Lecture Notes: The Rise and Fall of Borders

Introduction

Discussion of major companies filing for Chapter 11 bankruptcy protection: Atari and Kodak.
Focus on Borders, a significant player in the American bookstore industry.

Founded by brothers Lewis and Tom Borders in 1971 in Ann Arbor, Michigan.
- Initially targeted college students with textbooks and rare titles.
- Expanded to multiple locations.
Growth into a large bookstore concept with over 700 locations worldwide and 33,000 employees.
- Emphasis on customer experience and knowledgeable staff.

Expansion and Growth
- Opening of larger stores with a cozy atmosphere, classical music, and extensive seating.
- Launch of Book Inventory System for efficient stock management.
- Sales reached $32 million by 1988.
Acquisition by Kmart
- Borders sold to Kmart in 1992, allowing for aggressive expansion.
- Sales jumped to $1.5 billion by 1994.
Borders Group Formation
- Spun off as a separate entity from Kmart in the mid-90s.
- Innovations included in-store computers, coffee bars, and music listening stations.

Competition
- Fierce competition with Barnes & Noble, both chains approaching market saturation.
- Estimated maximum market of 1500 bookstores in the country.
International Expansion
- Attempts to enter Canada denied, but successful in Singapore, Australia, and the UK.
- Overall sales reached $1.6 billion in the late 90s.
Digital Shift
- Launched website in 1998, which was unprofitable and costly.
- Lawsuits from independent bookstores and declining stock prices.
- Partnership with Amazon in 2001.

Losses and Failures
- Significant losses reported by 2007 despite $4 billion in sales.
- Poor investment in non-book products (CDs, DVDs) hurt profit margins.
- Delayed response to the rise of e-readers (Kindle by Amazon, Nook by Barnes & Noble).
Operational Changes
- Shift from full-time, trained employees to a part-time workforce.
- Increased competition and decline in retail mall stores (Walden Books).

Filed for Chapter 11 bankruptcy protection on February 16, 2011.
- Immediate closure of 220 stores.
- Ultimately converted to Chapter 7, leading to total liquidation.
Final Closure
- All stores shut down by September 2011.
- Some locations absorbed by competitors like Books A Million.

Borders' rise from humble beginnings to a major bookstore chain.
- Failure to adapt to technological advancements and changing market conditions.
- Lessons on competition, expansion, and maintaining brand identity.
The last remaining Borders location is in Dubai, while the original charm of the company has been lost.