Indigo Storefront

What Retail Can Learn From Indigo, the Cultural Department Store

Learn why the Canadian bookstore chain just experienced its most profitable year yet

  • By Matthew Ritchie

Many retailers are concerned about the so-called “retail apocalypse.” But when it comes to brick-and-mortar retail, few niche retail industries are in such a dire physical state as the big-box bookstore.

Back in the 1990s, retailers like Borders and Barnes & Noble took a page from other large-scale retailers and opened superstores filled to the brim with printed works in an attempt to become a one-stop-shop for book-lovers.

With ample space and an unbridled selection of goods, these businesses were able to undercut competitors (namely small, independent stores), and changed the publishing industry as a whole.

Then, Amazon Came Along

Over the past two decades, bookstore chains have tried to keep up with the online retail giant and failed repeatedly. (In 2011, Borders went bankrupt, and despite having the largest number of retail outlets in the U.S., Barnes & Noble continues to shrink its store footprint.)

Amazon still dominates when it comes to print book sales (analysts say the e-commerce company is responsible for one out of every two books sold in the country). But, despite having only one U.S. location, which recently opened at a luxury mall in Millburn, N.J., Canadian retailer Indigo is not only surviving but thriving in the industry, and plans to open more stores in the Northeastern U.S. in the future.

Here are four reasons why Indigo is succeeding as a bookstore chain and specialty retailer while others go under.


Cross-Merchandising is Key to Indigo’s Success

According to the New York Times, books only account for roughly 50% of Indigo’s total sales, with the retailer putting more of an emphasis on non-book-related items—such as drinkable and stylish Mason jars, scented candles, wall art, bento lunch boxes, blankets, and “reading socks” (one of the bookstore chain’s major gift-giving draws)—over the past few years.

It’s all part of Indigo’s years-in-the-making rebranding effort to be seen as not just a book and CD/vinyl store (its official title is Indigo Books and Music), but a “cultural department store.”

One of the ways it positions itself as a tastemaker in the field is by cross-merchandising, offering a curated selection of soft and hard goods alongside books in thematic sections that almost act as mini-boutiques within a store. There, you could find cheese and knife sets placed on a table beside cocktail books, cozy blankets nestled up next to decorative pillows, and gardening books planted alongside herb-growing kits. And, with so many locations in a variety of shapes and sizes, each store presents its own set of opportunities for presenting the brand’s vision and sharing inspiration to the rest of the visual merchandising team.

(Full disclosure: Indigo is one of Foko Retail’s legacy clients, and although we can’t take credit for all of the company’s improvements over the years, it’s been exciting to watch them evolve as a business.)

“We are not looking to be the everything store,” CEO Heather Reisman recently said in an interview. “Someone’s already doing that.”

Instead, Indigo focuses on creating an easy-going, interconnected in-store experience with goods that complement the books on sale, and in doing so reminds customers that, while not a one-stop-shop, they’re more than just a place to buy books.


Store-Within-a-Store Concepts

The shop-within-a-shop model is no longer a nascent business idea, but a burgeoning way for major retailers to boost profits. By leasing space to brands, like Indigo does with its American Girl doll boutiques, and as it did in 2013 with Apple (and later Rifle Paper Co. and Fitbit), companies get in front of customers they usually wouldn’t have access to otherwise. On top of that, Indigo gets to experience cost-saving benefits by renting out the retail space—presumably at a cost—and increased foot traffic thanks to having more general merchandise and hot properties in their stores.

And while Indigo, as far as I can tell, has never publicly shared any performance stats about its shop-within-a-shops, judging by the ongoing rollouts of American Girl specialty boutiques in their stores, it seems to be working well for them.


Indigo is Omnichannel Done Right

Retailers big and small are striving to offer an omnichannel experience—one that connects the versatility and ease of e-commerce with the instant gratification and connection to a brand that only physical retail can offer—in their stores. Most get it wrong.

But one way Indigo is giving users an omnichannel customer experience and separating themselves from the competition is with their endless aisle kiosks.

A staple in the store for some time now, the interactive terminal allows shoppers to browse books they’re unable to find on their first walkthrough of the store. If none are available, shoppers can order any items that are out of stock for home delivery, all without ever hassling a store associate for help.

It’s a move that perfectly bridges the online world with the physical one, and helps generate sales regardless of what’s in stock at any given location.


Kids’ Stuff Can Be Found Everywhere at Indigo

American Girl isn’t the only kids brand to invade Indigo locations over the past few years.

As the company focused its efforts away from strictly selling books, the retailer has embraced a younger clientele, offering up LEGO, board games, and other kid-friendly items, in addition to more educational materials.

In 2016, Canadian Business pointed out that part of the retailer’s strategy involved rebranding it as not just a place to shop, but “a place to linger,” and selling kid-centric items are part of that strategy. (As the publication pointed out in a previous article, unlike other kinds of books, you need to flip through a kids’ book to appreciate its art and message fully. And, once inside a store, it’s easy to cross-merchandise to children or family members and friends looking for gifts.)

But educational toys, which Indigo’s higher-end, book-appreciating customers are undoubtedly looking for, aren’t always easy to find at your general department store.

In 2012 the company began rolling kids products out more aggressively, and they’re a big hit with customers (judging by the increased number of Indigo Kids sections in their stores).


Thinking Ahead

At an annual general meeting in the summer of 2014, Indigo’s CEO described the company’s ongoing history as being split up into three distinct phases:

  • Stage One was Indigo’s initial phase in which they sold books and music
  • Stage Two was their move away from hardcopy books to e-readers and digital materials
  • Stage Three was a “whole new Indigo,” one that focused on diversifying their offerings and creating a new experience for its customers

In 2017, the company’s revenue exceeded $1 billion; the following fiscal year, the retailer reported a revenue increase of almost $60 million over the last, making 2018 the most profitable year in the company’s history. (They also recently expanded into the U.S. market.)

Indigo’s recent success is owed to their ability to take chances where others didn’t, their visual merchandising acumen, enhanced product assortment, embracement of new technologies, and business savvy.

The good news for other retailers looking to shake things up is: it’s not an impossible transition to make.

By changing with the times, Indigo has not only redefined what a bookstore is, but what a physical retailer can be, and customers (and the industry) are taking notice.

“The reality of today’s environment is, you are constantly being moved forward by how we as customers are evolving,” Reisman previously told BNN Bloomberg. “It’s an ongoing process.”