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Barnes & Noble abandons Nook; Indigo welcomes the iPad

After months of speculation, Barnes & Noble announced yesterday it will no longer manufacture or sell its Nook tablets, instead focusing on a “partnership model” to produce content for other e-reading devices.

Like B&N, Indigo Books & Music is embracing its technology partners. As part of its continued evolution from bookseller to general merchandiser, the retail chain announced that, in the coming year, it will open 40 onsite Apple shops within its stores, selling iPads, iPods, and other products.

At its annual shareholders meeting on Tuesday, Indigo CEO Heather Reisman revealed the next steps in the company’s plan to become the “world’s first creatives department store.” Larger stores will be redesigned to accommodate several smaller boutiques focused on house categories, including kids’ toys and clothing, health, technology, and office supplies.

Book sales still account for 78 per cent of Indigo’s overall revenue (down 10 per cent from five years ago), with 20 per cent of that amount attributed to ebook sales.

Reisman also spoke of a possible international expansion, but says an acquisition of B&N is currently not part of the plan.


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Toronto Public Library launches Retail Affiliate Program

The Toronto Public Library announced on Wednesday that library users now have the option of purchasing books via its website. Through the new Retail Affiliate Program, customers will see a “buy now” option when they search for a book. The button links them to the Indigo Books & Music website if there is a copy available.

A portion of sales made via the TPL website will support the library’s special collections and services. Going forward, the program will be expanded to include additional retailers.

The Ottawa Public Library has an affiliate plan in the works that would allow users to purchase ebooks through their website. Endorsed by the library board in February, an agreement with publishers and booksellers is still being negotiated.

The TPL’s “buy now” option is currently only available for books in print format.



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Indigo sales down 4.9 per cent

A fall in sales of books and e-readers has led to a 4.9 per cent decrease in net revenues for Indigo Books & Music in its third quarter, which ended Dec. 29.

In a press release, the retailer attributes the decline to the absence of any hit books and the growing switch to digital reading.

Indigo and Chapters superstores posted a 5.0 per cent decrease, while Coles and IndigoSpirit stores were down 5.2 per cent. Online sales were up 3.6 per cent.

Indigo still managed to generate higher gross profits compared to last year because of a “shift to higher margin gift and lifestyle products, lower sales discounts, fewer markdowns, and shipping more products through the Company’s distribution centres.”

In the press release, Indigo CEO Heather Reisman says, “We are pleased that our results reflect our efforts to dramatically improve margins and significantly expand our product mix in key categories and online to drive sales growth. We’ve made great strides during the quarter to accelerate our transformation while reinforcing our position as Canada’s preferred destination for gift giving.”





Random House of Canada taps into trend of books doubling as decor

It’s common now to flip or click through style, home, and design publications and see books used as everything from accent pieces to the materials for DIY decorating projects. So it makes sense that, at Random House of Canada, the company’s three paperback imprints – Anchor Canada, Vintage Canada, and Emblem Editions (the paperback division of McClelland & Stewart) – are joining together to publish the Books Are Beautiful series, a project that taps into the burgeoning interest in books as markers of personal taste and as home accessories for the style savvy.

Books Are Beautiful is a celebration of the physical book as objet d’art, says Sharon Klein, deputy director of publicity at Random House of Canada. More specifically, it’s a limited-edition reissue of 30 backlist titles from across the three imprints. Vintage Canada publisher Marion Garner says the series roster – which includes M&S authors such as Margaret Atwood, Michael Ondaatje, and Anne Michaels alongside Kazuro Ishiguro, Salman Rushdie, Arundhati Roy, Peter Carey, and others – represents the “backbone” of Random House of Canada’s paperback publishing program.

Each title in the series has been given a text-only, single-colour cover treatment, with matching spines and sprayed edges. Alone, the books are bricks of solid colour. Together, they look something like a Pantone sample book.

The series is based on a similar program launched last year by Vintage U.K. in honour of its 21st anniversary. Unlike the Brits, who worked with a pencil-crayon-box colour palette, Scott Richardson, vice-president and creative director at Random House of Canada, assigned colours in an almost indiscriminate manner.

“I arbitrarily chose 30 colours that I thought if you string them together makes this wonderful effect,” he says. On a second pass, Richardson made sure his choices fit the tone and content of each novel. For example, Mark Haddon’s The Curious Incident of the Dog in the Night-time went from bright yellow to deep plummy blue – “a darker, hopefully mood[ier] colour” – to reflect the nocturnal reference in the book’s title.

On the cover, Richardson emphasized author’s name over title, highlighting the publisher’s long affiliation with the “cream of Canadian and international writing.” To maintain a unified look, he used the same typeface (Adobe Caslon) throughout, and kept cover copy at a standard length.

“It was a real challenge,” Richardson says. “Normally, every imprint has their own style and their own editorial/marketing take on how they treat things like back-cover copy.” He even ditched colophons, instead  listing all three imprint names on the spine (subtle text shading identifies a title’s originating imprint).

