TORONTO — After some rocky years of revitalizing the business at Indigo Books and Music Inc., Heather Reisman is in growth mode again.
“We think there is room to add six or seven new stores across the country … big ones,” the retailer’s chief executive said as she unveiled the company’s latest store concept in west Toronto on Tuesday, the closest realization yet of her long-held vision to create a so-called “cultural department store.”
It’s a bold prediction given what has happened to other large-scale book and music chains in recent years, which have shrunk or gone out of business entirely.
Indigo Books and Music Inc profit soars to highest in 3 years as general merchandise shift pays offWhy Indigo Books & Music Inc CEO Heather Reisman believes we are on the cusp of a bricks and mortar renaissance
“Yes, you can shop online, but this store experience — you have to have in three dimensions,” said Reisman, surveying the new 33,000-square-foot space at Toronto’s Sherway Gardens. The visually inviting store has been broken up into several categories of interconnected and highly curated mini-boutiques, encouraging an atmosphere of “meanderability,” as Reisman puts it. It also features a series of screens displaying digital art installations, sculptures and a blue piano for visiting musicians and customers to play.
“It’s the challenge to all of us in retail: If the store is not going to be more exciting than shopping online — legitimately leveraging what you can do in three dimensions over two dimensions — then it’s harder (to survive),” Reisman said.
The new store concept, which will be feted with a grand opening event this Friday, includes a large book section and seven “shops” within the store separated by partial walls: the Art Shop features prints and art books; Joy of the Table contains cookbooks and a range of tabletop products; Home includes design books and home décor items such as pillows and throw blankets.
Reisman is particularly proud of an 1,100-square-foot section dubbed A Room of her Own, a nod to Virginia Woolf, which features everything from cozy “reading socks” to wedding and engagement gifts, and “by women, for women” book titles including the acclaimed graphic novel Persepolis by Marjane Satrapi, the memoir of longtime Vogue creative director Grace Coddington and works by Hillary Clinton and Gloria Steinem.
The new store format will be rolled out over time to the company’s 90 other book superstores, Reisman said.
Kaileen Millard-Ruff, director of retail operations at Toronto-based consultancy OSL Retail Services, said the company’s transformation has taken several years to execute, but has paid off.
Yes, you can shop online, but this store experience — you have to have in three dimensions.
She credits Reisman’s canny ability to sense what book-lovers like to buy in addition to books.
General merchandise has always been a part of Indigo’s stores but has been reconfigured over many years into a more appealing assortment. Its success has been borne out in sales, of which general merchandise now accounts for 40 per cent, up from 25 per cent in 2012. Reconfiguring the bookshelves a few years ago allowed the company to stock even more book titles, however; Sherway Gardens carries 70,000 titles.
“Indigo is not selling much that you can’t find anywhere else, but it is a very nice collection and they have really taken it to the next level with the staffing and the store environment,” said Millard-Ruff, who credited the company’s expansion of its toy business in 2012 as one key strategic move.
“Overall, they have a very good mix of price points. They also targeted that higher-end, educational toy customer — a lot of upper income-families. A family home that cherishes those kinds of (reading and cultural) experiences likely also leans towards toys that educate. There are only two other retailers (of scale) doing toys in that area well: Mastermind and Scholars’ Choice.”
Though Reisman won’t break out the performance of Indigo’s American Girl in-store boutiques — Sherway Gardens marks its seventh in Canada — she concedes carrying the pricey dolls and assorted merchandise, which will be available for sale at Indigo’s online store later this year, has been a wild success.
Indigo is due to report fourth-quarter results next week, but the third quarter capped off two years of steady growth following a long period of stagnation.
Profit in the period ended Dec. 26 jumped 60 per cent to $52.8 million, or $2.02 a share, compared with $33 million ($1.27) in the same period a year earlier. Revenue for the quarter ended Dec. 26 grew 13 per cent to $383.2 million, even as the company operated one less superstore and four fewer small stores than a year earlier.
And same-store sales, a key industry bellwether stripping out changes in square footage, leapt 15.5 per cent at its superstores and 13.4 per cent at small-format stores. Online sales surged 18 per cent.
The company’s shares have soared 60 per cent in the last year; in the same period, shares of U.S. book retailer Barnes and Noble lost 25 per cent of their value.
The performance underlines a philosophy of rebirth Reisman has been touting for years, even when the numbers weren’t so great.
Almost two years ago in 2014, Indigo posted an annual loss and its saw its revenue fall for the third year running. Reisman dug further into her vision of transformation and store reinvestment, even as many in the industry figured Indigo was destined for the same fate as Blockbuster.
“If you not prepared to invest then it is hard to evolve,” she said Tuesday. “Naysayers are always ready to defeat you. Always. And you can’t let them be the ones who define your future.”