Could These Retailers Suffer the Same Fate as Border's?

Brittney Barrett  |

For the most part the retail sector has been thriving in spite of the weak economy, but the recent weakness of Borders, pointed to the external forces and changing landscape between buyers and sellers that can makes situations like the book store’s liquidation impossible. In the case of Border’s, the losses were largely the result of the company’s inability to compete with online competitors, notably, (AMZN), as well as the growing prevalence of e-readers ranging from the Kindle to the Ipad and the Nook.


This would lead to the natural question of whether other stores will also lose their edge to the internet age or simply be ousted but more attractive competitors. The first company comes to mind is Barnes and Noble (BKS).  Sales have been weakening, though B&N chose to blame Border’s first round of liquidation sales for the wavering numbers, but is that legitimate? Or is Barnes and Noble also headed for an eventual close.


In the case of this company, it can be expected that sales will continue to weaken for the company and though they may see store closings, Barnes and Noble has been more competitive in terms of its modernization. While Border’s was essentially fraternizing with the enemy, allowing Amazon to run their digital department and ultimately losing customers to the company, Barnes and Noble was doing their best to stay current.


After noting the popularity of the Kindle, Barnes and Noble went to work on the Nook, its own e-reader. While the invention did not take off the way the company had hoped, it now has 25 percent of market share for e-readers and the company has a way to make up revenue that would otherwise be lost. That said, having lost a major competitor, and still serving as a physical hub, like Starbucks, where customers can read hang out or, well actually go to Starbucks, Barnes and Noble could be expected to do solid business for some time into the future.


The next one we considered was Blockbuster. Netflix (NFLX), with its price hike, is looking to essentially erase DVD rentals as a concept and replace them with internet streaming. Blockbuster long ceded to Netflix, and while the company has been fighting tooth and nail to stay above water, it’s lost the battle. It was acquired by Dish Network (DISH) during bankruptcy and its latest move will likely cost it’s buyers money. Blockbuster will offer a month free if you’re currently a Netflix customer, plus a slightly discounted monthly rate from current Netflix levels. People; however, are reluctant to change and in spite of the recent price hike, Netflix has shown its dominance. Dish doesn’t rely on Blockbuster much for profit, so its share prices, currently nearing their 52-week highs are unlikely to move much regardless of the outcome of their latest scheme.

The next one on the list is less expected. The concept that women love diamonds would seem ageless but the same cannot be said of Zales (ZLC), the jewel shiller that has lost in excess of $250 million over the last two fiscal years and projects more ahead.  Zale’s, with their ongoing sentimental, saccharine marketing scheme seems a decade behind marketing. With a wider range of jewelry in this price range available today and the massive options for online jewelry sales, which can offer more competitive prices, Zale’s seems to hardly stand a chance.


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