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A physical retailer is an obvious place to start . Empty stores once inhabited by great British brands represent the most noticeable example of how disruption can send solid businesses into a death spiral within two or three years . There have been winners as well as losers in retail over the past 18 years , with those adapting to the changing habits of the consumer taking market share from their oldfashioned rivals . Yet sometimes the businesses that appear to be the most forward-looking in stealing a march on their competitors find themselves going nowhere but a dead end , as was the case with bookstore chain Borders . Richard de Lisle , manager of the
VT De Lisle America fund , recalls being impressed when he found a bookstore with its own Starbucks and numerous other services back in 2002 , and contrasted the cosy feel of this US import with the stuffy atmosphere of the British incumbent . “ You got the feeling that Waterstones wasn ’ t that keen on a coffee shop because the idea of people getting crumbs in its
sacred new books was rather , well , American ,” he says . “ What chance did Waterstones have ? Surely such a cosy ambience of the Borders experience was the future of retail ? This was a growth story and the perfect stock for the next 18 years as a child progressed from the train table to the music downstairs and finally , with any luck , to the books .” But de Lisle notes that behind the scenes , Borders was expanding too fast with too much debt , while putting too much emphasis on the physical and not enough on Amazon , the real disrupter . “ Borders over-invested in music sales , which was not profitable , as HMV found , and even outsourced its online sales to Amazon ,” he adds . “ When it caught the fox in the henhouse and stopped the arrangement in 2007 , it was too late . “ Borders peaked the year after that Starbucks queue , with 1,250 stores . The last year it made a profit was 2006 . In 2009 , the stock hit $ 1 . That ’ s down from $ 30 in 2005 and $ 25 in 2007 . In 2011 the stock goes to zero on bankruptcy .” trustnet . com