When the pandemic hit, Indigo’s online sales more than doubled. Could the forced shutdown hold the key to saving Canada’s bookstore?

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This was Toronto-based tech journalist Shruti Shekhar’s first bookstore after moving from Singapore to Canada in 2007.

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She found comfort in the neat shelves of indigo, meditated on the latest thriller and reveled in scented candles and comfy socks. But ever since COVID-19 hit, Shekhar now does most of his shopping on IndiGo’s app.

“Don’t look like you’re missing out on much,” he said, adding that the physical aesthetic of IndiGo’s store is “translated well” to its app.

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It is not the only regular IndiGo that has embraced online shopping despite the easing of norms.

When the pandemic hit, the troubled book and lifestyle chain, like many other retailers, was forced to close its brick-and-mortar stores, lay off a hundred employees, and worst-case scenario. For the first time in its history, it will have to rely on online sales for 100 percent of its revenue.

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But while other retailers suffered, and some, such as J. Crew and Brooks Brothers filed for bankruptcy, something miraculous happened to IndiGo: Its online sales soared — more than doubling during the pandemic, to $370 million.

In fact, during the fiscal year, from April 2020 to April 2021, in the depths of the pandemic shutdown, overall sales declined by only 7 percent – even as many of its stores remained closed for months.

IndiGo President Peter Ruis said, “(The) acceleration has been tremendous, and has been positive for us in terms of our future strategy.”

IndiGo is still losing money and its future is uncertain. In the decade leading up to the pandemic, the retailer struggled to maintain profitability, with its stock price on a roller-coaster ride, rising from $14 a decade earlier to $20 in early 2018, Then fell below $4 before the pandemic hit. .

Could its surprising jump in online sales be the way forward? It may turn out that the pandemic shutdown, which has devastated so many businesses around the world, could be the key to saving IndiGo.


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animals in the room

Indigo has historically been a large fish in a disturbed pond.

After the growth of large book retailers in the '90s and early 2000s, the market became more volatile, said retail analyst Lisa Hutchson, managing partner at consulting firm Jesse Williams Group.

E-readers entered the market, and online shopping grew. Once accused of eating up small, independent bookstores in decades, Indigo was now being threatened by an even bigger beast: Amazon.

IndiGo began focusing on being a "lifestyle" store, Hutchison said, believing that cross-merchandising would be key to its survival.

Over the years, Indigo expanded its wares into mugs, pillows, candles, and other crowd-pleasers, the kinds of gifts you get last-minute that you might not know very well.

Retail analyst and author Bruce Winder doesn't think the company's struggles were self-caused. Looking at the overall market, he said, books were one of the first items to come online.

"Amazon started 25 years old," he said.

Indigo seemed a little lost in a tough industry, but not because of a lack of trying, Winder said. It was making wise moves that just weren't translating into profitability.

Ruiss, who joined IndiGo in early 2021 after a stint as managing director at clothing retailer Anthropologie, said the company has historically focused on its physical stores, with a focus on the digital sales business. for "expansion". The pandemic changed all this.

take advantage of loyalty

The company was expected to return to profits in FY21, but the pandemic crushed those plans.

But when IndiGo lost money again last year - it wasn't as much as one might expect.

In fiscal year 2021, which ended on April 3, 2021, IndiGo's individual retail revenue was down by more than $250 million compared to the previous year.

Yet online revenue closed the hole in the gap, jumping more than $200 million -- 127 percent -- to $370 million. Overall, IndiGo's revenue fell by just $53 million over the previous year, just seven percent.


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Ruis says this shows IndiGo customers have remained loyal during COVID-19.

He is not wrong. Longtime IndiGo shoppers like Shekhar say they turned to the retailer's website or app, not Amazon, to get their pandemic readings.

Before the pandemic, Candice Makhan stopped by at the Eaton Center to go home from work, buy books, household items and gifts.

But she hasn't set foot in an Indigo store since the pandemic began, and still remains loyal - she shopped online for books, and would send gifts to her mother-in-law.

The shift to online shopping was also an opportunity for IndiGo to review its physical footprint.

It permanently closed 20 of its stores during the 2021 fiscal year, bringing the total to 177. Two years ago, it had 204; Most of the closures have affected its smaller format stores, which now represent half of its locations. Since the year-end report, another small-format store has closed.

And with stores closed for months, the company's sales and operating expenses plummeted. IndiGo's loss before income tax for the year was $56.9 million -- much less than the $100.3 million in fiscal year 2020, and slightly higher than the $49.6 million loss in 2019.

Not bad for a company that struggled to reach profits before the pandemic.

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