Borders demise signals end for chain bookstores

Borders demise signals end for chain bookstores
Could this sight be disappearing from the US? Borders is faced with administration
Uploaded by jblyberg on flickr.

By Jon Whiteaker - 06:08PM - Mon 14th February 2011

High street book shops are becoming increasingly rare, with many of the biggest names in the sector pushed into oblivion by buying online and the increasing popularity of reading devices such as the Amazon Kindle and the Apple iPad.

Yesterday The Guardian reported that US book retailer Borders is poised for bankruptcy after a recent sales and shares nose-dive, which leaves the company contemplating the closure 150 of its 674 stores dotted around the US.

Just over a year ago Borders closed the doors of all of its UK stores, marking the start of a disastrous down-turn for the industry.

The next to go was British Bookshops which announced its move into administration in January, and more recently Waterstones closed of 11 stores in the UK and Ireland following disappointing December sales trading.

So the question is whether there is still space for a large chain bookstore on high streets around the world?

Consulting Director of Verdict Research Neil Saunders argures that because bookstores require an extensive amount of space in order to offer a wide selection of books, a combination of low sales and high rents can be lethal.

Nick Bubb, Retail Analyst at Arden Partners, said: “The main problem with Borders, which was true in the UK as well as the US, is that the stores are way too big and impersonal and too dependent on sales of music.”

Both experts agree that Amazon casts a large shadow across the sector with its convenience and delivery services and with major supermarkets undercuting prices further it is almost impossible for specialists to survive.

Amazon demonstrated the success of e-books by announcing at the end of December that the Kindle had become its best selling product, meanwhile its huge variety of physical titles with none of the property overheads makes it a leader in both formats.

BGC Partners analyst David Buik told Retail Gazette: “Suffice to say that I am amazed that it has taken so long for Borders and Waterstones to throw in the towel.

“The pressure from Amazon and downloading on to ipad’s must be overwhelming competition, which they must yield to. If you cannot beat them, join them but neither retailer has selected second gear in that department.”

Book stores are unlikely to disappear from the high street altogether, but it may be smaller independent outlets that are best equipped for the challenges ahead.

Saunders commented: “I don’t think they will die out altogether, there will always be room for some but, economically, we can’t support as many as we currently have.

“The ones that survive will be either specialist shops or formats that are very innovative and incorporate leisure and other points of interest.”

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