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Oct, 01 2006

Bookstore Franchising - A Refined Business Experience

BELIEVE it or not, but it is a proven fact that \'Books are your best friends\'. Books are the most suitable medium through which knowledge is transmitted, from one person, the author, to many others. Literary marvels, through the ages, are also passed fr

BELIEVE it or not, but it is a proven fact that 'Books are your best friends'. Books are the most suitable medium through which knowledge is transmitted, from one person, the author, to many others. Literary marvels, through the ages, are also passed from generation to generation.

Reading used to be quite intensive during the school days, in the form of syllabus books. Mostly, it is only during the college and the university days that a student can indulge in reading that interests him.

Reading is an exciting way to gain a better understanding of and experience in life. It is best to develop reading habits at a young age which, once formed, last a lifetime.

Unorganised to organised retailing

Today, bookstore retailing has matured with the present organised retail boom. However, earlier, the book trade failed to live up to the expectations as it was totally unorganised right from the time of independence. Shabby shops with inadequate customer support, poor furniture and visual merchandising, and outdated stocks - all led people away from the bookstores.

However, the situation now is much better.

According to Hemu Ramaiah, CEO, Landmark Book Store, "Bookstore retailing is largely unorganised but for the presence of a few chains like Landmark, Crossword, etc. However, there are a few big format retailers entering the trade like Pantaloon, Reliance and RPG."

With the growth in organised retail, almost all industries, including the education sector, have restructured their operating models. Says Sandeep Dutt, CEO, Book Café, "A bookstore provides a hassle-free, white-collar and refined business experience to the investor, unlike some other retailing opportunities like F&B."

The growing cosmopolitanism, rise in disposable incomes, and increased inclination towards reading, have led to the rapid growth of bookstores in India.

Ajay Mago, CEO, Om Book Shop adds, "Bookstore retailing in India has become very popular, especially in the last five years. As the readership goes up, we have more bookstores coming up. Demand for all kinds of books is increasing. Today, we have concept bookstores with good display, sitting arrangements and coffee corners."

Franchising a bookstore

Franchising has worked well for bookstores, and has proved to be a very successful mode for business expansion.

Dutt opines, "Franchising is no doubt the fastest and least expensive mode of expansion for any company."

Mago believes, "Franchising plays a vital role in bookstore expansion as the investment gets divided between two parties."

Ramaiah believes otherwise, "Bookstores require enormous levels of control over merchandise because of the uniqueness of their products and hence we prefer to grow through our own outlets."

Key bookstore franchises

Some prominent players that are into franchising are the following.

Oxford Bookstore

Launched 80 years ago in Kolkata, the bookstore is in expansion mode and is adopting the franchise model. The bookstore will launch in this financial year franchise stores in five cities, ie, Guwahati, Kochi, Nagpur, Ahmedabad and Pune. Two formats are being considered for the franchised bookstores: one, a downtown Oxford bookstore model, which would be centrally located in metros; and the other model would have the same look and feel of a downtown bookstore, but the spend per square feet would be a lot less.

Oxford Junior in Kolkata was a pilot project with books ideal for children upto 18 years. Oxford Express, spread over 500 sq.ft., would be a newsagent bookstore. The first one will come up at a shopping mall in Bangalore and the second at Fame Adlabs in Delhi. There could be a deal with a national chain of multiplexes.

Crossword Bookstore

Crossword opened its first bookstore on October 15, 1992, at Mahalaxmi, Mumbai. The current promoters, Shoppers' Stop Ltd, India's leading department store chain and ICICI Ventures, part of India's leading financial services group, took over the company on 31 March 2000. Crossword has grown to 16 stores in six cities with a mix of company-owned and franchised stores.

Capital Bookstore

Targeting major cities across India, Capital Bookstore has 27 stores in 11 major metros and mini metros, and opening six new stores every month. The preferred location is high traffic areas such as malls/multiplexes or shopping complexes and the shop-in-shop option. The investment ranges in infrastructure from Rs 1 to 2 lakh and in stock from Rs 2 to 4 lakh. The area required is 150-200 sq.ft.

