The news of the REDgroup going into voluntary administration ironically reached me (by text message) while I was standing in the Borders in Berijaya Mall in Kuala Lumpur. The REDgroup comprises Borders Australia and Singapore, Angus & Robertson, Readers' Feast, and Whitcoulls in New Zealand; it accounts for around 20 per cent of book sales in those markets.

The REDgroup aren’t alone in finding current trading conditions tough – most who’ve had long experience of bookselling say it’s unprecedented. Scribe’s Henry Rosenbloom told me recently that he’d never felt so stressed or distressed about the industry.

Given the industry’s state, it’s unlikely that the administrators will be able to turn the group around or find buyers for the businesses, so we may see closures of scores of bookshops across Australia and New Zealand. Although other sectors are hoping they’ll be able to pick up some of the REDgroup’s business, it’s likely some of those sales will be lost to the Australian book trade. For many publishers – already losing sales to offshore online retailers and other competing media channels – this will make life very difficult.

Some commentators (and the REDgroup’s owners, Pacific Equity Partners) have blamed the growth of offshore internet retailers, with their double competitive advantage (due to the strong Australian dollar and the fact that those retailers can sell their products free of GST). We may never know what the reasons are, and as an outside observer, I’m sure that this was an important contributory factor, but ultimately, the REDgroup should never have bought Borders – it was a sick company that had a sick model. Once the REDgroup bought in, they needed to get margins up and reduce costs and inventory, and this led to silly decisions – among other things, they started to price most books above the RRP. That enabled them to sell other books at half-price, but ultimately, I’m sure many book lovers saw through that con. They rationalised their staff, getting rid of experienced people and bringing on retail buyers whose only experience was how to screw suppliers. (Their non-fiction buyer had been a wine buyer for Tesco’s, for god’s sake!) As the impact of the GFC hit, they desperately tried to find other ways of stopping the haemorrhaging of sales and introduced cookware to their stores – they put it right up the front of the Borders in Carlton, so it didn’t look like a bookshop anymore.

Personally, I don’t think Borders should ever have come to Australia; it was a ruthless, tasteless and arrogant display of cultural and commercial imperialism. Like Starbucks who followed them, they were useless and brought nothing to our communities. But the real tragedy is that Borders’ ill-conceived invasion, continued by the venality of Pacific Equity Partners and their REDgroup, has probably led to the demise of three venerable Australian and New Zealand commercial institutions – Angus & Robertson, Readers' Feast and Whitcoulls – and the losses of thousands of jobs. More importantly perhaps, it was the Angus & Robertson shops that took books to the shopping centres and regional Australia. Who will do that now?

Mark Rubbo is the Managing Director of Readings.