Are Brick and Mortar Bookstores Doomed?

Are Brick and Mortar Bookstores Doomed?

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I have the good fortune of living within walking distance of two bookstores: Barnes and Noble and Borders. And, just two miles away from my home is a popular used bookstore with its share of good reads and constantly changing inventory.

In the case of the two retailing giants I can tell you one thing: business is slow, at least at the locations I frequent. I like to think that this has something to do with it being summer, but I’m also thinking that online retailers and ebook readers are beginning to take their toll on brick and mortar booksellers.

Borders Shareholders

I may not be too far off the market in my assessment. Yesterday, Borders announced the sale of its stationery unit in a bid to pay down its debt. Borders found a buyer for Paperchase Products Ltd., its British stationery unit and with that sale it will be able to significantly reduce its $90 million debt load. Still, even after announcing the deal, an analyst with Standard & Poor’s Equity Research urged Borders shareholders to sell.

At 1.62 a share, Borders isn’t making anyone rich. The company trails Barnes and Noble and its online competitor Amazon in the e-book market, the area of book selling that seems to be growing the fastest. That may explain why as I sit in a Borders Cafe and hear the whirl of a blender that the cafe has more people in it then the rest of the store. At least Borders has a sidewalk sale going on with books slashed to as low as $1.99.

Poison Pill

Barnes and Noble has been in the news lately too. Billionaire investor Ron Burkle, who has a 19 percent share in the company, sought to increase his stake to 35 percent. That move would have made Ruckle the largest shareholder in B&N, passing chairman Leonard Rigglio and family’s 32 percent stake.

Not about to cede control of the company to Ruckle, the company’s directors swallowed the proverbial “poison pill” and made discounted shares available to other shareholders in a bid to keep Ruckle out. The move worked, Ruckle sued and the case is being heard in Delaware chancery court.

Amazon Monolith

Amazon has found its place in a world that goes far beyond bookselling. Active in web services, the e-giant is now venturing into supercomputing, diversifying its business further. That move should serve notice to everyone that Amazon wants to dominate the book industry and a host of other industries as well.

As for Barnes and Noble and Borders, their respective Starbucks and Seattle’s Best cafes may keep their retail outlets busy for now. But unless people spring for a $4 cup of iced joe, there won’t be much else for these companies to tap as the shift to e-books continues to hasten.

Adv. — Shop smart! At the NBuy Shopping Plaza.

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Categories: Consumer Tips

Comments

  1. Sam
    Sam 14 July, 2010, 08:33

    Well I think Borders entered a the ebooks scene little to late to help them. I would sell too if I was a shareholder.

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