The Hindu Business Line : Clued in to Crossword

Crossword's secret of success is not to just offer a wide range of products, but to create an ambience that would get the customer to spend more time, and money, at the store.

HAVE time and too many clothes? Want a coffee and perhaps a stroll ... all in AC comfort, and soft music? Well, today's bookstores have changed the way anyone will think about books and the shopping experience.

So what has shifted shoppers' loyalties to the upmarket bookstore? According to R. Sriram, Enterprise Facilitator, CEO and Managing Director, Crossword Bookstore Ltd, a lot. Besides books, `cool' AC comfort, better layout, more space, nil "brush factor", a place to sit, have a snack, even toilet facilities.

For Sriram, the learnings came with setting up Landmark, now one of the most popular book, music and gift stores in Chennai, as a store selling books in air-conditioned comfort. It proved popular in Chennai, known for its sultry climate. In December 1987, when Landmark was started, this was almost unheard of. And perhaps as an afterthought, the store added music. Sriram says there was no clear plan on how to `evolve' the store, even where design and layouts were concerned. The management more or less looked to the customer for what was expected and what would make for a pleasant change.

Besides, the great variety in product offerings — greeting cards, stationery, toys — also made a difference. "What Landmark tried to offer was a wider range of products than existing bookstores."

In fact, about two years later, when Walden, a similar store, came up in Hyderabad, music was added. And in 1992, when Crossword was set up in Mumbai, the learnings generated from these two stores were implemented. Sriram insists that most of what has happened was the result of constant innovations. The idea then was to position the store to cater to existing buyers and to increase the number of new buyers. Not new, for any business.

But, creating more value for the customer's time, increasing significantly the store's offerings, providing areas to sit and browse, little baskets and trolleys to hold books are some of the value-added services that, though not too obvious, create a harmonious atmosphere. He says it is more of creating a `wallet and watch' situation, where, if you can get a customer to spend some time, you are likely to make a sale.

Innovations, and a constant stream of them, are what Sriram says make all the difference to business. And the innovations are the product of the constant internal studies that the chain of stores undertakes with the help of its over 35,000-member Book Rewards Programme.

At Crossword, the marketing team has a clear programme — coming up with a certain number of events at every store every year. Bringing up something new constantly also encourages customers to frequent the store more and even take part in activities. Children and children's books are an important part of the store make-up. In fact, new management recruits per force have to conduct a survey or begin their career at Crossword by doing studies or promotions. They watch and interpret customer needs, even studying the demographic and other data collected from members of the Book Rewards Programme. "The continuous feedback is essential to stay in the loop," says Mr Sriram. "In return, customers vote with their feet."

Innovation in design affects space, stocks and people. Retailers have to make key investments in this aspect. Crossword assesses its use of space with the GMROF (gross margin return on footage) — or margins per square foot. Typically the margins are 25-30 per cent for Crossword outlets.

Customer psychology

For the store, a lot depends on how books are placed, comprising the high-and low-impulse sections. The high-impulse-high-browse segment, typically found at the back, comprises sections on management, self-improvement, cuisine, philosophy, religion, classical literature, and more. Low-impulse-low-browse segment, towards the front, comprises bestsellers and books that take very little time to be picked up. This, Sriram says reduces the "brush aspect significantly. It irritates customers when spaces are crowded and someone constantly brushes against them ... which also spoils the mood."

Another interesting aspect is `adjacencies'. For instance, the placement of travel books next to management books, as many businessmen are also travellers. Understanding buying readers' psyche is very important. Information from the Book Rewards Programme is shared with franchisees.

Book habits

An interesting study it has undertaken is of plotting reading habits of various age groups. It found that children between the ages of four and 12 developed reading habits and sustained them, with these habits intensifying at age 12. However, at around 12 years, there is a different pressure on children — that of the academic. So the `reading' habit slowly declines all the way up to 21. By age 21, these `children' have graduated and are either entering their first jobs or preparing for higher studies. This is when interest is rekindled. Some of the hot favourites that are bought are books on self-improvement, grooming and knowledge-oriented books.

The buying picks pace till the consumer hits 35-40 years. Hereon, book buying can plateau, or dip. It could pick up at retirement or just slow. This is because of the retired lifestyles, perhaps poor eyesight and interest in books may have waned to some extent, or readers are re-reading the books that they like.

A large number of the company's Book Rewards members comprise the reasonably well-educated — mostly post-graduates and the professionally educated. Post-graduates and MBAs were found to be among the largest book-buying segment. It could be, as Sriram says, the result of realising that the more you know, the more you realise how little you know.

