As the dust settles on the Indigo-Chapters merger, Heather Reisman, president and CEO of Indigo Books & Music Inc., the new conglomerate comprised of the old Chapters and Indigo, still manages to inspire a wide-range of emotions from members of the industry. For the most part, they remain positive. Some even credit the businesswoman with saving Canada's book industry, which was spiraling out of control.

For her part, Reisman appears to have weathered a particularly trying year well, despite being dogged by the media and scrutinized by the federal government as well as industry members. Reisman stands by her vision for the new book chain, which she says is coming along "fantastically well."

"We're extremely positive about having the two organizations come together. In a general sense, the company today is truly a merged entity as far as the operations and the management go, but of course with four brands in the marketplace," Reisman told PW in a recent interview. Reisman is committed to maintaining separate brands in Canada's retail market, including Chapters, Indigo, Smith Books and Coles. Unlike Chapters' previous owners, Reisman plans to keep most the 200 mall stores, and last year began working on redesigning them and improving their selection.

Although the book industry in Canada can hardly be discussed without her, Reisman does possess a life outside of books. She has four children and three grandchildren, whom she describes collectively as "an unbelievably important part of my life." She maintains several community commitments that are important to her as well.

Reisman began her career as a social worker but before long, she gravitated toward the business world, opening Paradigm Consulting Inc., which she ran for 17 years. In 1992, she became the president of Cott Corp., a private label soft drink maker, but left after two years. Yet books always remained important to her.

"I have been a reader since the time I was literally a child, three and a half years old. I love, love books," Reisman claimed, adding. "I read fiction, I read biography, I read mystery and I read certain nonfiction books... In general, in every genre, I have my favorite writer." The Indigo CEO is up-to-date on current titles and raves about Crow Lake, a novel by first-time novelist Mary Lawson, which she recently finished. "I think she is going to make a phenomenal introduction on the scene." She also recently finished a big American title, The Emperor of OceanPark by Stephen L. Carter, published by Knopf, which she also describes as "phenomenal."

Attention to Individual Stores

Reisman maintains a strong commitment to the stores, personally visiting every one on a regular basis. "There are 300 stores in all and I generally like to get to almost every store in the course of the year, and there are several stores that I visit many, many times. I spend about 25% of my time out in the stores," she admitted.

While she is very involved with the operations of individual stores, Reisman insists that individual store mangers have the opportunity to promote titles that are of local or regional significance.

Reisman finds it hard to say what the ideal number of stores would be--a matter of intense interest to the industry--but she does disclose that there are five or six superstores that she is considering closing or downsizing over the next year or so. Some of those half-dozen stores were part of the group of stores that the trustee assigned by the Competition Bureau was unable to divest. "There were 14 large stores in that list and we would certainly not divest all. There are several that we would be very happy to support and maintain, but there are a couple in markets where we are over-stored, and in those cases, we'll look to either close or downsize. But we haven't decided yet."

Indigo-Chapters does not plan on any new store openings, nor can it;. the company's commitment to the Competition Bureau restricts it from opening any additional store for 24 months. "As I look at the market right now, I think the idea is to improve what we have, and not necessarily open more," Reisman said.

Discounts and Sales

Although the stores do not sell display space, Indigo does engage in special financial arrangements with publishers if they decide to promote a particular title.

"We do not sell display space per se. What we do is pick--through a very vigorous selection process--books that we feel we want to promote. And when we decide we want to promote a book, if we're going to make a big commitment to it, we will go and negotiate a special deal with the publisher. It is an inverse of that process [selling display space]. A publisher cannot come to us and say, 'I want to buy space in your store.' No publisher can do that. We have to decide--and every table is deliberately thought through--what story we want to tell with that table, what we believe in promoting. Under those circumstances, we will go to publishers and discuss special deals or support of some kind," Reisman explained.

At Christmas time, they introduced a new discount scheme called "deal of the month" for specific titles. In this scenario, the chain asks publishers to participate in a sale where certain titles are marked 40 % off, a discount the chain shares with the publisher. "That's had a tremendous response and we are looking to increase the number of titles in that program. At least two books get marked down, and next month the deal will extend to children's books," said Reisman.

Indigo also maintains 40 books on its own bestseller list, which are discounted 30%. It also tries to rotate the books on the list so that patrons have a choice of books to buy on sale.

In light of the fact that the former Chapters had a somewhat tumultuous relationship with publishers, to put it mildly, Reisman makes a concerted effort to maintain close ties with the publishers across the country. "I work closely with a number of them, and although I don't make the daily buying decisions I am quite involved in our relationships with publishers." Currently, Reisman is also committed to the industry's supply-chain redesign initiative, sitting on the steering committee with the publishers.

Commitment to Canadian Books

Reisman says she is a big fan of Canadian books in particular, and plans to further focus on promoting Canadian titles in her stores in the future. "We do have a big commitment to Canadian fiction and we're actually looking to increase our commitment to it, but not to the decrease of something else. I'm finding that there is just an unbelievable selection of Canadian writers right now bursting on the scene. Lynn Coady and Donna Morrissey and countless numbers of others, so it seems like it's going to be a very good time for Canadian writers," said Reisman.

Some publishers, specifically smaller, more esoteric ones, fear that the new Indigo will not allocate space in their stores for less-mainstream titles. Reisman tries to allay these fears by creating what she calls "super selections" in selected stores. "What we are actually going to do is create what we call 'centers of excellence' in certain stores in certain markets. Take philosophy or poetry--categories that tend to sell somewhat less; every store will not have the ultimate selection because it just wouldn't work, but we are going to look to create super selections in certain stores in certain markets so that we can expand the participation of some of the more esoteric, experimental books. That's a big initiative for us this year," Reisman said.

