The industry has been ablaze this month with “will they or won’t they” guesses concerning the future of Borders Bookstores. Are they declaring bankruptcy?
Borders is the second-largest chain of bookstores behind Barnes & Noble, which is having its own share of financial difficulties in the current economy. I’ll discuss more about Barnes & Noble next time.
But the future looks even less bright for Borders, which may have to file for Chapter 11 if it is unable to successfully renegotiate terms with its vendors and lenders.
What led Borders to this position? Some could say it over-extended itself with the opening of gigantic “superstores” while statistics seemed to strongly indicate that more and more people were buying books online. It’s true. Perhaps 95% of our authors’ books at Outskirts Press (and most other self-publishing firms) sell online via Amazon and Barnes & Noble’s website.
Others have hypothesized that Borders was “too late” joining the e-book game, following in the wake years after Amazon and months after Barnes & Noble. Personally, I’m more inclined to believe the first reason than the second. A physical store typically makes just over $5 selling a $10 paperback novel. You know how many books each store must sell every month to pay for 50,000 square feet of retail space? And that’s before heating and lighting it. Plus there are the employee costs and other expenses typical of running any business.
Of course, to supplement that income, it’s a little known fact that most large retail chains like Borders and Barnes & Noble make a large portion of their revenue selling advertising and “premium” space in the store to traditional New York publishers (many of whom are having their own set of financial difficulties, which may be contributing to a decrease in those advertising dollars at the store level).
Here’s hoping Borders pulls through.