FINDING Indigo’s Niche IN BRAZIL AND CHILEPresenter: Arundati Dandapani

Agenda1. Who or what is Indigo Canada?

2. What is the problem?

3. Where are the new markets?

4. What are Indigo’s objectives?

5. Scripting a new research methodology

6. Analyzing the research

7. Market and competitive intelligence

8. Indigo now vs. Indigo tomorrow? (Old markets and new)

9. So what?

10. Q & A / Photo op

Canada’s largest bookstore is A retailing First!

Enrich your Life

INDIGO STORES CANADAWIDE• Chapters, Coles, Indigospirit, SmithBooks, The Book Company

• 92 superstores (10X small stores sq ft.)

• 140 small format stores

• Over 5 million book titles

• Approx. 7000 employees

• Entrepreneurial: started up Kobo, tie ups with Mattel/American Girl

• Price of Kobo Touch WiFi US$139 (same as Amazon Kindle)

CEO & chief book loverHeather Reisman, 66

“We don’t care whether people read books physically or digitally!”

CANADA DOMESTIC BOOK SALES

• Monopoly excludes Quebec where Archamebault and Renaud-Bray independent bookstores hold most market share

• Sales exclude educational texts

• Independents:  campus stores, large book departments in grocery stores, and used bookstores

• Non traditional retail: Wal-mart, Costco, etc.

• Online booksellers: eg. Amazon, Smashwords, brick-and-mortar online affiliates

INDIGO MOBILE APP

Research Problem

Management decision problem:

How can Indigo expand its line of operations to restore a flagging bookstores business by entering foreign markets? How will the company compete internationally and what elements of its international marketing strategy are pegged to make Indigo a “retailing first” in the industry?

Marketing research problem:

How will Indigo make its first choice of foreign market entry between the potential markets of Brazil and Chile and what will be the implications for the launch of the company’s first global operation outside Canada?

Country profilE Brazil

Large and well-developed agricultural, mining, manufacturing and service sectors; Brazil’s economy outweighs all South American countries’ and is a fast expanding presence in world markets.

Exchange rates:reals (BRL) per US dollar -2.153 (2013 est.)Labour force: 107.3 millionUnemployment rate: 5.7%Telephone users: 75.9 millionInternet users: 76 millionLanguages: Portuguese210 languages, 180 indigenous

Research Objectives: Brazil• To analyse the advantages of setting up a new chain store in

Brazil by extending Indigo’s operations to Brazil

• To analyse key regions within Brazil where Indigo’s chain will operate

• To assess the retail experience (including sales platforms and marketing mix) offered by equivalent bookstores in Brazil and gain insights from competitor and competitive analysis

• To develop a blueprint and timeline for the setting up of IndigoBrazil including online affiliates like indigo.br

• To generate branding communications for IndigoBrazil, a uniquely Canada-Brazil partnership and an international retailer to reckon with

Country ProfilE ChileA market-oriented economy High level of foreign trade Strong financial institutions Strongest sovereign bond rating in South America.

Labour force: 8.367 million (2013)Unemployment rate: 6%Inflation (consumer price): 1.7%Exports: $78 billion Imports: $76 billionChilean pesos per US dollar: 491.7Telephones: 3.27 millionInternet users: 7 millionLanguages: Chilean Spanish

Research Objectives: Chile• To analyse the advantages of setting up a new chain store in

Chile by extending Indigo’s operations to Chile

• To analyse key regions within Chile where Indigo’s chain could operate

• To assess the retail experience (including sales platforms and marketing mix) offered by equivalent bookstores in Chile and gain insights from competitor and competitive analysis

• To evaluate the pros and cons of doing business in Chile as a Canada’s largest book retailer (keeping in mind the ease of starting up here)

Hybrid MethodologyBrazil

•Face to face intercepts and door to door interviews seeking people’s views on what are the kinds of customer experiences being sought in towards the different, seeking awareness of local books, global books, link to culture

• Internet shopping habits and satisfaction surveys online

•Secondary research

Chile

•Similar to Brazil, but will account for cultural and linguistic differences

•Online Internet retailing habits satisfaction surveys

•Secondary research

Hofsted’s Model Brazil vs. Canada

CHILE VS. CANADA

Analysis And TESTS• Correlations between book buying rates and age groups, regions,

languages spoken

• T-tests for means to test for variation in book sales among and between groups

• Logistical regression between time spent on the internet and reading or purchase of ebooks and books purchases online and drivers of satisfaction with retail experience

• Multi-collinearity tests between the impact of several factors (ambience, culture, type of books, technology, accessories sold, pricing, deals, toys and family store features, etc.) on repeated customer visits to a bookstore

• Determine predictors of technology adoption

• AlphaCronbach’s test for reliability

Competitive IntelligenceBook Retailers in Brazil

US $3.3 billion book market

Livraria Cultura (“Bookstore culture”)

Saraiva (largest bookstore) might be taken over Amazon?

Over 56.2% of retailer’s revenues come from non-book sales! (USD 399 million)

Indigo should partner with Saraiva online to cash in on online revenues

Book Retailers in Chile

Mostly small internet businesses

E-commerce: small-scale online marketplace for utility-based books!

Conclusion action plan

Go after Brazil now: 3.3 billion US dollar market

Hit the chain bookstores

Seek unique partnerships

Community building is key to sales in Latin America

Translations

Tackle Chile next: as a companion market, following on the heels of Brazil

A good immigrant, and commuter population, urban, literate, but largely ONLINE population

See You IN Brazil 2020!