Hit by the deep discounts offered by e-commerce companies, bookstore chains are increasingly betting on online technologies and reworking their merchandise mix to boost sales and profits.
The Tata group-owned book chain Landmark has just announced its foray into e-books to augment sales where it sees the ‘future of book retailing’, according to Ashutosh Pandey, chief operating officer, Landmark. It has added 250,000 titles.
In the next one year, Landmark expects a 10 to 15 per cent of its overall sales to come from Landmarkonthenet, its online avatar, and e-books. The chain posted a revenue of Rs 230 crore in 2011-12 and is targeting around Rs 300 crore for the current financial year.
The Raheja group-owned book chain Crossword, too, is looking at adding e-books to its e-commerce site, said Kinjal Shah, chief operating officer. Besides, it is planning to add toys, stationery, music, movies and gaming to its online portal. Its e-commerce site is growing 20 per cent month on month, he claimed.
They have a reason to focus on e-commerce. Diptosh Mukjerjee, a 37-year marketing professional in Mumbai orders at least half a dozen books from leading online retailer Flipkart.com in a month. Earlier, he used to buy similar number of books from Crossword Bookstore in Malad, a western suburb of Mumbai. But now his weekly visits to the store has come down to just once a month as he finds discounts offered by the online retailer irresistible, besides the free delivery and cash on delivery options.
Even publishers are not complaining. “Overall, their (book chains) sales have been affected as e-commerce sites offer 30 to 40 per cent discounts on new releases which physical stores were not able to offer due to high operating expenses,” says N S Krishna, director, sales and operations, Harper Collins, a leading publisher.
According to Krishna, Flipkart itself has doubled its orders at Harper Collins in the last one year whereas leading book chains have cut their orders for new titles by around 50 per cent. “They say they will sell the current stock first and order later,” Krishna said.
However, the discounts at e-commerce sites have come down to 10-15 per cent from 30 to 40 per cent earlier, said Govind Shrikhande, managing director of Shoppers Stop, the parent of Crossword.
“Those chains which are not offering any discounts and want their buyers to pay full price are impacted,” said Pandey of Landmark. Besides giving discounts, Landmark has launched a ‘three for two’ offer where if a person buys three books, he will get the lowest priced book free.
Change in strategy
Hit by declining sales in categories such as homeware products, music and movies, both Landmark and Crossword are reworking on their product mix. Both are downsizing or even exiting these categories and increasing the share of toys and gaming that are growing at 35 to 40 per cent.
Landmark has almost doubled the share of toys and gaming, Pandey said. For instance, in its large stores, it has devoted 3,000 to 4,000 sq ft of space for toys, compared to 1,500 sq ft earlier. The chain has identified 12,000 to 15,000 sq ft as the ‘optimum area’ for its stores. If there are larger stores, it has gone in for shop-in-shops from other brands to optimise the space, he said.
Crossword has also sharply cut the share of movie and music category and focused on kids’ books and toys.
“Yes we are not able to see the growth numbers that we used to see earlier . However certain categories like children books, coffee table books have helped us increase sales. We have focused a lot on store look and feel and improved the experience of the customer at the store,” Crossword’s Shah said.
Crossword is also banking on its ‘book reward loyalty programme’ to push sales where it is adding 9,000 customers every month. It has a base of 400,000 and 55 per cent of its sales come from loyalty members. “We are focusing a lot on analytics and sending relevant information/ communication to these customers to increase sales,” Shah added
Although Crossword had franchisee stores since 1995, Landmark is looking to expand through the franchisee model. It plans to open three to four company-owned stores and seven to eight franchisee stores this year.