With the minimalist aesthetic, a retail price of $16.95 per book, and a print run of 5,000 copies for each title, Random House of Canada is clearly angling for consumers who prize bold design and collectors’ items – a market that Indigo Books & Music has also tried to capture in rebranding itself as a lifestyle boutique. Naturally, it followed that the publishing house would name Indigo the exclusive retailer of the series throughout the holiday season (the books can also be purchased through Random House of Canada’s website).

Books Are Beautiful displays at Indigo (Photos: Random House of Canada)

“Indigo is merchandising its stores now by blending products and displaying them more in an aesthetic sense,” Garner says. “We thought this would be a good match.”

“Indigo is a huge component,” agrees Klein, who has been working with the retailer on marketing the series. (Indigo would not comment on its marketing plans.) Klein has also reached out to a range of Canadian style, home, and decor publications, in addition to traditional book media. “I’m trying to get outside the box and think different,” she says. She’s even pitched the series as an ideal backdrop for the morning talk show Canada A.M.

It’s this kind of inventive thinking that Garner suggests will give paperback publishers a leg up in a competitive category. “It’s just getting harder … to bring some of those books to the front of the store if you’re not getting helped by Canada Reads, or a movie tie-in, or even … a new book in the market that’s flying off the shelves,” she says. Books Are Beautiful is a way to “reimagine and re-present backlist in a way that people haven’t seen before.”


World’s Biggest Bookstore in Toronto up for rent

The World’s Biggest Bookstore will soon shrink to nothing.

According to the Toronto website Yonge Street, the lease on the iconic downtown bookstore, currently held by Indigo Books and Music, runs out at the end of 2013 and will not be renewed. The 64,000-square-foot former bowling alley has been owned by the Cole family, of Coles Books, since 1980. The family is looking for a single tenant to take over the space, located in a prime area near Yonge and Dundas Square.

In 2010, Torontoist ran a brief history recounting the discount bookstore’s opening day on Nov. 5, 1980:

When asked, shortly before World’s Biggest opened, about the future of bookselling, [Jack] Cole sounded optimistic. He bragged that his low-cost, highly commercialized approach to selling had helped publishers and played a part in creating an audience that supported a far larger number of independents than when he entered the business in the 1930s. Predictions during the 1950s that television would kill books never came to pass. Visions of a “wired city” world where computers ruled didn’t faze him: “Books will provide the basis of information to be programmed.”

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Indigo’s sale of Kobo realizes “a stupendous return,” Reisman says

As many in Canadian publishing’s inner circle primped and primed themselves for the Scotiabank Giller Prize gala, important industry news of another sort broke with the announcement Tuesday evening of Indigo’s decision to sell its majority stake in Kobo, the e-reading company it spun off less than two years ago, to Japanese e-commerce giant Rakuten.

Indigo is expected to realize between $140 and $150 million from the sale, but it raises questions about what the chain’s future will look like without a significant investment in e-reading (not to mention whether the deal will be allowed to go forward under the Department of Canadian Heritage’s foreign-ownership rules).

In a Q&A published today in Canadian Business magazine, Indigo CEO Heather Reisman addresses some of those questions, telling staff writer Jordan Timm that the sale represents “a stupendous return on our investment” in Kobo, especially in a market that is becoming increasingly competitive:

Over the next year, this business [Kobo] will need in excess of $100 million to take it to where this industry is going, and we just cannot play in that league for that amount of capital. That’s first, but it’s also a question of speed. How quickly can you grow this business in order to establish your leadership position? What Rakuten brings is tremendous reach with their huge customer network.

Reisman was, understandably, less specific about how Indigo will use the influx of capital from the sale, but she did say a new acquisition for Indigo is “very possible”:

We must and will fundamentally transform Indigo. The idea of a book retailer as it existed up until the last two years – that option no longer exists. We did two things two years ago: we made the decision to commit to Kobo, and we also made the decision to fully transform Indigo into a whole new kind of retailer and e-tailer, and we are on that track right now. And there’s no doubt that some of that money will be used in that transformation process, both digitally and physically.

In related news, Indigo’s most recent financial results, released at the same time as the Rakuten announcement, show a relatively flat quarter, with sales up 1.7 per cent to $218.5 million. Revenues at Indigo and Chapters superstores were down 4.3 per cent, while revenues at small-format stores were down 2.9 per cent. By contrast, Kobo sales were up 219 per cent to $40.9 million, though the division operated at a net loss of $10.8 million.

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Kobo to be acquired by Japanese e-commerce company Rakuten

Kobo announced Tuesday it has entered into a definite agreement under which it will be acquired by the Japanese e-commerce company Rakuten. The deal is expected to close in early 2012.

