Beleaguered bookseller the Borders Group is reportedly finalizing plans for a bankruptcy plan that may shutter more than one-third of the chain’s 674 stores. The Wall Street Journal is reporting that a bankruptcy filing by Borders “could come within days,” and would involve the initial closing of about 200 stores “and possibly 50 or so later.”
Even if a leaner Borders Group can emerge from bankruptcy, the current market will be irrevocably marked the significant diminishing of the nation’s second largest bookselling chain. According to the WSJ, the closings would be good for e-books since “once physical shelf space is gone, it’s gone forever.” Borders currently accounts for about 8% of the U.S. book market, but the Journal quotes a literary agent to the effect that on certain titles Borders can account for up to 20% of the sales, and in the case of manga, Borders played a huge role in advancing the category (see “Borders Woes a Blow to Manga”).
Currently almost half of U.S. book sales come outside the traditional bookstore market, with the majority of those sales coming from a limited number of bestselling titles sold in big box retail stores, supermarkets and other non-traditional venues. If Borders were to go away, there would be one fewer venue where publishers could “break” a title by a new author. According to USA Today, mail order giant Amazon has 22.6% of the market, followed by Barnes & Noble with 17.3%, Borders at 8.1%, Books-A-Millon with 3%, and independent bookstores with 6%.
If Borders were to disappear or lose a large portion of its market share, that should provide opportunities for its competitors large and small. One analyst quoted in the WSJ estimated that Barnes & Noble could gain $1 billion in sales in the event of a total Borders collapse, but the Journal article also pointed out that the liquidation of Borders U.K., which had 4% of that market was expected to improve its major competitor Waterstone’s net margins by 3% to 4%, but Waterstone’s parent the HMV Group recently announced the closings of 20 Waterstones stores after a poor holiday season.