Having worked in bookstores, I really have to say that it is not the digital movement that is doing Border's in. The problem stems directly from staffing problems and stocking issues, and mostly the latter.
Having shopped in Borders stores all over the country I have never visited one that had consistently helpful and knowledgeable staff. My acquaintances who have worked at Borders tell horror stories about their training, management, and co-workers. Even when the employees are nice and friendly they consistently don't seem to know their stock or be generally knowledgeable about their merchandise. But I am willing to grant that that may just be my personal experience.
The big problem with Borders, and what I believe led them to going under, is stocking issues. Borders tries to stock exclusively current and big name authors and keeps constantly eating the cost of old stock to shelve new stock. The problem with this is that they rarely have anything for the sizable chunk (possibly even the majority) of bookstore shoppers that are not looking for currents, or who are looking for a current and something else.
The last four times I have gone into my local Borders I have come out empty handed. The employees are generally very helpful in telling me how they can order this or that for me. But at the same time I can do the same thing, and probably for a cheaper price from Amazon. Now, even if I want a current, I order it online because I am usually ordering several other books at the same time and it is just easier (and usually cheaper). Borders can't compete with that.
The way a company like Half Price Books deals with this is to have a hub of stores in an area all of which have differing merchandise. Thus the HPB stores in any given area have a decent chance of having at least one copy of any given book and collectively have a selection much larger than any Borders (which even if it has the same number of stores in an area makes all stores cookie cutter copies of each other). You may have to drive a little out of your way to get a book that the employees put on hold for you, but it beats waiting a week or more for it to show up in Borders' next shipment or waiting on it to arrive from Amazon.
Basically it has nothing to do with digitization, and everything to do with the fact that instant gratification and service is the only way a physical merchant can outperform an online merchant. And Borders' business policies just couldn't cut it.
I am sorry for all the people losing their jobs from this though. It's a bad time to be out of work.