According to a press release, Rakuten intends to “acquire 100 per cent of total issued and outstanding shares of Kobo for US$315 million in cash.” As part of the agreement, the e-reading platform will continue as a stand-alone operation, maintaining its Toronto headquarters and employees under the leadership of Kobo CEO Michael Serbinis.

In the press release, Serbinis said:

“From a business and cultural perspective this is a perfect match….We share a common vision of creating a content experience that is both global and social. Rakuten is already one of the world’s largest e-commerce platforms, while Kobo is the most social e-book service on the market and one of the world’s largest e-book stores with over 2.5 million titles. This transaction will greatly strengthen our position in our current markets and allow us to diversify quickly into other countries and e-commerce categories.”

Kobo was founded in 2009 by Indigo Books & Music before it was spun off into a separate company 10 months later, with Indigo remaining as the majority shareholder. Indigo will receive approximately $140 million to $150 million in the Rakuten deal. In a separate press release, Indigo CEO and chair of Kobo Heather Reisman said:

“Notwithstanding the sale, Indigo will maintain a very strong relationship with Kobo, supporting the products and the services both in-store and online…. The success of Kobo confirms that Indigo is a great brand and a strong platform on which we can continue to innovate and grow.”

In October, Kobo announced it would be offering self-publishing services and launched the Kobo Vox, a tablet to compete against the Kindle Fire and iPad.


Indigo, Chapters, and Coles to open early for Steve Jobs bio

Indigo, Chapters, and Coles stores across Canada will open at 8 a.m. on Monday, Oct. 24, to accommodate readers who want to be the first to get their hands on the new Steve Jobs biography, written by Walter Isaacson and published by Simon & Schuster. The 656-page Steve Jobs, which lists for $36.99, will be available in-store for $25.

The reduced in-store price makes the hardcover book comparable to Indigo’s online price of $24.41. Amazon is selling pre-orders for $23.19, and in the U.S., Barnes & Noble is selling the book online for $17.88. Pre-orders for the e-book version are available for the Kindle ($20.72), Nook (U.S. $16.99), and through Apple’s iBookstore ($17.99), but there isn’t a listing for it yet in the Kobo bookstore.

Isaacson is scheduled to appear Sunday night on 60 Minutes, where he’ll play a portion of an audio tape of Jobs talking about his biological father. In this preview clip, Isaacson, who conducted more than 40 interviews with the Apple CEO, discusses Jobs’ refusal to be operated on after he was diagnosed for a second time with cancer. This revelation and others already leaked from the book, such as Jobs’ “intense battle with Google,” may convince a few more people to set their alarms early for Monday morning.

UPDATE: As of Oct. 24, Steve Jobs is now available on Kobo for $17.99.

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Indigo sales down as the chain prepares to launch its lifestyle business

Indigo Books & Music is reporting a 1.1 per cent decrease in net revenue for its first quarter, which ended July 1.

Revenue for the quarter was $202 million, down $2 million from last year, which Indigo attributes to lower print books sales. Indigo also reports its digital operations grew 170 per cent, thanks in part to the June launch of the Kobo Touch eReader.

While the net loss attributable to Indigo shareholders for the quarter was $18, million compared to $5 million last year, in the press release, Indigo CEO Heather Reisman said, “The results were expected as we invest both in the growth of our digital business and in preparing to launch our proprietary gift and lifestyle business in the fall of this year.”

Indigo’s new product mix will focus more on giftware, toys, and other lifestyle products, reducing the shelf space dedicated to books. Indigo said it has created a $3.2 million inventory provision for its annual summer clearance sale as it “intends to discount more aggressively to clear a larger amount of product than in prior years.”

In July, Q&Q reported that the chain will also be introducing a new returns policy that will evaluate a book’s sales after 45 days, a significant reduction from the industry standard of 90 days.

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Publishers to ship directly to Indigo stores this fall

Indigo Books & Music is asking publishers to send books directly to individual store locations for 10 weeks this fall while the company updates its distribution centre.

Publishers Weekly reports:

Indigo wrote to its vendors to explain that it is asking for the temporary measure in order to ensure a good supply of books in stores for the holiday season while it changes and updates its distribution centre. Indigo opened an online facility last year, has invested in the physical infrastructure, and it is adding a new software system, which will begin to be used in 2012. During this time, it expects that 85 per cent of its stock will be received directly from sources.

“We will reduce or even remove the store-specific minimum order thresholds to ensure that we are outputting orders on a timely basis,” the letter promised, “and hope that you will not consolidate orders for more than one week to avoid stocking out at the store level.”

Earlier this month, Q&Q reported on Indigo’s new returns policy. The current industry standard allows publishers to refuse returns on orders less than 90 days old, but starting this fall, Indigo will be evaluating sales after 45 days. According to Publishers Weekly, the letter from Indigo told publishers to start expecting more returns:

We will be aiming over the coming weeks to return stock from our [distribution centre] of titles for which there is no longer active store demand, or for which we have high inventory levels relative to our requirements through [the] holiday.

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