Borders Group - Time For The Last Act?

Looks like my beloved Borders (NYSE: BGP) will quite likely leave the stage at some point in 2011. The company announced that it has been delaying payments to some vendors will trying to work out a refinancing/funding with its current lenders.

This is not exactly what you call "bargaining from a position of strength", and it is unlikely that there is any miracle solution. Now, allowing for the fact that there is a time lag in the company's operating model that can create liquidity issues (they have to reorder inventory after a sale before the payments actually reach them), there is just no reason to be optimistic here insofar as I can see. The holidays are generally a time when retailers should be getting fat, not struggling to keep merchandise on the shelves and angering vendors by paying late.

The writing is on the walls, though. Maybe Barnes & Noble (NYSE: BKS) survives, but nationwide chains of big-box booksellers will not. The power of Amazon (Nasdaq: AMZN) is just too much to resist, to say nothing of the myriad alternatives to actually reading a book. All in all, book stores look more and more like arcades - another place I used to love to while away hours, but really no longer exists.

Off Topic: When Economics And Love Collide

As a reasonably firm free-marketeer, I suppose I should not mourn the impending demise of Barnes and Noble (NYSE: BKS) or Borders (NYSE: BGP). This is what is supposed to happen in a functioning free market, right? Good companies rise, bad companies fall and go away, and throughout the process capital is supposed to move towards the best returns.

So, I am not denying that the markets are working as Barnes and Noble and Borders go away as physical stores, to be replaced (presumably) with Amazon's (Nasdaq: AMZN) online-only methodology. Perhaps a few Quixotic private bookshop owners stay around, those who either have not gotten the memo about the demise of the industry, or simply refuse to read it.

But I will tell you ... I love bookstores. I love going to them, I love sitting in them, I love reading in them, and I love buying in them. And yet, I have done my part to kill what I love - I am not the only person to thumb through a book at Borders, confirm its worth, and then go home, pop on Amazon (because it is a buck or two cheaper than ordering from Borders' website) and buy it there. Basically, bookstores have turned into places where we test-drive our reading material.

So, as I look at the latest news from Barnes and Noble (bad, of course), I cannot help but feel a little sad that this industry is going away. I do not miss portable cassette players, Atari 2600's, video rental stores, or other flotsam and jetsam of the 1980's, but I will miss bookstores.