Borders Group Inc.’s decision to exit its Ann Arbor headquarters and consider leaving the area altogether illuminates the gap that has opened up between the book store chain’s distinctly Ann Arbor identity and the business realities of a major corporation that’s fighting to stay afloat.

The company, launched 40 years ago by brothers Tom and Louis Borders as an 800-square-foot shop on South State Street, said this morning that it plans to move out of its headquarters on Phoenix Drive on Ann Arbor’s south side.

A Borders spokeswoman told AnnArbor.com the company is searching for new office space in the “metro Detroit” area, which, she said, could still include Ann Arbor.

Steve Pepple | AnnArbor.com

Nonetheless, the company’s connections to Ann Arbor have frayed as its corporate identity morphed from small-town, customer-service-driven bookshop to innovative national chain to behind-the-times global corporation.

Now, the company is navigating Chapter 11 bankruptcy court in hopes of identifying a profitable business model that would allow the company to continue operating.

But the need to cut costs has emerged as a top priority.

Michael Norris, a publishing industry analyst with Maryland-based Simba Information, said that sticking with Ann Arbor probably shouldn’t be Borders’ key objective.

“If you’re in bankruptcy, sometimes a company’s got to ask whether they can afford something intangible like an identity and decide whether maybe it’s better if they can afford to stay in business going forward,” Norris said.

Skip Simms, interim CEO of economic development group Ann Arbor SPARK, said he understands that Borders needs to make economically prudent decisions.

“If, in fact, they’re leaving, certainly it’s a loss to the community that we hate to see happen,” he said. “But if the early reports are true that at least they’re staying in the general area, they’re doing what they have to do to survive, which we are certainly supportive of.”

He added: “SPARK will be there to help them in any way we can.”

To be sure, Borders’ reputation in Ann Arbor has declined in recent years after rapid executive turnover, deteriorating customer service, successive rounds of corporate layoffs and the closure of the Arborland Center store on Washtenaw Avenue.

The company is believed to employ about 550 workers at its headquarters, down from about 1,800 at one point, though we don’t know for sure. Borders won’t say, and the company’s official CEO, tobacco executive Bennett LeBow, refuses to talk to the media.

So it should come as no surprise that the company might be willing to ditch its Ann Arbor headquarters to save a few dollars somewhere else.

“For me, the company really ceased to have an Ann Arbor identity when it was acquired by Kmart” in 1992, said David Dykhouse, a former manager of the Arborland store. “At that point, it had become a corporate entity.”

That’s not to say that Ann Arbor no longer cares about Borders. In fact, there are many book readers who prefer to shop there, if only because it’s still a local company and it provides jobs for local residents.

Even Karl Pohrt, who owned the shuttered Shaman Drum Bookshop on State Street near Borders’ flagship store on Liberty Street, said he hopes Borders survives.

“I’ve been really worried about the store on Liberty Street and how central that is for the health and vitality of downtown Ann Arbor,” Pohrt said. “I think that the loss of Borders, if they don’t weather this crisis, would be a real tragedy for the city and for State Street and also for the book business in general.”

Pohrt’s concerns stem from the declining book sales industry and the state of reading, in general. He said Borders’ decline “makes me sad" and he's disappointed to see the company requesting the bankruptcy court's permission to distribute executive bonuses that could be worth up to $8.3 million.

“I think it has to do with decisions at the level of executives. They’re the ones that were responsible. But it’s not only them, it’s the decline of the culture of books in the country,” Pohrt said.

He added: "Ann Arbor certainly has so many book lovers in this town that it was easy for there to be a number of bookshops here. But I’m not sure the material conditions or the economic conditions are such that you’d want to do that again. I think of somebody’s who’s young. Why would they want to enter this business?”

Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.