Indigo undergoing changes
The company has offered few details about these developments, or a transformation plan it launched late last year.
As Canada’s biggest bookstore-turned-gift-giver’s-paradise edges toward privatization, it’s evident from a stroll around one of its Toronto stores that the retailer knows some things haven’t been working.
Epsom salts and body lotions that previously lined Indigo Books & Music Inc.’s wellness area at the Eaton Centre have been replaced by shelves of books and tchotchkes like cat- and corgi-shaped book lights, magnifying glasses and lap desks.
In the children’s section, a red velvet curtain and a closed sign hide what was once the American Girl doll emporium. (The pricey playthings and their plethora of accessories were sold off at a discount in March.)
The company has offered few details about these developments, or a transformation plan it launched late last year — around the same time it revealed an almost $50 million net loss in its latest fiscal year — but such is the state of Indigo at a time when shareholders prepare to decide whether the company is better off as a private enterprise owned by a holding company connected to its largest shareholder.
“It’s a pivotal period to strengthen the company financially and then begin to move it forward,” said Joanne McNeish, an associate professor at Toronto Metropolitan University specializing in marketing.
“This won’t be a quick fix.”
She estimates it will take Indigo five years to turn itself around, a process that marketing experts agree could see the retailer put books back in the spotlight and rethink its spaces and even its store count.
“In the case of the Eaton Centre store, do you need two levels?” McNeish questioned.
“Maybe it’s just each square inch of the floor space doing a great job at selling the products they have available.”
Some of this work appears to be underway already, but how much further it will go depends on a May shareholder vote to decide whether to accept the offer of $2.50 per share in cash — up from $2.25 in February — from Trilogy Retail Holdings Inc. and Trilogy Investments L.P.
The deal got a green light from the retailer’s board in early April and needs to meet the threshold for shareholder approval before it can go ahead.
Trilogy is owned by Onex Corp. founder and chairman Gerald Schwartz who holds 56 per cent of Indigo’s shares and is the spouse of Indigo founder and CEO Heather Reisman, who holds almost five per cent of the company’s shares.
Should the transaction, which would see Indigo leave the Toronto Stock Exchange, close as expected in June, experts say it will be time for leadership to roll up their sleeves and begin a new chapter.
What they will find is that “it’s a lot of work to make this business profitable,” said Grant Packard, an associate professor of marketing at York University. He previously served as Indigo’s interim chief marketing officer and vice-president of marketing.
Between the low margins linked to books, the dominance of e-commerce giant Amazon and a cyberattack that downed some of the company’s services for weeks, he said, “They’ve been under such turmoil for the last few years.”
