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Indigo eyeing more toys to boost bottom line

Globe and Mail Update

Heather Reisman says that shoppers love to browse her company's Indigo and Chapters bookstores, but most walk out without buying anything.

One way she thinks she can entice people to part with their money is to add a wider range of toys to the mix. Her research tells her that parents are already spending considerable sums on toys for their children.

Later this year, Indigo Books & Music Inc. will test a “full-scale toy business” at a couple of the company's superstores, Ms. Reisman told a Scotia Capital Inc. back-to-school conference in Toronto Tuesday. A company official explained later that she was referring to beefing up educational toys, a small selection of which are already carried at the outlets. In late October, the company will start selling the “edutainment” offerings on-line (toys that marry education and entertainment).

If successful, the broader selection of toys will be rolled out at all 86 of the company's book superstores in 2007, Ms. Reisman said. Over the next couple of years, the toy business could add between $50- and $60-million of annual sales to Indigo, she said. It's one of a number of initiatives that Indigo's chief executive officer is planning, or considering, in her bid to convert browsers into buyers. It's part of her vision to transform the book retailer into a “cultural department store.”

Her challenge is clear: Last year, about 70 million people visited Indigo's superstores, but only about 20 million of them actually made a purchase, she said.

If Indigo can convert one more browser into a buyer — out of every 100 visitors — it would add $20-million to sales, she said. And if each customer who made a purchase spent 50 cents more — up from the current average of $28.19 — that would add yet another $10-million to sales, she said.

The challenge is somewhat tougher now. That's because many book prices are dropping as a result of the higher value of the Canadian dollar against the U.S. greenback. That means customers have to buy even more to produce an increase in Indigo's overall sales. Still, Ms. Reisman said sales volumes are “going way up.”

She said she'd like to boost the browser-to-buyer conversion rate by 1.2 per cent this year. After all, visitors are staying in the store an average of 45 minutes. “If [the stores] can't sell them something in 45 minutes, you shouldn't buy our stock,” she said.

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