Rosemary Gallagher: Borders' troubles only part of wider high street malaise

Published on Saturday 28 November 2009 12:22

IT WAS much loved by the "Friends generation", but it seems the Borders chain of bookshops has had its day.

In these technology-driven and debt-ridden times, most of us just don't have the inclination or money to sit in a shop flicking through books, drinking overpriced coffee. The UK has moved on from the era when millions tuned in every week to see Monica, Rachel and friends discussing life on the sofa at Central Perk coffee shop. Borders failed to keep pace.

Alarm bells started ringing when it recently stopped taking online orders. Then, late last week, Borders UK called in administrator MRC, threatening a bleak Christmas for its 1,150 staff.

While the administrator has said all 45 Borders and Books Etc stores would remain open while it sought a buyer for at least some of them, there is no sign of a white knight, which is hardly surprising.

Borders has suffered from increased competition from online retailers and supermarkets and has admitted it had "severe cash-flow pressures". The writing has been on the wall, with suppliers reducing its credit or stopping it altogether.

But it was a very different picture back in 1997 when Borders was brought to the UK by the US book giant of the same name. It was seen as a breath of fresh air in the stuffy world of booksellers and had popular appeal by selling magazines and stationery – as well as coffee – alongside all types of literature.

Since then it has changed hands several times and lost its way. It was sold in June 2007 to Risk Capital Partners, which then sold it on to private equity firm Valco earlier this year. Now a new buyer is being desperately sought.

There have been reports that HMV, which owns rival book chain Waterstone's, is interested in some shops. HMV has a track record of stepping in to buy parts of struggling rivals. In 2007, it bought a number of Fopp stores from the administrator after the collapse of the record chain, and they continue to trade under the Fopp name. So any move by HMV will be to cherry-pick the Borders outlets it wants rather than save the entire group. In common with all bookshops, Borders can't match the supermarkets on discounting. Anyone wanting the latest Dan Brown novel at cut price will go online or head to Tesco, not their local bookshop.

The fate of Borders is yet another sign of the problems facing the high street, which has lost big chains such as Littlewoods, Woolworths and Zavvi in recent times.

Boarded-up Borders stores would also be a blow to the fragile commercial property market, adding to the problem of 200 former Woolies stores still lying empty across the country.

As Liz Peace, chief executive of the British Property Federation, said: "The sad news about Borders throws open the large possibility of more empty retail space.

"And given that Borders' outlets are large shops that often anchor shopping centres, it will not be as easy to fill these."

But it's not just bookshops that are facing extinction: the great British off-licence is also going through tough times – again the supermarkets are being seen as the culprits.

On Friday, administrators of First Quench – owner of Threshers, Wine Rack, The Local, Haddows, Bottoms Up and Victoria Wine – announced the closure of a further 391 stores, resulting in 2,140 redundancies.

Unfortunately, there will be more casualties across the retail sector next year as the internet and supermarkets tighten their grip on the UK.

Bolton: a wise man who hails the Orient

WHILE turmoil reigns in the Middle East with debt-laden Dubai's economic future hanging in the balance, Far Eastern economies are still riding along comfortably. And the news that investment guru and star stock-picker Anthony Bolton has decided to come out of retirement to manage money in China is a clear sign that opportunities are to be had in that emerging market.

In a world of faceless fund managers, Bolton is about as close as you could get to a household name. He ran Fidelity's special situations fund from launch in 1979 until the end of 2007, turning every 1,000 into 90,000. In the US, the home of his employers, he would have been a celebrity. He did achieve a certain level of fame in the UK for his role as the "quiet assassin" who used Fidelity's position as a major shareholder to oust Michael Green from his role as chairman of ITV.

Now he's back declaring: "I firmly believe that China is the investment opportunity of the next decade."

Coming from a man with Bolton's track record, that's hard to argue with.