The Corner Bookstore

After taking Delhi, Mumbai, Pune and Bangalore by storm, The Corner Bookstore has made its entry into Chennai by opening its first store on Khader Nawaz Khan Road in Nungambakkam. The Corner Bookstores in Barista coffee shops have teamed up with the coffee company to give a unique drink, browse, buy experience to the shoppers. The two have plans to launch 30 stores in Delhi, Mumbai, Pune, Bangalore, Chennai, Hyderabad, Kolkata, Chandigarh, Jaipur and Ahmedabad soon.

Books and Beyond

RPG Retail will foray into books retailing with the launch of its own bookstore, Books and Beyond, by October this year. Books and Beyond will follow the Music World strategy for its expansion. The outlets are to occupy spaces between 15,000 to 18,000 sq.ft and will also include the concept of a bookstore with a café.

The first standalone outlet will open in Kolkata before moving ahead with a pan-India expansion.

Landmark

Books and music retailer Landmark pioneered the concept of family-centric multi-product leisure stores that cater to the needs of all the members of the family. Landmark presently, has five physical stores. Each store is distinct in appearance and architecture and is designed to complement its local surroundings while utilising certain standardised specifications to increase the speed and lower the cost of new stores. The company estimates to grow from the current revenue levels of approximately Rs 80 crore to 250 crore during the next three years.

Business prospects for SMEs

One of the main prerequisites for a bookstore franchisee is literary taste and a love for books.

According to Mago, "Bookstore franchising has a good future in India, but one has to have good experience and a right plan to execute things."

Similarly Dutt believes, "Bookstores provide an excellent opportunity to a typical investor who would like to take up a socially high-end business opportunity. Commercially, the prospects are good with low investment and appreciable returns. It is best suited as an add-on to an existing retail activity like a music shop, café, restaurant, or a gifts or even garment showroom."

Organised bookstore retailing is fairly profitable. However, there are challenges. It requires more personal attention and the gestation period may also be a bit longer.

Considerations before selection

There are certain factors to keep in mind before opting for any business, including franchising.

Dutt suggests, "Before selecting a bookstore franchise an investor must look at the demographic profile of the market. A bookstore will surely do better in a market or location that has a high proportion of families coming in. The education level too, without doubt, is an important consideration. A good presence of schools, colleges and other educational institutions will be a plus."

"Well, there are no specific qualifications for a potential franchisee, but he should be educated enough to manage a bookstore franchise and educated enough to read the customer's mind and market trends says Mago."

Creating an atmosphere to read

Reading requires concentration, for which a particular setting is required. The organised bookstores are not just offering books but they are offering a kind of environment where people can have a look at the various sections of books, read them and spend some time in the store.

Elaborates Dutt, "A typical book lover usually likes to spend lots of time in the shop and hence the entire shop layout and ambience must be designed with great care."

The shop-in-shop concept in book retailing has gained ground in the past few years. A bookstore with a cafeteria is a successfully tested model for bookstore retailing both in India as well as internationally. Another concept that can be applied to this business is that of MBO (multi-brand outlet).

Challenges in the sector

Dutt highlights one of the major challenges as designing the layout of the store, "It should be done in such a manner that it gives the customers an easy and comfortable shopping experience. The ambience should be appealing to all the five senses. The furniture and fixtures must be set in a manner that provides the best display of the stock."

Mago informs, "Finding an appropriate franchisee who can manage a book store efficiently is one challenge. Location also plays a very important role."

Another aspect is carving out a separate brand identity for the franchised bookshop from the franchisor, and making sure that there is no negative rub-off of the host brand on the franchise.

Successful business model

The best and most successful model is that of an independent bookshop. An independent bookshop is always a preferred destination of a book lover.

A shop-in-shop or MBO always counts on impulse buying. Still, to get the best of both worlds, co-location can be profitable. A shop-in-shop does provide great value addition to each brand and helps in cutting capital expenditure and other overheads. So while two or more brands can work together in the same premises, they should ensure that the store is designed so that each of them has a completely separate and different workspace.

Today, there is no foreign company which offers a franchise in India. In fact, book franchising in India is still in a nascent stage. However, the reading habits of Indians are growing substantially due to the rise in education levels and awareness. More and more children are also entering into the world of books, moving ahead from the usual comics.

At the end Mago believes, "So far the success rate of bookstore franchising is over 60 per cent. I see a bright future for it and we are working towards it."

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