A wave of top executive departures marks the latest worrying chapter in the history of Indigo Books & Music Inc., which a**lysts say is facing a slowing economy — and a mild identity crisis — as fall approaches.
Indigo announced last week the sudden departure of CEO Peter Ruis after just one year in the role. That was a day after Andrea Limbardi, the company’s president and two-decade veteran of the company, announced on LinkedIn that she was stepping down as CEO of Reitmans Canada.
The two executive departures come shortly after Indigo founder and president Heather Reisman retired from the company in August and four board members left in June. When the board changes were announced, Indigo said in a statement that the departure of director Chika Stacy Oriuwa was due to a “loss of confidence in the leadership of the board” and “mistreatment “.
Retail a**lyst Bruce Winder told PKBNEWS that while the conversations happening behind the scenes at Indigo are unclear, the wave of departures with a lack of explanation “sends signals that the The company is kind of in a bit of a chaotic state right now. »
“They’re probably a little panicked,” he said.
The management shakeups follow a rough few months for the Canadian retailer, which saw sales drop significantly following a ransomware attack in the spring that knocked its digital and in-store shopping offline for weeks.
Indigo said in regulatory filings in August that the attack affected not only the company’s immediate online sales, but also its ability to replenish inventory afterward. That translated into lower revenue and a wider net loss for the company’s fiscal first quarter ending July 1.
Indigo’s stock price has also fallen over the past five years, from around $14 per share in September 2018 to $1.23 as of market close Wednesday.
Struggles on the operations side are likely amplified by management and board shakeups, Winder says. The company’s stakeholders, including investors, suppliers and employees, rely on senior management to guide them through turbulence, he says.
“This sends a signal that the company is currently in turmoil. And I think someone needs to take control of it and calm everyone down,” Winder says.
Indigo caught in the ‘middle’ of the retail crisis
The ransomware attack isn’t the only drag on Indigo’s sales lately: a slowdown in consumer spending amid higher interest rates and rumors of an economic slowdown on the horizon are also threats to the company’s bottom line.
Indigo said in filings last month that its general merchandise business declined 16.4 percent last quarter amid “lower discretionary spending” in the market. Print sales also fell 12.3 percent, but Indigo said it had seen a surge in interest in bargain books, “demonstrating customers’ sensitivity to price in the current macroeconomic environment.” .
Winder says consumers “are not in good shape right now” as they grapple with debts such as rising mortgage payments and still stubborn inflation at the grocery store. Others may be worried about job losses in the near future, with some economists predicting a mild recession in late 2023 or early 2024, he says.
“So now is not a good time to make discretionary purchases,” says Winder. “It’s safe to say that most of what Indigo would sell is discretionary.”
Joanne McNeish, an a*sociate professor at Metropolitan Toronto University’s Ted Rogers School of Management, says Indigo is in a difficult position heading into a slower economy.
As luxury retailers can continue to cater to customers who still have significant disposable income and discount stores become a go-to destination for struggling consumers, Indigo may well find itself ignored, McNeish says.
“Indigo is in the middle of the market, and being in the middle is always a more stressful place,” she says.
Indigo will have some tough choices to make as the critical holiday season approaches, Winder notes.
With a slowdown in spending, the company may have to offer deep discounts to attract shoppers to the store, he ventures. But that will put even more pressure on the company’s margins, which could lead to layoffs and other cost-cutting strategies as the company tries to maximize sales, he says.
PKBNEWS reached out to Indigo to ask how it plans to adjust its retail strategy in anticipation of an expected economic downturn, if one occurs.
“As we enter a busy holiday season, our Indigo team will remain focused on delighting our customers and delivering positive results for the business,” said Melissa Perri, Indigo Senior Director of Public Relations, in a press release.
“The Board of Directors reiterated its strong commitment to seeing Indigo re-emerge as a strong force in Canadian culture and business. »
In fashion now
But what will this Indigo look like?
Clues to Indigos’ future may be found in the company’s plans for a new urban store concept at The Well building in Toronto, which it plans to open this fall. The retailer would serve beer and wine alongside coffee and pastries, and allow shoppers to play arcade machines and sample music on a jukebox.
Before leaving his role as CEO, Ruis described the new Indigo store as a “cultural emporium” in an interview with The Canadian Press. He acknowledged that stressed consumers need to be careful about where they spend their money, and said he was looking to give shoppers an “appealing reason” to come into stores.
Winder says he’s “very interested” to see how the retailer’s experiments with the urban concept store play out, and notes that Indigo is still trying to find its “reason to exist.”
He says the company could find a new purpose as a “Starbucks-plus,” settling into a location at the bottom of the condos where a built-in traffic stream spends time browsing the shelves before or after heading to the desk.
Ruis told the Canadian Press in August that while Indigo is branching out into lifestyle products and experiential services, the company isn’t looking to abandon books.
While the publishing industry was upended when Amazon took the sector by storm, McNeish and Winder say independent bookstores have seen a resurgence of late. Winder points to the one-on-one relationships with customers that independent booksellers can cultivate as an advantage these stores can exert over the Indigos and Amazons of the world.
But Indigo has also long had a soft spot in the hearts of bookworms, McNeish says.
Books and other printed products account for about 57 percent of Indigo’s business, according to the most recent quarterly results, with general merchandise accounting for about 37 percent of sales. Book sales declined less than those of derivative products in the most recent quarter, with both verticals impacted by the ransomware attack.
McNeish says the Canadian retailer’s identity as a bookstore-turned-lifestyle brand over the past decade has been a source of consternation for some shoppers.
“As Indigo began to transform its retail space, dividing it between books and lifestyle products, there was an underlying discontent,” she recalls: “Is it a bookstore or is it something else? »
She said the transition into the lifestyle sector appeared to continue under Ruis’ leadership, noting that the executive came from women’s clothing store Anthropologie and British department store John Lewis.
The urban concept stores’ ideas of having a gla*s of wine with a good read are in line with Indigo’s book-loving target demographic, McNeish says.
But she also says recent executive departures could hint at an Indigo who had “two visions at play.” It’s unclear at this point, she continues, what vision of the future has left the company and what direction the remaining executives and the eventual CEO replacement have in mind.
The fate of the urban pilot store concept and whether it will be rolled out more widely in the coming months could be an indication of the ideas that have won the day at Indigo, McNeish says.
“They have, in this retail space, a chance to do something exciting and interesting.”
— with files from The Canadian Press