Everyone’s favourite bookstore is leaving the books behind and focusing on what really makes money — electronics, toys and scented candles.
In their latest quarterly report, Indigo Books and Music saw their revenue grow by 5.4 per cent from the same period last year. Although Indigo is still losing money, they are doing so at a slower rate than before. This is a result of some changes in merchandise strategy.
It’s out with the old and in with the new as print books are cast aside for digital text. Indigo has reduced their inventory by $6.9 million since last year, most of that coming from cutting back on the books they keep in stock.
To get rid off all the old merchandise sitting in their warehouses Indigo held a number of discount and clearance sales. Although sales increased, Indigo didn’t end up making much of a profit because the sales were at reduced prices.
“Indigo is really feeling the pinch, having to compete with companies like Amazon — they pushed out all the smaller bookstores and one might say that now they are getting their just desserts,” said David Gray, economics professor at the University of Ottawa.
To keep up with the technological age, Indigo is diversifying their portfolio as part of their transformation agenda. In their last annual report they laid out a strategy for dealing with a rapidly changing market.
In the report Indigo stated, “The company’s priorities remain focused on advancing the core retail business through adapting its physical stores, improving productivity, driving employee engagement, and expanding the company’s online and digital presence.”
One example of how Indigo has embraced digital media is with last year’s rollout of Indigotech shops, which sell things like tablets and e-readers.
This foray into the digital world doesn’t just mean a stronger focus on e-books. Indigo is looking to become more versatile in terms of online accessibility. In the last quarter they have seen a significant jump in online sales, as compared to in-store purchases.
“The share of all retail done online in Canada is only ten per cent but it is growing,” said Gray.
Bit by bit, Indigo is slowly chipping away at their debt and in the last quarter their net loss decreased by 15.19 per cent.
In a public statement released November 2014, Indigo attributed their increase in revenue to better sales in their lifestyle, paper, toys and electronics sections. They have worked to expand these sections to come in line with their company’s image as a gift-giving shopper’s destination.
“This has been achieved through a reduction in the floor space allotted to books, given the erosion of physical book sales,” stated Indigo in their last annual report.
In 2014, Indigo also launched several American Girl specialty boutiques to compliment the children’s sections of select superstores.
“They really need to make it fun for people to go in and browse,” said Gray. “They make it fun for the kids so they’ll pressure the parents.”
Indigo is casting positive predictions on the future of their company, even despite their uphill struggle with debt.
In their public statement, Indigo CEO Heather Reisman stated, “These results demonstrate that our customers are responding to the investments we have made to transform Indigo.”
If Indigo keeps doing what they’re doing they might just weather out the storm that has shaken up book retail. What comes out on the other side though might bear little resemblance to the bookstores that we grew up with.
Photos taken by Tanya Kirnishni.