Ask Ashutosh Pandey, COO, Landmark, how it is to run his kind of store ( or a books, music and gifts store) in the age of e-commerce and he says that while e-retail has got people used to discounts, it hasn't really made headway among customers looking for specific or unusual books to read. But he knows the business is getting tougher - sales have been stagnant, with growth at just 1-2 per cent for the last couple of years, with some stores turning in better growth, some negative.
It's only in the top six cities that e-commerce has made a dent. These being the cities where bookstores were concentrated, it led to tough times for these stores which are either closing down or selling, Pandey says. As for books, it's only the frontlist that e-commerce has penetrated, “so we're not competing for the same books sold online, we have a bigger range.”
Twenty-five years on, Landmark, which changed hands from founders Hemu Ramaiah and Nataraj Ramaiah to the Tatas, believes books will remain an integral part of its offering. The 25 years have seen many changes in the way customers spend time and money on leisure - and Landmark is only too willing to give them what they want, though it will necessitate recalibrating its offering.
The non-academic books market is estimated at Rs 2,000 crore, with organised retail (including e-commerce, excluding independent bookstores) accounting for Rs 200 crore.
The Rs 260-crore Landmark has devised what it calls a ‘Heartland Strategy' to cope with the demands of the day. For over 10 years now, books have been contributing 30 per cent to its revenue and allied categories 70 per cent. Music consumption has changed. The mobile phone and MP3 devices have taken over, so the market for CDs has fallen. So has the market for movie CDs and DVDs, at least for Hindi and some other Indian language movies — the time between the release of a movie, its DTH launch, DVD launch and TV premiere has shrunk so people don't much buy those anymore. What do sell, besides books, are toys and stationery - toys contribute 20 per cent and stationery 10 per cent. Gaming contributes 15 per cent (but accounts for only 7 per cent of the stock).
“We should reduce our inventory in music and home entertainment, the toys and stationery categories are a little underserved. The challenge of balancing lies there,” says Pandey, adding that the older customers will feel deprived. However, “the customer is changing much faster than we have,” he adds.
Landmark will also appoint franchisees to open stores in Tier 2 and 3 cities, something that it has not much experience with. Coimbatore, Kanpur, Kochi, Kolhapur, Guntur, Mysore, Nasik, Tiruchi, Vijayawada and Vizag are on its radar. There is a need for such stores in such places, and they in turn will yield Landmark customers who have not yet made the shift to e-commerce.
Then there's the plan to take the online feature offline, where customers can order and be delivered books that are not available off the shelf.
In fact, Hemu Ramaiah says the amount of inventory is a crucial difference in the management style of individual owners and corporate owners. To her it makes all the difference between shopping at a book store and on the Internet. And India's not even a country that has been affected by the e-book as much as others. “There's no inventory in stores anymore, they only keep the bestsellers. But why should anyone buy bestsellers at the store when they can do it on the Net for a better price?”
Also, Landmark hopes to have more categories on its portal Landmarkonthenet.com, which will help it compete with e-commerce sites which offer a range of categories. Shoppers looking for a wide range of electronics and apparel can be led to other Tata group companies such as Croma and Westside, which are e-commerce-enabled. There is a plan for all Tata group companies to have an integrated shopping portal so that would help too.
Pandey knows survival is going to be difficult. Some industries in retail are “blessed with continuity” (apparel, food) - people will still need to buy them, but leisure options have changed dramatically.
“We're ourselves doing multiple things, moving from books and music to books and toys and stationery. We're the biggest retailer in books, gaming and stationery, second in toys (after Shoppers Stop). There are expectations that we will carry something not available in other categories. We run the risk of veering off course but we have to do it,” says Pandey, who adds that the in-store experience is a crucial element of the strategy.
He expects books to be the single biggest contributor for some more time to come. Publishing is growing 15 per cent, so where's the growth coming from if not from bookstores? From small stores and from smaller towns and cities. It's driven by academic books as well. However, it's equally likely that in a few years, non-book categories may contribute more to sales.
Thomas Abraham, Managing Director, Hachette India, predicts a “big, big churn” in the next 3-5 years. Growth will be punctuated by ups and downs as book retail grapples with inventory management and expansion. It's not e-commerce that's entirely responsible for brick-and-mortar book retail falling sick.
As book stores took off, chains came up, expanded, got corporatised and got things wrong, as selling books is not like selling other products.
He points to successful independent bookstores such as Sapna in Bangalore, Midland and The Bookshop in Delhi - the owners know their clients very well, and carefully measured inflow and outflow, he says.
Landmark began tackling inventory problems with a new approach two years ago. Now there is a central inventory holding warehouse that supplies to the stores based on the rate of sales, says Pandey.
As for the view that few bookstore managers know their customers, he says: “It's undeniable that these stores were started with a lot of passion but over the years, their ideas may not necessarily have stayed up to date.” According to him, expansion demands some standardisation, but in trying to customise products, not enough attention was paid to common likes across cities. This saw stores, including Landmark, hoarding an unwieldy amount of stock, he says.
In the next couple of years, Pandey expects profitability to improve and Landmark's positioning to be clearer. At present, in people's minds, it's a books and music store. There will always be more books than any other category, but what might rake in sales may be something else altogether.
A Landmark journey
Hemu Ramaiah, who set up Landmark in Chennai's Nungambakkam in 1987 and in 2005, sold it to Trent, the Tatas' retail venture, says it changed the way books were bought, distributed and imported. With her experience of working in a small hotel bookstore, she was absolutely convinced a large-format, air-conditioned one was needed. She wanted a store which had a tremendous backlist, with books people didn't know about. Ramaiah now runs Shop 4 Solutions, a retail consultancy she co-founded with husband Jai Subramaniam. Here, she looks back on those days:
It's a different joy for a reader to discover books s/he didn't know existed. Due to lack of exposure, a lot of Indians didn't read. There was a supply-demand issue too.
We had to bring people into the stores, make it attractive, make sure the customers were allowed to browse for as long as they wanted … Chennai being Chennai, it was the right place for this kind of an enterprise — it is a far better market for books. It had the right people, it was the right city and the right format.
There were then only two importers for American and British books, and they had a monopoly for 25 years. There was no connect between the customer in Chennai, say, and the dealer in Mumbai.
We knew what the customers were asking for, so we placed orders after looking at the catalogues, we created demand. Certain books can only sell 5-10 copies apiece, even just one.
We'd get a shipment every week and we'd bring these books through as part of that - and didn't charge the customers for the freight.
We were also the first to have a computerised system for stocking and billing. We built it from scratch and it became an industry standard.
So how is it to view Landmark from the outside today? “Every owner has a different dream for their business. I thought it would be similar to what we wanted, but they have their own agenda. I'm not saying there's a right or a wrong. I wanted a hugely stocked store with a backlist in books, music … whatever category I kept, I had to be the best at that, I wasn't willing to compromise.”
“The browsing pleasure has gone out of people's lives. Writers are still writing, readers are still reading. The middleman has changed and they're not doing their homework right. You just simply need to know books.”