November 10, 2011

Money to burn?


Heather Reisman with a Kobo reader

Heather Reisman, CEO of Canada’s biggest books chain, Indigo Books & Music Inc, has just signed a very lucrative deal. According to this story in the Toronto Globe and Mail:

After making a $315-million (U.S.) deal to sell e-reader maker Kobo Inc., Ms. Reisman is in a stronger position to make acquisitions and expand non-book ventures, to offset Indigo’s shrinking book business. She will invest heavily to shore up her new product design and development studio in New York City, which is focused on home decor and gift items.

Reisman plans to reinvest the windfall from the deal into changing and developing the Chapters/Indigo stores into a varied retailer, with only 50% of store floorspace devoted to books. “We have to grow very considerably to balance off what we lose in our book business,” Ms. Reisman, who, with her husband, financier Gerald Schwartz, owns more than half of Indigo, told the Globe and Mail. “But I have every expectation that within 18 months, we will fully make that transformation … I would rather, for shareholders, to employ the funds and deliver to them a great result.”

Reisman will be moving the stores into selling more toy, gifts and home decor items, though the competition in that market is stiff and getting stiffer. “By 2013, savvy U.S. discounter Target Corp. will launch its stores in Canada, carrying many of the same types of products,” according to the Globe and Mail.

“It is a big challenge – there are a lot of retailers in this [lifestyle gift and home decor] space and it is where the world is going for a lot of other brands,” said Anthony Campbell, a brand strategist, told the Globe and Mail. He see Reisman’s sale of Kobo as a way to consolidate resources.”Taking on Apple and Amazon and Google isn’t just a distraction, it puts Indigo in a position where the brand would completely lose focus,” Mr. Campbell said. “By maintaining its focus, Indigo’s better prepared to take on the likes of Target and other retailers who are trying to corner the lifestyle space.”

To help create her lifestyle merchandise and experiences, Reisman will be using her Kobo sale profits into product development and design at her recently-launched studio in New York. She is interested in creating a consumer “experience” as she explains it to the Globe and Mail:

I’m not interested in selling a bowl. That’s not the business I’m going to be in. I am interested in creating an experience around the table for the customer … There is so much about what inspired and created Apple – the conviction about creating an end experience for the consumer … the commitment to beauty and simplicity.


Valerie Merians is the co-founder and co-publisher of Melville House.