Indigo Drops Prices. Really?

Chapters.indigo.ca was handing out badly photocopied flyers to customers at the cash desk to answer our questions about Canadian book prices. This issue is in the news almost every day now. Torontonians are now becoming a mecca for Buffalo-area merchants, from what I see on the TV.

According to the news, Indigo was selling bestsellers at 30% off. Are journalists not book buyers? Only buy books on Amazon? Just wondering because since when is that price discount new? I’ve even seen Indigo offer bestsellers at 40% off. So this discount, contrary to breathless journalist prose, is not Indigo responding to people ticked off at high book prices in Canada.

I glanced at the flyer as the cashier was ringing up my books to see just what Indigo was doing about prices. And this is what they said.

Problem #1, according to Indigo: “Prices are set by publishers, not retailers, at least six months before titles arrive in stores. Due to the rapid movement in exchange rates, current prices rarely reflect current rates.”

OK, so what was the rate 6 months ago? $0.89. Hmmm…that would translate to a price that’s just over 10% higher. Let’s be nice and go back further to February. It was 0.84, or 16% higher price. Yet, look at this, books are STILL 40% or more higher in price. The last time the Canadian dollar was worth about 60 cents was in 2002. Ummm, surely these mass paperback books I’m buying, which are designed to move quickly, weren’t printed five years ago. The other interesting thing was that one of the mass paperbacks had a drop in price of a buck. Be still my heart. It’s now only 30 % more in price, and the others had no US and Canadian prices printed on the back, like one usually sees.

Onto Indigo’s problem #2: “We buy from Canadian distributors in Canadian dollars, at a trade discount from the same Canadian price you pay. There is no opportunity for us to profit from exchange rate fluctuations.” Right. Indigo has never negotiated with these distributors for a lesser price? Sounds implausible to me, especially given that Indigo has a huge market and the clout to make those negotiations. Indigo’s take is usually 40% of the price of the book. Forty percent of $10 is a heck of a lot better than 40% of $7, particularly when that $10 is worth more now than in 2002. Enough said.

Problem #3: “Canadian publishers, distributors and agents incur costs that are unique to the scale of business in Canada and as such, keeping prices in line with the U.S. is difficult. There will likely always be a differential of almost 10%.” First off, unlike even a decade ago, they’re now in direct competition with US book sellers. Claiming economies of scale will no longer cut it. Second, they’re taking the same percentage of the price that they always have, but now have a bigger market as they can sell to the world through their online store, unlike years ago. Third, unlike US employers, they benefit in their own costs from the big discount of not having to pay for health care. I could go on; but on the one hand, I can sort of see this point, but on the other, times are changing and opening up Canadian businesses to international markets, and this point is becoming less valid.

So what is Indigo doing for their customers? They’re working with publishers to drop the prices. They’re monitoring the exchange rate. (Nice to know they’re on top of things.) They’re increasing their promotional discounts (I saw zero difference when I was in the bookstore, contrary to those easily-fooled reporters). And they remain committed to the long-term sustainability of the Canadian book industry. That’s good. But they’d better get honest about prices, else people will shop online at stores that don’t feature Canadian writers, and what good will that do for “sustainability of the Canadian book industry”?

5 Comments so far

  1. swoononeone (unregistered) on November 3rd, 2007 @ 3:07 pm

    Change is not instantaneous. Store owners buy most of their inventory from Canadian suppliers who are sold product based on, in most cases, a manufacturer price based in US$. This “converted” price have SPOT exchange rates (and usually a cushion built into them if a multi-national hopes to survive) in mind. Everyone for McDonalds to Apple to yes book sellers price discriminate around the world based on distribution costs.

    Should prices go down? Yes. When? Probably when most stores restock and the now par or better rates (Most likely next year after Christmas). The inventory they are sitting on was paid for at a much higher rate. No this isn’t hyper inflation the US$ has tanked 12% in less than two months. For now a few shops will “discount” in hopes in starving off the so called exodus to Buffalo but the drive and the fact that returns, exchanges and warranties are harder to get will mean people will likely stay warm in cosy in Toronto.


  2. talk talk talk (unregistered) on November 3rd, 2007 @ 3:19 pm

    I personally am not going to shop in Buffalo, but books are easy to buy online from the US, if I was so inclined, and aren’t difficult to return. But books aren’t going to be a high return item, unlike electronics for example.

    The reason why I don’t buy the “it takes time” argument at this point — meaning right now in November 2007 — is for the reason I noted in my post: the exchange rate has been well above 60-70 cents for over a year now. In fact the last time, it was close to 70 cents was May 2003, close to 75 cents was August 2004, and 80 was July 2005. I don’t think it takes a full 2 years to adjust book prices, either from a 40% markup to 20% markup, from when the dollar was close to 60 cents to when it was 80 cents; or 4 years from a 40% markup to none. They have been gouging the consumer for the past 2 years as they never decreased the markup at any point, starting from one year after the dollar hit 70+ cents. People have only noticed now because when the dollar is at parity, you don’t have to be able to do any math to see the yawning gap between prices and know it’s wrong.


  3. talk talk talk (unregistered) on November 3rd, 2007 @ 3:21 pm

    Just one more comment: the inventory they’re sitting on now was not paid for when the rate was at 60 cents but at 85 to 90 cents. The price though is based on a 60-cent dollar.


  4. CQ (unregistered) on November 4th, 2007 @ 11:43 pm

    Last year I bought a recent U.S. published cartoon book by a Canadian. Except that I couldn’t find it anywhere downtown!?! So along with a few other items, I purchased it online and at a much cheaper price, with free shipping. And that was via Chapters/Indigo.ca


  5. bookmarked (unregistered) on November 5th, 2007 @ 1:29 pm

    LOL. Thank you for pointing out the insanity of advanced pricing by publishers. I have paperbacks from 2003 that have a price of $7.99US/$10.99Cdn. Yesterday I went to WalMart and found 3 different books priced 3 different ways: $7.99US/$10.99Cdn, $7.99US/$11.99Cdn and $7.99US/$9.50Cdn. If all 3 books were printed in 2007 why do they have different prices? And only one book had a rate lower than the books from 2003! It’s a good thing Wal Mart has switched to the US pricing or I wouldn’t have bothered buying any book.

    I doubt Indigo/Chapters will be in any hurry to offer better pricing. They never do anything significant until Amazon does it first. They keep going on and on about the iRewards card discount but that card does cost $25. I finally gave up the card this year. The promotional coupons weren’t that great. And I would need to buy at least $250 worth of books to break even on the membership. I buy mostly new releases and I can always find them cheaper elsewhere without the limitations of bestseller status.



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