Reuters, NEW YORK - Tue Jan 4, 2011
NEW YORK (Reuters) - Book publishers reeling from low sales and lower prices of electronic books will suffer more if the United States' second-largest chain of bookstores goes out of business.
Last week, Borders Group Inc said it was delaying payments to some of its vendors, including book publishers and distributors, as it searches for new financing to avoid violating the terms of its credit agreements early in 2011.
Borders' troubles would spill over into the world of publishers, agents and authors if its more than 600 stores went out of business.
"It would have a significant, concrete and immediate impact on sales," said one publishing executive who requested anonymity as the person's business relationship with Borders is confidential. "We would just sell fewer books period."
Traditional book outlets such as Barnes & Noble (BKS.N) and Borders account for about 49 percent of book sales in the U.S. according to Albert N. Greco, professor of marketing at Fordham University who follows trends in publishing and retail.
While people can go to other retail outlets such as Wal-Mart, there are typically fewer selections.
Wal-Mart, for instance, carries around 1,400 to 1,700 titles, said Greco, while Borders' superstores stock well over 100,000 books.
"If the chain went out of business it could be a serious blow... the whole value chain could be adversely impacted," Greco said.
Publishers as large as Pearson PLC's Penguin, CBS's Simon & Schuster, Random House and News Corp's HarperCollins could lose between $10 million to $50 million in sales if Borders' goes out of business, Greco said. Some smaller publishers could go under.
Many publishers hope to get paid for inventory already supplied to Borders.
"We're working diligently with our key publishers to work out these arrangements," said Borders spokeswoman Mary Davis.
Borders owes money to some publishing houses, likely dating as far back as September, the publishing executive later told Reuters. Davis, the Borders spokeswoman, was not immediately available to address that statement.
Full report at Reuters.
Borders have been in trouble for a while. Among other things, they were known for employing young lowly paid store staff with "fast food" type experience but with no knowledge of books - that was seen as a plus, because they wouldn't start questioning how the chain was run and what it stocked. Its demise and hopefully replacement with well-run independents is a "who cares?" affair.
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