Over-investment in music - while this was a big plus for this in the early to mid 90’s, this was a disaster in the long run. This is basically why the stores were too big once the music business cratered. So, stores were sized and modeled to provide a large music CD business which largely disappeared. In addition, infrastructure was sized to support this, including a dedicated warehouse distribution facility. This last part has been addressed over time, but soaked up money, time, and energy. Note that music was also part of what made Borders a destination for many customers, so when music sales tanked, other product categories’ sales suffered as well.
One of six reasons why Borders failed, according to Mark Evans, the franchise’s former Director of Merchandise Planning and Analysis.