Indigo & Music Inc Case Analysis

MARKET CASE ANALYSIS- INDIGO BOOKS AND MUSIC INC.

The first indigo store was opened in Ontario in 1997 before Indigo Books & Music Inc. was created in June 2013 by the merging with Chapters Inc. Since then, Indigo has evolved to become Canada’s largest book store. Now, it employs more than 6,500 people and has retailer in all 10 provinces across Canada. The company’s intention is to bring a unique cultural destination to enrich customers’ lives with books and eReading. It also offers an online experience at indigo.ca, their products branching out into home goods, toys, children’s clothing and now, Apple tech products.

KEY ISSUES

Since the 2008 world recession, the company have been facing the financial capital decrease problem internally, cash and cash equivalent dropped and the expense in operating, selling and administrative raised. This situation pushes indigo to redirect dividend to transform to a life style company. However, investors were worried about the risk of strategy shift, stocks dropped rapidly and pressure increased. Indigo’s over speed development and the hostile takeover acquisition of chapter could pose potential instability in management during the transition period. Besides, company traditional sales dropped greatly including the core products: books and eReader. Moreover, the lower iReaders membership income declare the lose of clients’ loyalty.

Externally, indigo is facing a rising competition from large general retailers, US discount and Canada local retailers. The new digital world is also changing the game that companies have to find new opportunity to survive in the compete against in digital industry. The innovation, reposition, good partnerships and cohesive marketing plan is crucial for company progress.

OBJECTIVES

Solve the financial crisis, stabilize transition phase, build the new Indigo global company, reimagine company as the world’s first “creative” department store. Keeping books as a key sell, while developing a multichannel, multi-category retailer.

SITUATION

Ø SWOT analysis

- Strength

With it’s 19 years’ old age, indigo is a young and hopeful company which has open and creativity spirit, this is an advantage to go through the transition phase. Company has a strong leadership in books retailer industry in Canada, it had gained a large market portion and built the reputation, so they still have a strong customer base, strong infrastructure position and brand recognition.

Indigo’s business philosophy is heart-driven, focused on offering the most inspiring books retail environment and life-enriching products, which meet customer’s high expectation and strengthen the attraction.

The choice of to be a multichannel, multi-category retailer reflexes the differentiation and positioning strategy. Their products catered to every generation and domain of interest. The strengthen partnership with different companies also contribute to indigo’s performance and evolution.

Company also performed in the social public welfare responsibilities, such as the donation to Globe fund and established the Indigo Love of reading foundation, build a good social awareness.

Besides, Indigo has excellent leading policymakers: Reisman, the founder and the director of company, with a wealth of professional experience, forward-thinking and deep determination, could resolutely implement the transformation measures. Her and her husband’s social networks facilitate the corporation and partnership.

- Weakness

Negative investor’s perception and the high expense in operating, selling and administrative form a downing cycle, making company struggling in the transition phase. The coming of digital world make customer turned away the traditional books, Indigo lose its competitive advantage in the changing book retail environment. Kobe, the only one prospective product which could generate huge profit is sold to Rakuten Inc. Indigo has big footprint in the physical store but not have a strong image in the online business. The lack of core competitiveness limits development.

- Opportunity

Some products are doing well, such as gift, paper and toys, which uncover the clients’ interest tendency, company have opportunity to reposition their sales focus from books to other relevant cultural entertainment products.

- Threat

In the traditional book retail market, U.S. discount retailers and the large superstores providing