The news over the weekend that Borders is on the verge of filing for bankruptcy should surprise no one. They follow in the footsteps of Blockbuster Video and many other media and newspaper companies that have either gone out of business or needed massive recapitalisations to stave off the end result.

Somewhat different to the recent acquisition of the Huffington Post in the US for $315 million dollars by AOL after commencing operations in 2005 with a million dollars in start up. Borders is in the final stages of preparing a bankruptcy filing, clinching a long fall for a company with humble beginnings that helped change the way Americans buy books but failed to keep pace with the digital transformation rocking every corner of the media landscape. The troubled Ann Arbor, Mich. bookseller could file for Chapter 11 bankruptcy-protection as soon as Monday or Tuesday, paving the way for hundreds of store closings and thousands of job losses, said people familiar with the matter.

Borders has abandoned efforts to refinance its debts, and is preparing bankruptcy papers and seeking financing agreements that would keep it operating during the Chapter 11 restructuring process, the people said.

Its shares tumbled 33 per cent to US$0.25 apiece in 4pm New York Stock Exchange trading after The Wall Street Journal reported their plans.

Let me be Frank (because Frank is one of the smartest people I have ever met), the gates of creative destruction are well and truly open and are welcoming more businesses on a daily basis. The internet and the internet of things will blow up many, many more existing businesses unless they take this opportunity to embrace change.

Now, Borders is preparing for a costly and time-consuming trip through bankruptcy court, where it will seek to close about a third of its 674 Borders and Waldenbooks stores, the people familiar with the matter said. Borders also would cut swathes of its 19,500 staff as it attempts to reinvent itself to compete with Amazon and its hot-selling Kindle reader, and Barnes & Noble Inc., the nation's largest bookstore chain and maker of the Nook e-reader.

And this matters to you how, you may ask? Well, in time it will affect you and your investments in a more direct way. The graphic above displays the store closures and employee layoffs at Borders since 2000. Last week, Myer reported that life is becoming more and more difficult. Consumers are feeling the pinch and will continue to do so under the threat of increased interest rates on the threat of higher inflation, a sort of negative feedback loop.

Again to be Frank, margins are under pressure and prices are rising almost daily due to inflationary pressures. Ask the person who does the shopping in your household what they are seeing pricewise at the checkout. Logically, as margins fall and prices rise, it follows that profits decrease, so more businesses struggle.

We harp again and again that rents in many retail spaces in Australia are way over the top. The smaller retailer finds it difficult to pay their staff and rent, so the landlord (that is, Westfield) find themselves in a situation where they may have to look at rent reductions in order to keep the tenants in business. Lower rent equals lower yield which equals reduced property and asset values and that equals a lower share price. Look to companies that embrace creative destruction as a way of hedging your portfolio.