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Herb Weitzman: After Borders, Who’s Next?

When Linens ‘n Things and Circuit City failed in late 2008 and early 2009, I asked myself, “Who’s next?” And the logical answer was: Borders. But all through 2009 and 2010, even as Borders continued to report weak sales and losses, its Dallas area stores stayed open. Not until February did the chain finally declare Chapter 11 and start gutting its store presence.

So why is Borders closing stores when its main competitor, Barnes & Noble, celebrated the strongest holiday sales season in its history this past year? In a nutshell: technology. Borders’ stores were sized to include substantial music/CD departments. But as the growth of digital-format music exploded, CD sales cratered—and Borders was left with a large amount of under-performing space in its stores. They also seemed to be an also-ran when it came to online sales and e-books, two directions where competitors like Amazon and Barnes & Noble are finding great success.

Borders leadership declares that the chain can make it as a smaller, leaner operation. We are certainly rooting for it. It’s a great lifestyle concept, attracting the kind of educated, affluent shopper every lifestyle center needs. But no matter how great a concept is, it will fail if it does not keep up with changes that affect how people shop—and what they shop for.

So just like we wondered in 2008 and 2009 if there were more Circuits or Linens out there, today we’re asking, “Are there more Borders out there?”

Herbert D. Weitzman is chairman and CEO of The Weitzman Group and Cencor Realty Services.

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One comment on “Herb Weitzman: After Borders, Who’s Next?

  1. Maybe one of the office chains? Between Office Depot, Staples and OfficeMax, the price competition has to have margins very low. Further cutting into margins, especially for retail is the revised business franchise tax.

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