26 Nov 2009 Bookshop chain Borders goes into administration risking 1,150 jobs

[Watchman]

Bookshop chain Borders goes into administration risking 1,150 jobs

By James Tozer
Last updated at 7:01 PM on 26th November 2009
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One of Britain's biggest chains of bookshops collapsed today, threatening more than 1,000 jobs in the run-up to Christmas.

Borders, which has 45 stores selling books and CDs, went into administration, unable to compete any longer with online retailers like Amazon as well as supermarkets offering titles at huge discounts.

All its shops will remain open for the time being in the hope of finding a buyer, but many have begun 'closing down sales', while its website has stopped taking orders, threatening a bleak Christmas for its 1,150 staff.


End of an era: Borders went into administration today after battling against internet competition and supermarkets taking its market share

The news - which comes on the first anniversary of the demise of Woolworth's - is a further sign of how the traditional pre-Christmas boost in sales has not been enough to save struggling retailers.

Borders opened in Britain in 1997 as part of an expansion by its parent company, the second biggest bookselling chain in the U.S., but ten years later the UK arm was sold to a private equity firm, followed by a management buy-out.

Along with its Books Etc stores, it has struggled to compete with the massive popularity of websites like Amazon, while supermarkets selling bestsellers at low prices have further eroded its share of the market.

Difficulties in obtaining credit created further difficulties in securing sufficient stock to fill its shelves, and some publishers stopped selling to it.

Borders is thought to have been hoping to sell the bulk of its stores to high street rival WH Smith, but the firm is understood to have walked away from the deal last week, leaving it with no rescue option.

HMV, owner of Britain's biggest book chain, Waterstones - which has also seen declining sales - is now thought to be considering buying a small number of shops.

Administrators MCR said all stores would remain open while a buyer was sought, while employees' wages would continue to be paid.

Tim Godfray, Chief Executive of the Booksellers Association, said the collapse of Borders was a matter of 'great regret' but insisted the market as a whole remained healthy.

'Twenty-first century bookselling is a complex business, and while undoubtedly Borders is going through a miserable time, our current data indicates that books remain a popular purchase at this time of year across a variety of outlets,' he said.

Already this month off-licence chains Threshers and Wine Rack have shed more than 1,200 jobs after their parent company, First Quench, went into administration.

Business leaders last night said the Government needed to do more to prevent even more shops and retail units falling empty.

Liz Peace, chief executive of the British Property Federation, said: 'Coming on the anniversary of Woolworth's demise where 200 of its stores remain empty, the sad news about Borders throws open the large possibility of more empty retail space.

'And given that Borders' outlets are large shops that often anchor shopping centres, it will not be as easy to fill these.

'With the pre-Budget report due soon, it is essential the Government looks to extend empty property rates relief for all landlords and stop the damage that Gordon Brown has continued to do to retail throughout the downturn.'