Borders Group just hired a new CEO and is flirting with bankruptcy. The company is cutting costs like mad, trying to trim its debt, laying off employees and doing virtually everything it can to avoid Chapter 11 and de-listing by the NYSE. Same store sales for the most recent nine-week period were down nearly 15% from the prior year.

Borders has been hit by a threefold punch, including the economic meltdown, fierce competition from Barnes & Noble, Amazon, and dozens of other booksellers, and a changing marketplace in which book buyers are increasingly comfortable with shopping online, an area where Borders has historically lagged. Basically, Borders got caught in the squeeze.

The new CEO, Ron Marshall, is a financial guy, which may be necessary to shepherd the chain through this period of cost cutting. But let’s hope he can think beyond the numbers so that Borders doesn’t become just another Circuit City, suffering a painful and possibly irreversible decline.

In a Wall Street Journal article, the CEO of Hachette Book Group USA recalled a recent conversation with Marshall: “He said he is hell-bent on insuring that Borders is the first choice for the serious book buyer.” Let’s hope that by “serious book buyer” Marshall means a specific type of customer that Borders can serve better than its competitors, not simply people who buy a lot of books. Every bookseller wants them.

Borders must find a way to differentiate its brand from its massive rivals, and the key to doing so is finding a unique customer base it can serve in a distinctive way. At this stage of the company’s struggle everything should be on the table, and a serious strategic review should accompany the cost cutting. But the company doesn’t have a lot of time, and if it’s suffering from the destructive internal dynamics that so often accompany stalled growth, it will be that much tougher.