Image: Borders
Mandel Ngan  /  AFP - Getty Images
This Washington, D.C., Borders announced its closing in March. It will soon be joined by the rest of the chain.
By
msnbc.com contributor
updated 7/19/2011 2:14:38 PM ET 2011-07-19T18:14:38

In a little over two days Borders will be liquidating its remaining stores and it's still a mystery about what's going to happen to its Borders.com website, its rewards program, its extended warranties for e-readers, etc.

The only thing certain for consumers now is that the bookseller will continue to honor its gift cards throughout the liquidation process. But it won't be selling any new cards, Borders spokeswoman Mary Davis said on Tuesday.

The company is still reviewing the plan for its Borders Rewards loyalty programs, Davis said. Customers who signed up for Borders Rewards received discounts and free shipping, and could accrue “Borders Bucks” for buying $150 or more a year in merchandise. Currently, Borders Bucks expire a month after they are issued.

While frustrating for consumers, the lack of details now is typical in the liquidation of a major retailer, said Marshal Cohen, chief industry analyst for market research firm NPD Group. But there are plenty of lessons to take away from the recent demise of chains including Circuit City and Linens ’n Things, both of which were handled by the same team of liquidators, Gordon Brothers Group and Hilco Merchant Resources.

Story: Final chapter: Borders to close remaining stores

“What happens is this: The rewards cards are about to be worthless. Any kind of store credit is about to become worthless,” Cohen said. Once the liquidator takes over, the records for those accounts may no longer be available, so “Go and redeem them as quickly as possible.”

For shoppers looking for deep discounts, the best prices are likely to be found in the coming days, before Borders hands over control of the stores. The bookseller will be looking to sell as much of its merchandise now to help pay off creditors.

Once the store-closing process begins, the liquidators will raise prices back to full price, Cohen said, before starting to offer discounts. Unsold merchandise will typically get moved to another store — not sold for pennies.

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It isn’t clear whether liquidators will take over Borders.com, too. Cohen said it’s possible Borders could continue to run the website; the company may also license the name or sell the operations to a competitor. If Borders keeps the site after the stores close, it’s possible gift cards or rewards points would still hold value.

Borders’ electronic book strategy differed from competitors Amazon.com and Barnes & Noble, both of which sell their own e-readers. Borders sells e-readers from Kobo, a Canadian company; in June the bookseller switched from its own ebook store to Kobo’s. At that point, Borders ebook customers were prompted to move to Kobo accounts. Neither Davis nor a Kobo spokeswoman could say what effect the liquidation would have on the ebook libraries of customers who have not yet switched to Kobo.

Borders also sells a two-year, $50 warranty for Kobo e-readers sold in the U.S., administered by a third party, Service Net Warranty LLC. The bookseller did not say whether the warranties would be honored after the company goes out of business.

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