Indigo Books & Music Inc. maintains its ambition to grow into a global brand despite a challenging year for the bookseller that saw declining traffic at the mall where it opened its first U.S. location.
“We remain committed — even more committed — to expanding our brand outside of Canada,” said CEO Heather Reisman at the company’s annual general meeting of shareholders in Toronto on Thursday.
She outlined a number of negative factors that compounded to create disappointing financial results in the past year.
Mass retailer competitors’ use of books as a loss leader works to lower book prices and thus profit margins, yet Indigo has not lost market share, she said.
The year also included a prolonged Canada Post strike, as well as a number of store renovations and relocations. Inevitable delays in construction forced the markdown of products the company had hoped to sell at full price in stores, Reisman said.
These things combined to reverse positive momentum, she said.
Reisman noted that Indigo opened its first American location in New Jersey’s Short Hills mall, which she said has a long history as a top mall in North America.
While customer response has exceeded Indigo’s expectations, Reisman said the deterioration of traffic at the mall has been a bit less satisfying.
“As we look to make some changes in Indigo, we are also fully re-evaluating what the ideal real estate strategy should be going forward,” she said.
The historical thinking has been to look at the top malls for traffic and believe that’s where a company wants to be, she elaborated later in an interview. Now Indigo is questioning that approach trying to determine whether customers go to a mall or a streetscape to hang out.
“The mall is not necessarily where we want to be,” she said, but added the Short Hills location is not a mistake and the company is learning a lot from its presence in that market.
The company will use this year to advance a number of things it’s working on and will probably be on track to open a couple stores next year. Despite its U.S. plans, Reisman anticipates Canada will remain the most significant part of the business for the next three to four years.
As at March 30, it operated 89 superstores under the banners Chapters and Indigo, and 115 smaller locations under the banners Coles, Indigospirit and The Book Company.
“100 per cent, we are looking to make this a global brand — not just a Canadian brand,” she said.
To help achieve that, the company recently hired Nathan Williams as chief creative officer. He’s the co-founder of the magazine “Kinfolk,” which Reisman said is known all over the world by Indigo’s customers.
Indigo also believes it’s very well-positioned to address a larger cultural shift in the world and with its customers. Reisman identified it as a desire for less stuff but products with sustainable value.
She did not offer specifics, saying the company will announce more in the coming months, but said it will impact the products Indigo designs and sources, among other things.
“You’ll see it unfold. It’s gonna take a couple of quarters before you see it , but yes that will have a big influence on what we do.”
— With files from Ian Bickis