Attention shoppers: If you live near one of the 200 Borders bookstores slated for closure, some nice buying opportunities may be coming your way.
As I mentioned in a previous post, Borders filed bankruptcy this past Wednesday and announced plans to close 200 of its 642 stores. Yesterday, the bankruptcy court approved Borders' sale of the inventories in the marked stores to a consortium of liquidating companies. What will most likely happen is the liquidating companies (which specialize in this sort of thing) will conduct a store-closing sale at each of the locations condemned to die. According to the Dow Jones Daily Bankruptcy Review (not available on-line, but many of the source documents can be seen here), Borders will get about 85% of the cost of the inventory plus 50% of the sale proceeds above the 85% mark and certain fixed amounts payable to the liquidating companies.
What does that mean to you and me? Since time immemorial, retail bookstores have customarily marked up books 100%. (Or, to put it another way, the "list price" of a book is usually twice what the bookstore pays for it.) So, if a hardcover book lists for $25, we can assume that it represents a cost to Borders of $12.50. Actually, the cost might be a bit less than that, because big buyers such as Borders can get better terms from publishers. In any event, the liquidating companies are paying Borders 85% of its cost, or $10.62 for our hypothetical book. If the liquidating company then sells the book at a 40% discount ($15), it pays Borders $10.62, pays itself certain selling expenses and fees, and splits whatever is left 50/50 with Borders.
This can result in some good deals for the patient and lucky. Years ago, when Encore Books breathed its last, I was able to get a new, unabridged Merriam-Webster's Third (yup, the Big Boy) at half price at our local store. (They had one copy on the shelves, waiting for the day when some copy editor or word nut would wander in off the street and buy it, I guess.)
The husband and I plan on visiting the Borders near us over the next month or so to look for deals. Although we're not optimistic aside from perhaps stumbling upon a lucky find such as Lemuel did. We went to Circuit City during its liquidation and were underwhelmed, to say the least. We did not see any bargain prices in evidence, yet people were scooping items up.
ReplyDeleteAbout two years ago, "This American Life" had a piece about the closing of Circuit City. A liquidation company came in and initially RAISED all prices to MSRP, then chipped away at prices as the days passed. Employees searched for merchandise that customers had hidden in hopes of returning when prices were lower. As was to be expected, the doomed staff was less than helpful during all this. Listen: http://bit.ly/fjDIJp
ReplyDeleteI'd assume that the Borders store closings would proceed similarly, but there might be hope for a deal on items of "limited" interest, like Hershel Parker's multi-volume Melville bio or a trophy edition of Moby D.
Yes, to make the most of a situation like this, you need to be able to stop by the store often, so that you can monitor price reductions and how fast the merchandise is moving. One advantage with books is that it's easy to check via Amazon what your best alternatives are to the prices asked in the store-closing sale.
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