Borders Dilemma

by | 18 Feb, 2011

Reports from national and international media this week suggest that major book resellers Angus and Robertson and Borders which are part of Redgroup are in the hands of voluntary administrators.

Comments from observers suggest that both retailers had failed to take heed of the changing face of retail offerings, which have seen an enormous level of sales move to on-line retailers, both here in Australia and internationally.

USA company Borders has also faulted in the USA with diminished book and music sales resulting in the business now filing for bankruptcy protection in the USA.

In Australia, a variety of major retailers are citing the absence of GST charged on online purchases as a significant factor in Australian retailers lost business. However, as a frequent purchaser of CD and music accessories via the Internet, I’d suggest it is not the absence of GST that is the issue but the massive price difference in product cost internationally.

When a box of 10 sets of guitar strings selling just above the cost of a single set here in Australia one can safely assume that it is not the GST which is the issue but the huge difference in price. Similarly Borders would sell a bluegrass CD for in excess of AUS$30.00, whereas anyone with an internet connection would find an equivalent CD online for less that US$14.00.

Globalisation which was thrust on the public as a vital and necessary change some years ago does have its pitfalls. This may well be one of them. Interestingly the major retailers which closed a myriad of small business with their increased buying power and aggressive marketing price points are now facing the same challenges.

Additional reading – The Australian, Herald Sun.