Still a bookstore, but with fewer books

Indigo Books & Music Inc. continues to shake up its in-store offerings, and while books remain prominent, they no longer seem to be front and centre in the retailer’s stores.

In the past couple years, Indigo has been beefing up its selection of stationary products, gifts and lifestyle products, games, music, DVDs and even food products. At some Chapters and Indigo stores, like the Toronto Eaton Centre location, there seems to be a lot more emphasis on this other merchandise than books.

Most recently, the company has begun experimenting with new personalized gift items in stores. It has launched a new concept called IndigoStudio in two GTA locations, Erin Mills and Queensway, where customers can have items customized with their own photos, artwork and images.

Photo Glass from IndigoStudio

For example, as an alternative to framing a picture, IndigoStudio allows you to have high resolution photos printed directly onto glass. Other customizable items include greeting cards, calendars, mugs and others.

I imagine the new selection of merchandise is Indigo’s way of reducing its reliance on traditional book sales, which are declining with the rise of electronic books.

So far, this strategy seems to be working. In the latest quarter, Indigo said revenues jumped by 13.9% over the same period last year, partly thanks to growth in the sales of gift, toy and paper products.

It’s nice to see that the retailer is still investing in its stores, and finding new ways to keep customers coming back. But if it shifts its merchandise too far beyond the realm of books and music, I have a feeling its consumers may get confused about the chain’s specialty.

The customizable photo products, for instance, could make thoughtful gifts, but are a bit of an unusual offering for a bookstore. I’d be more likely to shop for this type of item at a photography store like Black’s.

It will be interesting to see whether the IndigoStudio pilot project takes off.

Meanwhile, on the core book side of the business, Indigo seems to be doing a pretty good job of adapting to the shift to digital reading. Last quarter, the retailer reported strong growth in its digital division. Sales in its online segment were up 6.5% over last year, largely thanks to sales of eReaders and eReader accessories.

This transition to digital books, however, has its costs. Indigo’s net profit fell to $30.2 million in the third fiscal quarter, from $34.5 million last year, due to its various digital investments.

I have a feeling that the shift to digital consumption will continue to present challenges to bookstores over the next few years. But this retailer, for one, seems to be adapting pretty well.

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Filed under Department Stores & Big Boxes, Retail & the Web

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