I'd mentioned in my post at the time that I'd noticed a huge gap in performance between their flagship locations and the retail park outliers and wondered if those bad real estate bets could be reason enough to put the company under. And I guess the answer is "yes," because Jon's immediate answer to this question was the real estate strategy of going into retail parks.
A "retail park" in the UK is something like Potomac Yard in the US, one of those suburban centers with big box stores and big parking lots going on for a half mile. Though a book superstore here is moderately more likely to be in a center with a Bed Bath Beyond and other slightly more upscale retailers, it's not uncommon for book superstores to be part of the mix. Trying this in the UK, Jon said, was a disaster. People went to retail parks to shop for clothes and food, and the bookstore part did not work. I can vouch for that; most of the Borders UK retail park locations I visited were beautiful stores to look at but not selling any books to speak of.
Hence, Borders UK had a lot of stores that weren't generating any sales, and even if the rents were cheap the drain on cash was immense. And then the stores that were generating sales, like the flagship outlet on Oxford Street in London, had huge rent bills on account of their luxe locations, so it was hard for them to be profitable enough to carry the retail park locations. And then add to that just a little that many of the smaller Books Etc. locations opened in the early 1990s when rents were in a lull after the 1987 stock market declines. If locations were on a 15-year lease, the leases were up to renew doing the thick of the now-collapsed real estate bubble.
Add it all up, and t'was the end of Borders UK. Which leaves the UK with one "high street" bookstore chain, Waterstones, and we should very much hope that we don't end up with that situation in the US.