The retailer’s transformational strategy will woo more shopper dollars this holiday season
Canada’s large retailers are cautiously optimistic this holiday season as average growth in last 4 months remains at 3.0 percent over the previous year. The growth headliners of late (either to the positive or negative) are seemingly tapped for new ideas that will produce significant gains. There is one exception, Indigo Books and Music, which in the last two quarters has shown they are wooing more shoppers and shopping dollars back into their stores.
Indigo Books and Music achieved Q2 sales of $189 million and comp store growth of 8.4 percent – higher than any one else on the list. Comp store sales are a key performance indicator as this measure excludes sales fluctuations due to store closings, permanent relocation, and chain expansion. In Indigo’s case, operating 6 fewer stores helped to increase its revenues in existing stores. The company’s 90 superstores generated a total 6.0 percent increase (9.6 percent comp increase), while the smaller format locations attributed 2.3 percent revenue growth.
Heather Reisman, CEO, indicated in a conference call November 5 that there are no plans to further decrease the number of Superstores that are driving the company’s business – but there is a possibility of expansion.
Small stores growth is driven by individual opportunity (i.e. expanding paper category where successful, adding toys where there isn’t competition in the mall, etc.) they aren’t yet part of a larger transformation strategy. With 2.3 percent revenue growth, it isn’t something to be worried about yet.
There are two indicators – beyond the strong comp store growth – that are promising for the retailer.
1) The transformational strategy is working. The cornerstone is transitioning itself into Canada’s cultural department store, and growing the general merchandise category is key to achieving this. Now at 27 percent and expanding, general merchandise is picking up some of the slack books left behind.
2) Core books showed great growth, despite the industry’s declining results! Anytime a retailer can continue to grow their core, it means positive results. Teen and children’s books are current driving forces.
The cautious approach Reisman takes, despite recent success in a difficult transformation is working. “As I say in every one of my meetings, we still have a long way to have to go to fully achieve what we think the potential is of the business“ she commented on the call.
The team at Indigo has been diligently working over the last few years to execute. The design studio in New York brings proprietary accessories and lifestyle home products to the stores each season. The retailer has sought and invested in the best talent. Indigo remains alert, and are beginning to see success while the rest of the industry sees only modest growth. Keep your eye on them in the third quarter.
Wishing everyone strong holiday sales.
READ MORE | Holiday business set-up (Canada)