Could this be the last year for the big chains?

[Connallmac]

http://www.msnbc.msn.com/id/40719268...siness-retail/

I saw this article on Msnbc.com this morning and it paints a pretty grim picture for both Borders and Barnes & Noble, especially for the former. Could we possibly see both big chains slide into Chapter 11 next year? It seems a very real possibility, given the overall slide in book sales and the cannibalization of pbook sales by ebooks. Especially when you consider how late to the ebook game Borders was and the fact that it hasn't been a particularly well managed chain. Perhaps by this time next year we will have no Borders, and a smalled B&N chain?

[HarryT]

Borders have already gone bust in the UK.

Can't see Waterstones (our dominant bookshop chain) going anywhere, though. Their business seems to be booming (and they sell lots of different brands of eBook reader).

[Kali Yuga]

Perhaps in the next few years. I suspect the Nook business may survive in some form.

However, the article places far too much emphasis on ebooks. The chain's big problems are also due to Internet sales, Walmart and other big box store sales, and the recession.

[fjtorres]

Originally Posted by Connallmac

Could we possibly see both big chains slide into Chapter 11 next year?

Actually, the way I read between the lines I wouldn't be shocked to see Borders go to Chapter 7. Don't expect it but I think it could happen. Chapter 11 is generally used to fend off creditors while you get your house in order and clean up your act. That would be B&N, who seem to have a viable exit strategy from the dying world of high-volume brick-n-mortar p-book retailing.

Borders, on the other hand, seems to be too far gone for the usual Chapter 11 remedies; new management team, new product lines, closing down non-performing locations and focusing on the profitable ones... They don't sound like they have *any* profitable locations and their efforts on the ebook front are all outsourced and contracted-out. To a large extent the ony thing of value they have is real estate (if any) and the name, which is getting tarnished daily. Plus their small investment in Kobo.

As the article says, both chains need *big* sales this holiday season to fend off disaster. B&N might survive with just a so-so season on the strength of their Nook and NookColor numbers. Borders? Dunno. Who'd want to throw good money after bad to keep them afloat? They may have to go to liquidation if the quarter doesn't turn up significant profits.

[Connallmac]

Originally Posted by fjtorres

Actually, the way I read between the lines I wouldn't be shocked to see Borders go to Chapter 7. Don't expect it but I think it could happen. Chapter 11 is generally used to fend off creditors while you get your house in order and clean up your act. That would be B&N, who seem to have a viable exit strategy from the dying world of high-volume p-book retailing.

I agree that Borders is a better candidate for Chapter 7, but then so is Blockbuster and they went Chapter 11 too. Sometimes people don't want to face reality.

[fjtorres]

Originally Posted by Connallmac

I agree that Borders is a better candidate for Chapter 7, but then so is Blockbuster and they went Chapter 11 too. Sometimes people don't want to face reality.

My thoughts on Borders is that they may not get a choice; involuntary Chapter 7 comes when nobody will trust you with enough money to try chapter 11.

I'm thinking that there may not be enough investors willing to bet on the pbook superstore model to keep *both* chains around and that whatever investors might be willing to gamble on a "distressed" property are more likely to support B&N. So Borders may simply find all funding sources dried up and have to go to liquidation. A lot of dept store chains found themselves in that boat when that industry collapsed in the 80's-90's.

[Connallmac]

Originally Posted by fjtorres

My thoughts on Borders is that they may not get a choice; involuntary Chapter 7 comes when nobody will trust you with enough money to try chapter 11.

I'm thinking that there may not be enough investors willing to bet on the pbook superstore model to keep *both* chains around and that whatever investors might be willing to gamble on a "distressed" property are more likely to support B&N. So Borders may simply find all funding sources dried up and have to go to liquidation. A lot of dept store chains found themselves in that boat when that industry collapsed in the 80's-90's.

You could be right, but if there is someone silly enough to double down on Blockbuster there's got to be someone foolish enough to do so on Borders.

[HarryT]

Are Borders big in the US? I don't think anyone really noticed when they went bust here in the UK - they only had 30-odd stores compared to Waterstones' hundreds.

[OldGunbunny]

Originally Posted by Connallmac

I agree that Borders is a better candidate for Chapter 7, but then so is Blockbuster and they went Chapter 11 too. Sometimes people don't want to face reality.

In instances like Blockbuster (and I strongly suspect, Borders), that merely delays the inevitable. Management of this type of organization won't recongnize the cultural shift that renders them obsolete.

[Connallmac]

Originally Posted by HarryT

Are Borders big in the US? I don't think anyone really noticed when they went bust here in the UK - they only had 30-odd stores compared to Waterstones' hundreds.

According to the article Borders has about 500 superstores left, plus they still have some Waldenbooks locations left, if I'm not mistaken. They are number two in the US, after B&N, which still has about 750 superstores.

[mldavis2]

I'm not so sure the eBook revolution is as rampant as some think. There will be a spurt over the Holiday season with gift purchases. But many of my friends and family are skeptical of the media and still think they prefer 'real' books. Many (myself included) considered an eReader as a niche 'toy'. I spent some time researching eBook readers for a friend and ended up buying a K3, and I'm a big fan. But I'm an avid text reader. Many will download a book or two on an iPad or Notepad and find them awkward to use for simple reading...heavy, warm on the lap, etc. The lukewarm experience will not often transform the user to a true eReader. Until the media itself becomes transparent to the user for purchases, library rentals and research, it will continue to experience good but not overwhelming growth. Retail stores will have time to turn themselves into specialty outlets if they wish to survive.

[mckait]

I am an avid reader too. I know that I am getting a Nook for Christmas. I do not know if I will keep it or return it. I am currently trying to make up my mind. One of the positives of the nook is library borrowing, if I can sort that out. I can't imagine not buying real books though, e-reader or no. I buy most often from Amazon, because B&N customer service for online purchases is abysmal. This is the biggest reason that I might return the nook without trying it.

I think if B&N does end up closing more stores, they had better mind their customer service if they want to remain an online bookseller. In store shopping is much better, though. Say what you will about Amazon, their customer service is fantastic. I have never liked Borders. It has always felt like the Walmart of media to me. Too much, too big...

[tubemonkey]

Originally Posted by HarryT

Are Borders big in the US? I don't think anyone really noticed when they went bust here in the UK - they only had 30-odd stores compared to Waterstones' hundreds.

According to Wikipedia:

As of 2009, there are 517 Borders stores in the United States, and approximately 466 stores in the Waldenbooks Specialty Retail segment, including Waldenbooks, Borders Express, Borders airport stores, and Borders Outlet. During the autumn and winter months, Borders also operates calendar stores and mall kiosks under the Day By Day Calendar Company name.

[MV64]

I love going into bookstores like Barnes and Noble, but honestly, if the chains collapse, we may see a resurgence in mom and pop bookstores, which would be a great thing.

[tubemonkey]

I prefer online bookstores. I have a Nook Color and over 125 books from B&N, and have never set foot in one of its stores. If it shut down all of its stores and went the Amazon route, it wouldn't bother me in the least.