From the source: Steve Cox, Dymocks
Steve Cox is managing director of Dymocks, a position he has held since February 2012. He has held various roles with the book retailer since September 2010. Prior to his Dymocks’ appointment, Sydney-based Cox held roles at Specialty Fashion Group, Jeans West, and enjoyed a six-year stint at David Jones.
COMPANY PROFILE: Dymocks
With a 137-year history dating back to 1879 when a young William Dymock launched a book store in Market Street in Sydney’s CBD, Dymocks is Australia’s oldest book retailer. In 1922, the Dymock family purchased the site of the old Royal Hotel on nearby George Street, upon which was built the historic Dymocks building, which has housed the retailer’s head office and flagship since being completed in 1930. Today, Dymocks has 60 stores Australia-wide.
Justin Grey: How has business been this financial year for Dymocks?
Steve Cox: Business has been really solid now for the past four years. We’ve had solid sales growth for every one of those years. This year, again, is positive. A good, strong Christmas. We would have been close to record numbers for last Christmas, if not record numbers, across a number of the stores. There was some good titles out … the stores were well positioned to capitalize on that. I think this year is going to be another huge Christmas, because obviously we’ve got the full trading week this year. Profit results are very strong for the business as a whole. Nothing is easy out there by any means, but fundamentally the trade is solid and we’re seeing some good growth across Australia. The book market is seeing growth as well, which is an exciting thing, because we were very much against the trend. The book market was heading south and we were still posting positive growth.
JG: How dependent is a bookstore’s trading performance on the number of big releases that are scheduled in any given financial year?
SC: Fundamentally, week by week sales are influenced significantly by major titles and new release titles. Having said that, each of the years, there tends to be something big running at some period of time, so whether it was Hunger Games a number of years back; 50 Shades Of Grey; last year it was all about adult colouring books. So part of my challenge is, ‘where do we find those sales from in the year ahead?’.
The sales will be spiked by individual titles, but we still look at it beyond that. We look at more across the financial year, and understanding where those peaks and troughs come from from releases from the previous year, making sure that we’re aligned and can anniversarise that, and that there’s something in the calendar to meet that. And the publishers are doing exactly the same thing – they’re very, very mindful that if they had a bestseller last year, they’re looking for the next one for the year after. We’re a full range bookseller, so we’ve got that bread and butter business that just churns through the year, and then it’s topped up by the front list ones, some of which are bigger than others. Then you just take the swings and roundabouts depending on week by week. Book retail is a reasonably consistent picture throughout the year. There are small increases around Mothers Day, slightly bigger increase come Fathers Day. It’s all about Christmas. Christmas is a big for book retail.
JG: Where does Dymocks sit in the Australian book retail market?
SC: We’re a percentage of the Australian book market. We’re the biggest specialty bookseller in Australia, but there’s still a lot of books, week by week, that customers are choosing to purchase from other places. We’re all about thinking about what the customers are looking for, making sure that we’re the brand that they think of when they think about buying books or book gifts.
JG: What non-book categories would you look to put into the business to bring new customers to Dymocks?
SC: A modern bookstore has got to be, obviously, a full and great range of the best books, and that’s really what our business is about. At the same time, if somebody is in a bookstore, they’re either buying something for themselves or a gift for somebody else, so it makes sense to have adjacent non-book related products. So book lights, bookmarks, all those kind of things, or cards, wrap, stationery, journals, those kind of things. They all fit very comfortably within the bookstore environment. For us, non-book is a growing part of the business. It’s an important part of the business, but we are very, very mindful of being the world’s best bookstore, and non-book ranges that complement that. I think I’ve seen some independents start selling coral necklaces and jewellery. Borders, when they collapsed in the Australian market, were selling barbeques and all kinds of things. That didn’t quite relate to the core reason why customers had come into their stores. That’s the balance you have to find. There is certainly plenty of growth to be had for the business by getting the non-book ranging better and better.
JG: Are people generally still buying as many printed books as they were before Kindles and e-books arrived?
