.m.

I put this in a reply to @Christopher, but perhaps should have put it in the main stream: Sadly, I think that too many people these days are all about cheap, and it will end up costing them way more than they know because it is a short horizon.


Mon, Mar 7, 2011 : 7:06 p.m.

Cheap relates to the quality of an item. A book is a book. The horizon you speak of is already very short.


Wed, Feb 16, 2011 : 8:01 p.m.

That's great if you've got the extra money, but if you're making just a little more then enough to cover the necessities, which is the case of many people in this economy, the money you can save by buying books online can make a big difference.

Jojo B

Wed, Feb 16, 2011 : 3:58 p.m.

And copying my reply from above: What many of these anti-Amazon replies are missing though is the fact that Amazon isn't just about &quot;cheap&quot;. They offer fast shipping, their site has user reviews, community questions/answers, want lists, gift lists, and usually their &quot;you might also be interested in this...&quot; suggestions let me to new books/music that I didn't know about but really appreciated. Borders can't compete with this, although at one point, their website tried to ride off of the Amazon engine. Even if Amazon wasn't around, I'd go to a dozen other stores to buy books and CD's. Borders' music selection is pitiful at this point and costs $3-7 more than anybody else. (I do remember back in the 90s and early 2000s when Borders DID have a good selection, but they got rid of their music selection to make more room for coffee and cheap plastic gift items.)


Wed, Feb 16, 2011 : 3:43 p.m.

Is it a matter of an individual being cheap or could it be that the product is overpriced?


Wed, Feb 16, 2011 : 3:20 p.m.

It's not about having spare money - it's about spending your money in places that actually bring it back to the community you live in. It's actually a more complicated issue than @Christopher seems to understand. Local businesses like Border's actually do a lot to sustain a community like Ann Arbor and make other opportunities in the area possible.

Christopher LeClair

Wed, Feb 16, 2011 : 2:59 p.m.

Having spare money must be quite the luxury


Wed, Feb 16, 2011 : 2:57 p.m.

And I replied to that because I totally agree with you on that.

Christopher LeClair

Wed, Feb 16, 2011 : 2:40 p.m.

I know this is was originally a local company but this day is long overdue. Borders no longer offers a vital service. Why would someone want to pay full price, $26, for a brand new book when they can go to and find the same book for $14.99. Some people might have the extra money to throw at this company, but for the budget conscious individual who wants to buy books Amazon is a savior. Perhaps they could have offered more in-store discounts. Oh well.

Christopher LeClair

Wed, Feb 16, 2011 : 8:08 p.m.

@LBH I absolutely value the written word in all it's various forms. However, I place that value at about 40-60% of the listed price. I agree @Jojo B, I even find better deals in the store at Barnes &amp; Noble. Publishers make the list price high for a reason, they never actually expect to get that much for the book. That is, unless it's purchased from Borders.

Jojo B

Wed, Feb 16, 2011 : 3:56 p.m.

What many of these anti-Amazon replies are missing though is the fact that Amazon isn't just about &quot;cheap&quot;. They offer fast shipping, their site has user reviews, community questions/answers, want lists, gift lists, and usually their &quot;you might also be interested in this...&quot; suggestions let me to new books/music that I didn't know about but really appreciated. Borders can't compete with this, although at one point, their website tried to ride off of the Amazon engine. Even if Amazon wasn't around, I'd go to a dozen other stores to buy books and CD's. Borders' music selection is pitiful at this point and costs $3-7 more than anybody else. (I do remember back in the 90s and early 2000s when Borders DID have a good selection, but they got rid of their music selection to make more room for coffee and cheap plastic gift items.)


Wed, Feb 16, 2011 : 3:49 p.m.

@Christopher, so it isn't really about not spending money, it is about what you think things are worth. That's cool. Perhaps you don't value complete instant gratification enough, IE walking in, picking it up and paying for it which costs more (though possibly not that much more when you factor in the cost of shipping). You're willing to wait for the mail to arrive, yet, you don't want to wait a couple of weeks to get a book out of the library. You're paying for that too BTW in the form of taxes if you live in A2.

Christopher LeClair

Wed, Feb 16, 2011 : 3:13 p.m.

Do you realize there are waitlists that are 100 people long for in-demand books at the library? I'll pass


Wed, Feb 16, 2011 : 3:11 p.m.

I mean't agree with you, Christopher.


Wed, Feb 16, 2011 : 3:10 p.m.

Agree with you. Better yet go use your library when the materials are free! Cheapest solution yet.


Wed, Feb 16, 2011 : 2:57 p.m.

@LBH is quite right. It is the Walmart mentality that what's cheaper is better. Border's still provides excellent customer service and its employees love books. Maybe if they scale back to that, it can at least be sustainable again someday. Me, I still buying books there and sitting down with a coffee to enjoy them.

Christopher LeClair

Wed, Feb 16, 2011 : 2:46 p.m.

When you owe tens of thousands of dollars in student debt, yes, many people are all about the cheap.


Wed, Feb 16, 2011 : 2:43 p.m.

Sadly, I think that too many people these days are all about cheap, and it will end up costing them way more than they know because it is a short horizon.


Wed, Feb 16, 2011 : 2:40 p.m.

Slow, slower, slowest. Sadly this is how Border's responded to many trends over the last couple of decades. Then, when their focus shifted away from books to wrapping paper, goofy gifts, (read the big-boxification of the place) etc, they lost me. There were fewer and fewer reasons for me to go into the store, something I used to love to do. You could almost always find an interesting book on a table with an employee recommendation, or the like. I have been mourning the loss of Borders for at least the last 5, perhaps more, years.

Stephen Lange Ranzini

Wed, Feb 16, 2011 : 2:25 p.m.

Very sad day for Ann Arbor. Borders until recently was the only private sector employer in Ann Arbor in the list of top 10 largest employers. I wish everybody the best as they work through the bankruptcy.


Wed, Feb 16, 2011 : 1:49 p.m.

The &quot;Circuit City&quot; of books... The best use of Borders is a combo with Barnes and Noble to fight Amazon. They've proven they have no self-sustaining business model.