Reisman acknowledges that in the months immediately after the merger, some titles may not have received the attention they deserved, but says the company is working to remedy that situation.

"For the most part, I think publishers are beginning to realize, as we battle through some of the challenges we inherited when we first acquired Chapters--and there were endless challenges--that perhaps some things didn't get much attention at the beginning, like the more esoteric lists. But now as we are through the first major part of the turnaround, we're starting to pay a lot of attention, and I think publishers will begin to experience and appreciate this."

Sales and Returns

Careful not to divulge too much financial information, Reisman did admit the chain had a couple of challenging months but is convinced the future looks brighter.

"September and October were challenging for us, but November and December were very good. We had a very good Christmas quarter. We're very satisfied with sales. We can see progress in the right direction.

"Third-quarter results were very good, ahead of what we anticipated. Our fourth-quarter results, which we are just about completing, we feel very satisfied with."

Regarding returns--a major bone of contention between publishers and Chapters' former owners--Reisman claims she's doing the best she can. "The first seven months after we acquired the company, we were pretty much stuck at the level of returns that Chapters had started, and also with huge problems with the inventory. But this year, we will be reducing the returns by a significant amount; we're looking to get down to 20 % within the next 24 months," she said.

Reisman said she wished she could make all the problems she inherited disappear, specifically relating to Chapters' inventory and relationship with publishers, but it's been challenging. "We would like to fix everything instantly. We've really started to make improvements, but nothing like the kinds of improvements I think will occur in the next 12 months."

"A Book Lover's Cultural Department Store"

Some publishers have expressed dismay with the amounts and variety of sideline businesses utilized by the chain. Reisman dismisses the critics by explaining her motive: to create havens for book lovers. "We always thought of ourselves as being here for people who love books, recognizing that those kind of people might value other things in the same environment. Music is obviously a part of that. In my mind, I sometimes think of it as a book lover's cultural department store. That's why certain gift items make sense to us," said Reisman. "That includes nice paper."

Last month, Indigo ran a yoga program, in which they featured specific titles and sold yoga balls and other related equipment. "People loved it. And there were tremendous books on yoga that we wanted to highlight and this allowed it to tell even more of a story," Reisman claimed. "It's about books first and foremost and it always will be, but when there's an opportunity to expand the experience, we'll look to do that."

The Couch Fiasco

A couple of articles in local papers have derided Indigo for disposing of their comfortable couches. A Web site, was even launched in protest, claiming, "Canadians have stood for the monopolization of literature. Canadians have stood for the predatory elimination of small bookstores and publishers. Canadians have stood for corporate censorship. But Canadians will not stand for the removal of the chairs and sofas!"

Reisman disregards the rhetoric as a tempest in a teapot. "Frankly, it's one of these things where a few radical people are trying to stir something up. If you compare the amount of seating in an Indigo or Chapters with any Borders or Barnes & Noble, we have way more seating. Indigo has the same amount of seating since the day we opened. In fact, we've added seating," claimed Reisman.

Reisman said they exchanged some of their soft seating for harder chairs primarily because the public was misusing them. "In some Chapters stores, there was a huge amount of seating and some of this seating was being so abused. Literally, we had staff crying because people were sleeping in the chairs, there were people living on the sofas. They asked if we could replace them with library chairs, chairs that would be comfortable to sit in to browse, but not comfortable enough to move in and stretch out on," she explained.

The chain complied with the staff members' requests and views the changing of chairs as a method of making the stores more fiscally healthy. "We have to make this a business. We have publishers to pay and rents to pay. It will be a long time before we as investors get any return on our investment but we at least have to build the business back to be solid."

Heather's Picks

In many ways, Reisman is becoming known as something of a book celebrity; radio commercials feature the CEO touting her latest favorite titles. But Reisman insists the picks are genuine, and not just a public relations gimmick. "These are my books, they are my personal favorites, and as a matter of fact I have to love a book to bits to pick it. We have been doing this as a formal program for about five months, since December, and the last two months we have had a phenomenal response to the books that were selected," she claimed. Yet Reisman doesn't feel the commercials are extraordinary in any way, since she has been promoting her favorite titles on an informal basis to friends for years.

Is Reisman Canada's answer to Oprah? She doesn't think so. "I don't like to think of it in those terms. I am highly respectful of what she's done. But because I have been recommending books to my friends literally--there has been a Heather's list for probably 30 years--this is sort of an extension of what I do anyway. I'm doing it not just for books but for music as well."

The chain's Web site is also important, and Reisman is committed to enhancing and improving it .

"I totally believe in the Internet as a vehicle for book purchasing--for 10% of the market. It's about 4% now. I've always believed in it," said Reisman. She says the chain has spent the year restructuring so that the site could break even. She now feels the chain is in a position where it can start expanding its Internet operations again.

The Way Ahead

Despite the obstacles of the last year, Reisman has high hopes for the future. "I am cautiously bullish on our industry. I believe consumers value their opportunity to read books. I think to some extent customer demands are evolving, so that along with fiction, which was always so important, nonfiction is playing an increasingly important role. As people do what I call 'life learning'--whether yoga, feng-shui, the Internet or writing--I think there is a greater awareness of the world around us. and that translates into a greater demand for well-done nonfiction.

"Consumers are more demanding and want more valuable information and a more careful selection of books and that is our responsibility to them," Reisman continued, "That's a big part of where we will focus--to improve selection on a store-by-store basis."

"I'm also positive about the relationship being built with publishers. As we get stronger, that will be an important contributor to strengthening the publishing community. I see that light at the end of the tunnel, and I see us emerging into a very strong period. I am cautiously, respectfully bullish," she laughed.