Borders Closing: Another Nail in the Coffin for Brick-and-Mortar Retail?

After a failed auction attempt yesterday, Borders Group Inc. is now
shifting into full liquidation mode. The nation’s second-largest bookstore
chain will close its remaining 399 stores and is likely to shut down for good by
September.

The question now: What does Borders’ closing mean for other small businesses
that struggle to compete against online competitors?

Borders’ collapse is both expected and disconcerting. The company filed for
bankruptcy protection last February and has struggled ever since. After closing
a first wave of retail stores, the bookstore chain had increasing trouble even
stocking its shelves, as publisher after publisher refused to send inventory to
Borders. This was because Borders delayed payment to publishers on books it had
already sold, and the company wanted to establish delayed-payment plans for its
future sales.

From personal experience, I can tell you that margins and cash flow in the
book publishing industry are incredibly tight, and only the largest publishing
houses would even be able to afford to contemplate such a plan, even if they
were inclined to participate.

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