Borders - a business turnaround that was doomed to fail

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As Borders UK slipped into administration yesterday, many book-lovers across the UK were saddened at the news but my guess is that many of them had not been buying their books at the chain or its Books, Etc division for some time. Even the administrator, Phil Duffy of MCR admitted the chain was outwitted by "competition on bestsellers from supermarkets and the growing strength of the digital and online markets in this sector."

Sure Amazon is growing in strength with around 20% of the UK book market, and supermarkets dominate the best-sellers marketplace with around 50% share.

Borders, as a high street generalist book-seller, was a business model that was clearly anachronistic, and the owners of the business, like their forbears at Woolworths, Adams and The Pier, didn't take a grip to fundamentally change the business strategies. This is clearly a tough market, and is arguable as to whether the business could have been saved by a more aggressive drive into DVDs, or electronic readers like the Kindle (rival Waterstone's is doing OK with Sony's e-reader). The company had made a half-hearted foray into these products, but by no stretch of the imagination could it have been described as decisive turnaround strategy.
At a time when book distributors had already been holding back supplies and withholding credit, the best move would have been to hunker down, focus on core competency, shed badly-performing stores, and work hard on building cash reserves. In this industry it would have never been easy, but certainly survival was possible.


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