Expansion plans

Crossword is planning another store in Kolkata in the near future, but the ultimate plan would be to open a store in every town/city that has a population of over one million people. The company sees much potential. While the Net could provide instant results in terms of information, greater and more comprehensive information could only come from books. Interestingly, the number of fiction books published and sold account for 30 per cent and 70 per cent of the books are non-fiction. Clearly, there are perception changes from fiction to knowledge. Some of the book segments showing growth were children's books, fiction, self-improvement and grooming, Vaastu Shaastra and Feng Shui. In fact, the store sells 15,000-20,000 copies of Who Moved My Cheese annually.

Publishers do little to promote books and so it is left to the bookstores to do so, says Sriram.

Typically the 5,000-10,000 sq. ft. Crosswords have 30,000-50,000 titles, representing 30-40 subjects; while the Crossword Corners (CC) stock about 1,000-2,000 titles, covering 8-10 subjects.

The store also targets an average size of 4,500 sq. ft. and Sriram says that it is a measure of a store's success and profitability when franchisees double shop floor space, as has its Ahmedabad store. It started off with 4,500 sq. ft. and now has a carpet area of 13,000 sq. ft.

Sriram says success in the book-selling industry is all about access and distribution in places customers are likely to be or frequent. This is where the market is and demand is to be created. Despite the recession, book lovers are not likely to totally do without their purchases. A certain percentage of sales are also accounted for by academics.

Crossword Corners

Perhaps helping things along are the Crossword Corners. They are mini-outlets of about 500-1,500 sq. ft. These, Sriram says, are more of convenience stores. Customers, he said, would not go to small stores for more complicated purchases, they are likely to enter the Corners for impulsive, quick, convenient book purchases. It has five of these stores and is planning to raise this number to 15 in two years. The estimated cost, he said, would come up to Rs 1,000 per sq. ft. for furnishings and fixtures, and Rs 1,000 per sq. ft. in stocks.

The retail turnover was Rs 31.5 crore this year, and the store is hoping to raise this to Rs 40-45 crore this year. Crossword is trying to tie up with large lifestyle stores such as Westside and Pantaloon which also offer multiple shopping choices, to set up Corners. There are CCs already at some Shoppers' Stop outlets and Piramyd. It is planning to launch CCs at railway stations and airports.

He adds that the CCs have been a successful concept and their profitability stems largely from the clear financial parameters the company sets regarding new ventures. As a model, the CC has to deliver 100 per cent return on capital in the first year. Even before the budget for the store is approved, it has to convince the management that the return on capital is total.

The "guesstimate" is that in Mumbai, one of its most profitable markets, Crossword has a 20-30 per cent share of the market. However, the market is fragmented because of the presence of a large number of small players.

Sriram says there is little competition in the organised sector and Crossword is mostly keen on competing for the customer's `watch and wallet'. He said even such an event as the Cricket World Cup saw sales dip. However, the number of market players is still small, the Indian market has enormous potential.

Bonus points

However, the bonus points count too. It has become a `family' place. And some of the positives in the exercises are that there are plenty of vacation and other activities for kids. Every fortnight, two authors, including one for children, are invited every fortnight in the Crossword Author Focus. Most events are geared towards building reading habits. Services like Dial-a-book, Fax-a-book and Email-a-book allow customers to shop from home. And payments are made on delivery. Also, the store has cross-offerings with Shoppers' Stop to pep up offerings to customers.

And finally, it offers new wordsmiths opportunities — the Crossword Book Award was instituted in 1998, with a cash prize of Rs 2 lakh, to recognise and reward the best of Indian writing. In 1999, it added a new category: Indian Language Fiction Translation into English and increased the prize to Rs 3 lakh for each category.

Since its inception on October 15, 1992, Crossword has received wide recognition for its achievements; articles on retailing in India invariably feature Crossword. It has been featured in Advertising Age International, USA, as one of the Marketing Superstars for 1994. The Bookseller, UK, has also described it as `being on the cutting edge of retailing' in India. Crossword's promoters are Shoppers' Stop Ltd (51 per cent) and ICICI Venture (49 per cent).

About the threat from foreign book chains, Sriram said that only Border had successfully expanded overseas — US, UK, Australia and Singapore. However, key for any chain to set up and succeed in India was the need to understand the local market, its customers — who now comprise an evolving, eclectic mix.

However, it is obvious that Crossword is doing things the global way. The shop-around-the-corner model, the café, music and an eye on customer comfort. He estimates that two million customers frequent the stores, with one million books sold, every year.

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