Rebalancing Is Underway At Chapters Indigo

  • Certain industries such as the video rental industry have fallen over the advance of technology and other industries like the book industry have remained under threatening circumstances with the decline in paper books and the advance of digital technology.  The book industry has undergone consolidations and closings and Chapters Indigo is one book company that has continued to undergo transformation in order to remain viable.

    Heather Reisman, CEO, Chapters Indigo recently stated that many customers browse in-store and then proceed to go home and purchase cheaper alternatives online.  She also said that the company sells books online at cost while other retailers sell below cost to drive sales of other products.

    As Reisman continues to help transform Indigo, the CEO has been busily converting more square footage in stores to lifestyle products rather than books.

    In its latest bid to add new and unique products that draw customers, Chapters has joined forces with American Girl to offer two specialty boutiques at Indigo Toronto in the Yorkdale Shopping Centre and Chapters Vancouver on Robson Street.  This marks American Girl’s first International foray.

    Specialty doll retailer, American Girl, is a wholly owned subsidiary of Mattel, Inc., the world’s leading toy company.  The company has enjoyed popularity with its high quality dolls and accessories as well as its interactive shopping experience.  Children can take their dolls to salons to get new hairstyles or ear piercings.  Some US stores also have restaurants where children can dine with their dolls or host birthday parties.

    In Canada, Indigo will give away the 2014 Girl of the Year Isabelle doll at each of its 89 Indigo and Chapters locations, excluding Quebec.  The company will also host child-friendly events and programs throughout the year.

    Last year Chapters launched Apple products at 40 Indigo iStore locations across Canada.  The first boutique location opened at Queensway in Toronto and features iPads, iPad Minis, iPods, AppleTV and much more.  Customers can enjoy personal interactions with the newest products.  The company will also offer a wide assortment of headphones, earbuds, speakers and other electronics for sale.

    Indigoistore

    According to Heather Reisman, CEO Indigo Books & Music, “The Indigo iStore provides an easy and inspiring environment through which Indigo customers can experience and connect with Apple’s dynamic suite of devices as well as some of today’s most innovative accessories.”

    Yet another new initiative the company took last year was the introduction of the new Poppin office supply line.  This line will launch across Canada at 97 Indigo and Chapters locations and online at indigo.ca., and marks the first International foray for the company outside the US.

    Randy Nicolau, CEO of Poppin thinks Chapters Indigo is the right place for the company to expand outside the US.  According to Mr. Nicolau, “As Canada’s largest lifestyle retailer, Indigo stores are the perfect place to introduce our brand to the Canadian public.”

    Chapters also is still very involved in selling Kobo eReaders and tablets after the company sold Kobo to a Japanese company in 2011.

    But, for all the new advances at Chapters Indigo, the company still has much work to do to reorganize.  The company’s large format stores have proven to have expensive leases and as some of these leases have expired, the company has been forced to re-evaluate the economic sustainability of such leases.

    This spring Chapters Indigo CEO Heather Reisman announced the closing of the Runnymede Chapters built in a former theatre that was preserved and restored at a high cost.

    Indigo’s World Biggest Bookstore location in downtown Toronto also closed this year.  Drew McGowen, VP, Real Estate & Development at Indigo said the lease expired and the company could not afford the new rent.  Mr. McGowen also stated the company is rebalancing its real estate portfolio.

    In its latest quarterly report ended December 28, 2013, the Company operated 96 super-stores and 131 small format stores.

    Total revenues increased $9.8 million or 3.0% to $332.4 million and higher sales were driven by double-digit growth in lifestyle, paper, and toy sales and by new growth from the Company’s Indigotech business.  Key benchmark comparable store sales increased 2.6% in superstores and 0.5% in small format stores.

    Online sales increased $6.7 million or 19.3% to $41.5 million from $34.8 million for the 13-week period ended December 29, 2012.  Online sales of lifestyle, paper, and toy products continue to grow.

    As Chapters Indigo continues to reinvent itself, it will more than likely continue looking for new and unique products to complement its current assortment and draw customers.  The company realizes that forming strategic partnerships with other successful businesses like American Girl, Poppin and Apple is an important strategic direction.  Bringing popular US products to Canadian stores could help the company attract customers.

    At the same time, the company will be forced to continue to evaluate its leases. The super-store formats are costly and may not pull enough revenue to justify their existence.  Therefore, important leases may be up for grabs and Chapters may be looking for smaller format stores.  This is one company that is fighting to change with the times.

     

     

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