On Wednesday February 16, 2011, Borders Group Inc. (Borders the bookstore) filed for Chapter 11 protection. In the next few weeks, the company says it plans on closing 30% of its stores nationwide. The filing will allow Borders to reorganize and access new capital, which the company desperately needs.
Borders has been having a difficult time competing with online book sellers, notably Amazon.com. The company has launched loyalty programs and introduced a digital bookstore, yet the company has many liquidity problems and more liabilities than assets.
Technology has greatly affected the traditional brick and mortar book store. Consumers are purchasing books online or through their tablet devices. In order for Borders to be competitive in the future, they will need to become more creative and find a way to gain back their lost sales to online retailers.
Sources: Checkler, Joseph et al. “The Wall Street Journal Online” February 16, 2011.
http://online.wsj.com/article/SB10001424052748703373404576147922340434998.html?mod=WSJ_hp_LEFTWhatsNewsCollection
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