Indigo’s new CEO plans to sell $450 pizza ovens and collagen face mists at the bookstore

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For years, Canada’s largest bookstore chain has been branching out beyond books. While the written word has not been pushed to the margins – still accounting for just over half of all sales – Indigo Books & Music Inc. is also a purveyor of toys, candles, throw blankets and more.

But is Indigo the first store that customers think of when they want to buy makeup? Or houseplants? Do shoppers expect to see a bed in the middle of the showroom, as though they’ve stepped through the looking glass and into a West Elm?

“That’s both the challenge and the opportunity,” says Peter Ruis, who joined Indigo last year as founder Heather Reisman cemented her succession plan. While he says books are still the heart of the stores, Mr. Ruis, who took over as chief executive this month, is now planning for what he calls a “big product revolution” as he seeks to position Indigo for the future.

Mr. Ruis is planning a major expansion in categories such as cookware, tech gadgets and beauty products. “It’s not four or five things; it’s about 400 or 500 that we’re busily beavering away, trying to bring them to market,” he says, sitting in a boardroom at Indigo’s Toronto offices.

These categories may sound familiar, but Mr. Ruis insists Indigo is not trying to be a department store. Unlike retailers such as The Bay, Canadian Tire and Amazon, which already sell a multitude of products across price ranges, Mr. Ruis wants people to associate Indigo with a narrower selection of “interesting” items.

“It can’t just be more stuff. Everyone’s got too much stuff,” Mr. Ruis says – though he would very much like you to take a look at his stuff, such as a $450 Ooni pizza oven, a vegan collagen face mist or a set of stemless wine glasses. And Indigo is redesigning some stores to highlight such products (the soon-to-open location in Ottawa’s Rideau Centre mall is where the bed appears, part of a new layout with updated lighting and pale wood fixtures).

This kind of investment was not possible just a couple of years ago, when Indigo – already losing money before the pandemic – was, like other retailers, forced to claw back expenses to stay afloat. While the retailer has no debt, it made only a narrow $3.3-million net profit in its last fiscal year ended April 2, its first time in the black since fiscal 2018.

“Last year we clicked back into profit because we started to scale the digital fixed costs and variable costs for the first time. So the future in terms of the profitability of the business is growing that digital revenue,” Mr. Ruis says. Online sales have already grown from 17 per cent of revenue in 2019 to 30 per cent last year – a digital acceleration that is “the only favour COVID did us,” he says.

To keep expanding digitally will take another big investment. The company is rolling out a new website in the coming weeks, with the first major under-the-hood change since it launched e-commerce – switching from a platform built in-house in 1999 to one run by Salesforce Inc. That will allow for better search and images, but also shipping from stores in addition to warehouses, to speed up deliveries.

A big question mark is consumer confidence, especially with the crucial holiday shopping season looming. “With the winding down of government stimulus, soaring inflation, a decline in real wages, and rising interest rates, consumer purchasing power has significantly dampened,” a recent research report from credit-rating agency DBRS Morningstar noted. The report predicted that sales volumes and profit margins at North American retailers would be affected – particularly for those selling discretionary goods. Much of the general merchandise on Indigo’s shelves falls into that category, though Mr. Ruis notes that books always sell well during economic downturns.

“There might be a bit of caution in the short term,” he says, but adds he is optimistic about the strength of the Canadian economy.Supply chains continue to complicate the picture: While shipping-container costs have come down, other input costs have not, prompting many retailers to raise prices.

Mr. Ruis says he is waiting for some of this uncertainty to pass before Indigo takes its next big step: international expansion, which will begin with the U.S. (it currently has one store in New Jersey), likely followed by Britain.“We need the market to calm down,” he says.

Indigo had 172 locations in total as of the first quarter. In Canada, it has closed more than 20 stores since the pandemic began, but Mr. Ruis now wants to increase the brick-and-mortar presence here as well, starting with 10 to 15 more. He is looking at Quebec, where the brand is underrepresented, as well as some smaller-format spaces with improved designs in higher-performing locations compared to the ones that were closed in 2020.

“A lot of the landlords are looking very much about developing their assets and encouraging you to create incredible stores,” Mr. Ruis says, adding that some landlords are willing to contribute capital and to structure “modern deals” to encourage development.

“Whether it’s filling in the map, or it’s an opportunity within an existing mail where we can do a new, more modern, more up-to-date store, we’ll take those opportunities,” he says. “... I think customers do want to come out, they do want to have a physical experience. But it has to be exciting. It can’t just be pile it high and hope they’ll come.”

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