The encyclopedia · Strategy & Leadership · Strategic decision · 2011
Borders opened too many big stores as e-readers arrived — all 399 of them closed
The bookstore chain kept expanding its oversized format into a shrinking market, then had no answer once the Kindle moved buyers off its sales floor.
Borders Group · 2011-07-18
What happened
Borders Group grew into one of the largest book retailers in the U.S. through the 1990s and 2000s by opening large-format superstores, often with high overhead from prime real estate and expansive floor space. The chain kept opening new stores in that format even as book sales growth slowed, leaving it with more square footage than its sales could support.
The eReader era compounded the problem: as devices like Amazon's Kindle shifted book buying away from physical stores entirely, Borders had built no comparable digital foothold of its own to offset the decline in-store traffic. Borders filed for Chapter 11 bankruptcy in February 2011, closing 200 of its then-659 stores immediately as part of an attempted restructuring.
No buyer emerged to take over the remaining business as a going concern. On July 18, 2011, Borders announced it would liquidate its remaining 399 stores entirely, with Hilco and Gordon Brothers administering the wind-down. Roughly 10,700 employees lost their jobs as the last stores closed by September 2011.
Why it happened
- Borders kept expanding its large, expensive store format even as underlying book sales growth slowed, building overhead the business couldn't sustain long-term.
- The chain had no meaningful digital or e-reader strategy of its own when Amazon's Kindle began shifting book purchases away from physical stores.
- Store sizes and lease costs were calibrated for an earlier, growing market and were never right-sized once the format's economics turned unfavorable.
- By the time the February 2011 partial closures happened, the remaining business still wasn't attractive enough for any buyer to take over as a going concern.
The lesson
Expanding a large-format physical retail footprint while a digital substitute for your entire product category is emerging leaves no way to right-size fast enough once that substitute wins.
Aftermath
Borders' remaining stores closed by September 2011, ending the chain entirely. Its retail assets and store leases were absorbed into competitors and other retailers, and the Borders name was later licensed for limited e-commerce use without a return to physical stores.
Sources
- Borders Group Chapter 11 liquidation notice — SEC filing
- Final chapter: Borders to close remaining stores — NBC News
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