Heather Reisman sweeps into the Toronto headquarters of the last big-box book retailer in Canada, her petite frame belying the power she wields as chief executive officer of Indigo Books and Music Inc.
She is confident, 65, immaculately coiffed, wearing a lilac dress that reveals toned calves and flatters her slim, lithe figure.
Around her neck, on a chain of diamonds, is an exquisite pendant in the shape of a perfume bottle, studded with diamonds. It is a gift from her husband Gerald Schwartz, chairman and CEO of the private equity firm Onex.
Schwartz, 72, is a mergers and acquisition expert whose personal fortune is estimated at $1.9-billion by Forbes.
In the earlier days of her book business, after she had built up Indigo and acquired Chapters, with Schwartz lending his negotiating skills to the deal, Reisman was someone independent booksellers loved to hate. Her beautiful book palaces and the discounts she was able to offer were siphoning away customers.
Now, some 20 years later, it is Reisman facing Goliath. Indigo is battling Amazon, Costco and Walmart, in an age of electronic readers and other personal electronic devices that can be used to read electronic books, including a vast online library of free books.
Revenue, net earnings, sales and profit margins at Indigo have swung significantly over the past years as the company struggles to find new footing in a sector upended by technology.
Two historic book palaces – the Chapters in the old Runnymede Theatre on Bloor St. W. and the World’s Biggest Bookstore – have been closed, as Indigo resizes and rebrands as a cultural department store, with books at the centre, but now in the company of, pretty housewares, toys and gifts.
“Transforming Indigo for the 21st century is the biggest challenge,” says Reisman, settling into a black chair in her small white office, lined with – what else – white bookshelves.
“All the product we are designing and bringing to market — that required that we bring new skills into the company, that we build a new kind of supply chain. This is like going through a chrysalis. I don’t want to suggest we were a caterpillar in the past — Indigo was great. But that notion of transforming from one thing to another, it’s a big job. It requires that there is a clear vision,” she says.
Reisman has hired a strong creative director to run studios in New York and Toronto, churning out charming products at affordable – though not cheap – prices.
The products designed and brought to market by Indigo – the table linens, glasswear, picture frames and blankets – offer better profit margins than books. Rainbow Looms, Lego sets and LeapFrog tablets draw kids like magnets, parents in tow. Inexpensive loot bags and party favours help moms get a last-minute birthday shop done in one shot.
It’s the Monday of a busy week for Reisman. She is fresh off the success of the weekend launch of the American Girl line of dolls at the Indigo at Yorkdale Mall. It drew 4,000 little fans with parents willing to pay $125 for the doll and more on accessories, including shoes at $34.
On Friday, a documentary Reisman helped produce on the food industry and childhood obesity, called Fed Up, opens in theatres.
Reisman relies to an extent on gut instinct. She knew American Girl would be a hit. She is a longtime fan. She buys them for her grandchildren.
“She has a knack for knowing the customer – as I think do most women retail leaders – and she builds terrific teams around her,” says Bonnie Brooks, vice-chairman of Hudson’s Bay Company and a former Indigo board member.
Brooks points out that Reisman scored a big win with the Kobo e-reader, which was developed at Indigo and later sold to the Japanese company Rakuten. Indigo made $165-million on the deal.
“She had a vision for Kobo and executed it really well and it was an extremely profitable venture, sold at just the right time,” says Brooks.
Reisman says that being in the books business – the ideas business – keeps her plugged into trends, which is how she came to be co-executive producer of Fed Up.
Three years ago, her team started to see a trend towards books on the topic of real food and the dangers of additives like sugar, including the book Salt Sugar Fat: How the Food Giants Tricked Us, by Michael Moss. Reisman interviewed him and was hooked.
“You just couldn’t listen to him and not be propelled by what is going on,” she says.
She gave up sugar, except for the occasional small slice of birthday cake.
“Have I been bitten by the bug,” she says, when asked if she is planning more movies.
“If another opportunity comes to be involved with something I deeply believe in, another documentary maybe. I’ve always wanted to do an impactful documentary on literacy, so that is the next thing – I want to do something as impactful as Fed Up.”
Reisman, a lifelong bookworm, believes early childhood literacy is a foundation for success. The Indigo Love of Reading Foundation has donated $18-million to Canadian schools in need of library books over the years.
There have been rumours that Reisman is thinking of buying the U.S. bookchain Barnes & Noble, which is reported to be looking for a suitor as it grapples with sluggish sales at its traditional bookstores and a shrinking Nook digital unit.
“That would be a rumour. It did not come from us,” says Reisman.
Does that mean she’s not interested in expanding beyond Canada?
“Well, we may at some point take our concept outside of Canada. Yes, we have a dream to take our concept outside of Canada, but no thought of acquiring another company,” she says.
The fact that Indigo is adding gifts and décor isn’t good news for publishers, says Carolyn Wood, executive director of the Association of Canadian Publishers.
“Indigo is not buying as many titles, and they’re not buying the same number of copies – that has been the steady trend over time,” says Wood, who represents 115 Canadian-owned publishers.
According to Indigo’s senior vice-president of book trade, Bahram Olfati, “Our assortment continues to grow. We’re buying more titles, and selling more titles. But we’re also buying smarter than in the past.”
Wood says book publishers are trying to improve sales by selling directly to consumers from websites and at special events.
Shelley Macbeth, the owner of Blue Heron books in Uxbridge, organizes monthly book brunches at the golf club and evening events with wine and hors d'oeuvres with authors in order to attract customers.
“To be successful, you almost have to be an impresario. You always have to have something going on,” says Macbeth, adding that the decline in paper book sales seems to have leveled off somewhat.
While e-book sales increased rapidly from 2011 to 2013, the growth has recently slowed, according to Noah Genner, CEO and president of Booknet Canada, which collects data on book sales.
In the third quarter ending Dec. 28, 2013, Indigo reported revenue was $332.4-million, up $9.8-million from the previous year. The increase was driven by double-digit growth in the lifestyle, paper and toy businesses and revenue from the newly launched Indigotech business, which added electronics to store shelves.
But net earnings were $8.5-million for the 13 weeks, down from $22-million in the same period a year earlier as the company is investing in expanding merchandising space, online marketing and launching more Indigotech locations.
“For the last 18 months we’ve been investing so heavily and we still have some time to invest, but I feel confident that the profits will come,” says Reisman.
Fortunately for Reisman she has patient investors – she and her husband effectively own a majority of shares.
When asked about the future of bricks and mortar stores, Wood says there will always be a place for bricks and mortar stores. Then she corrects.
“Always is a big word. You should never say never and you should probably not say always either.”
Reisman offers up her trademark enthusiasm. She grew up reading with her dad, who put All Quiet on the Western Front into her hands, and Marjorie Morningstar by Herman Wouk, The Fountainhead, and the writings of James Thurber.
“For me, this was not just a business. Books have always been at the absolute centre of my life.”
Reisman says she and her husband joke that they put their lives and four kids from their first marriages together before they put their books together.
“We were married for five years before we actually melded our libraries.”
She still reads a book a week.
“I don’t think physical books are going away at all. I am committed to being in it forever. Having said that, I think any business must evolve.”