Indigo triumphs as HMV shuts its doors
Indigo triumphs while HMV folds
Indigo’s ability to move beyond its big-box roots while chains such as HMV Canada have failed is largely due to the bookseller’s success in reinventing its stores, analysts say.
But it also might come down to consumer appetites for purely digital media, and the divergent appeal of paper books and CDs.
“If you go back 20 years ago and contrast the two retailers, they were not all that different, and they ended up on very different trajectories,” said Bruce Winder, partner in Toronto-based Retail Advisors Network. As box retailers, both lost their business advantage of a huge store selection with the rise of online retail, even as they also ventured into e-commerce.
Facing the spectre of Amazon eating into their key revenue bases with online sales of books and CDs and the rising threat of e-books and purely digital music on iTunes, both Indigo and HMV worked to broaden their merchandise base far beyond their core assortments.
Indigo, as a result, has closed very few stores and steadily grew its share of non-book goods such as toys, home decor, electronics stationery and gifts: general merchandise sales accounted for 43.2 per cent of revenue in its healthy third quarter announced Tuesday, compared with 39.5 per cent in the same period last year.
HMV did not wind up in a similarly good place: The retailer confirmed two weeks ago that it will have to close all 102 stores across the country, owing its largest secured creditor $39 million.
“(Streaming music) made HMV obsolete and they lost their foot traffic,” Winder said.
Meanwhile, the rise of e-books doesn’t appear to be hurting Indigo as BookNet Canada reported last week that e-book sales dropped in 2016 to 16.8 per cent of the market, from 19 per cent in 2015.
Another advantage Indigo has had over HMV is Heather Reisman, a dedicated longtime owner with a vision.
Analyst Robert Gibson of Toronto-based PI Financial credits the Indigo CEO and founder with hitting upon a retail assortment that makes people want to visit its stores for shopping ideas or for browsing.