SC: Globally, books are absolutely on the way back – they’ve been growing strongly. The Australian market, if you look at the numbers, the last two years there’s been value growth in book sales. Part of the challenge is understanding how much is coming in from overseas. There are a lot of books coming in from overseas today, so it’s difficult to get the exact measure about how big the [local] market is, and how much it’s growing or not growing. Fundamentally, the last two years, and this year again, the book market is growing, and showing good growth within Australia. And that’s physical books. Globally, e-books have plateaued early – and in fact declined in most developed markets. There’s still plenty of growth in the later markets to pick it up, but you know in the States, the UK and certainly parts of Europe, e-books are on the way back down. They probably peaked sort of 25 per cent of the value of books, but they’ve shown declines certainly over the last 12 months, and probably about the last 18 months, whereas print books are growing again. Virtual books are useful for travel. They’ve got their space, but fundamentally, people are definitely moving back to and showing strong growth in the physical item.
JG: What would you put that trend reversal down to?
SC: Books, the physical item, has a lot of benefit that the digital item can’t necessarily translate. Also, the way that people consume books is different as well. Most people have a few books on the go at any one moment in time. You’re not getting through them on a daily basis like you are the latest Madonna album or something like that. It is consumed in a different way. It’s not two hours of sitting in front of a TV or downloading a movie and watching the movie and that’s the end of the experience. There’s an investment in time, and there’s a reason why you’ve got that book, whether it’s for personal growth or education or entertainment or whatever it might be. It is a different medium to those others. I think that’s why it’s been far more resilient to the digital approach than perhaps some of the other mediums have been. That could all be disrupted and change again, but as we sit here today, e-books are on decline, physical books are growing again.
JG: What percentage of Dymocks’ sales are e-books at the moment?
SC: They’re a small part of our business, [but] they’re important. We’re Australia’s leading book retailer. People, when they come to us, are going to want to be able to buy e-books, and they can. But it’s not a large part of our business. Certainly the biggest part of our business is the physical market, and it will be for a long period yet. We’ve worked hard to make sure that it is a compelling offer, and that if people buy e-books from us they have a great experience and that it’s easy. But they’re not a big part of our future growth strategy or anything like that. The growth is really coming out of more of the physical books, non-book, that kind of space.
JG: Do you expect Dymocks’ e-book sales to remain static?
SC: I think we’ve still got plenty of growth in e-books, because we’re coming off a pretty low base. We’ll get growth out of e-books, but it’ll still be a relatively small part of our overall piece. But we’re starting from a really low level; we haven’t had a lot of e-books in the past. Globally, there’s a peak; it’s going to be no more that 25-30 per cent of the total book market.
JG: What percentage of Dymocks’ sales are coming through your website?
SC: That’s been a challenge over these last few years. We’ve sort of re-plat formed and done a lot of work on improving the customer experience in the digital space, mainly about positioning ourselves for the future. The old platform, we couldn’t do the things that we wanted to do with it. There’s been some pain in that transition, but we’ve been through that now. We’ve got some really, really strong partners in the market that work with us in that space. It has been growing at a tremendous rate. We’re getting very, very, very high double-digit growth through the website. It’s accelerating, our customers are responding, the feedback is getting better all the time.
JG: What other challenges are unique to book retail?
SC: If you think about the book market, it’s actually pretty complex. The total number of books in print, that are available at any time, is up around 20 million. You compare that to most retailers who, in the digital space, maybe, if they’re big, it’s a few hundred thousand SKUs on their database. We’re sitting at 18 million SKUs now. It’s quite complex. You have to invest in mastery of the information. Right now we’re doing a lot of work in that space to improve our product data management, and we’re doing a lot of work in the customer space as well, to continue to improve our customer data management.
If you’ve got strong product data, strong customer data, and then a really solid foundation platform to bring that to life, digitally, on an online experience, then you’ve got foundations to really start to drive change. We’ve been working very, very hard to make sure that we’ve got really strong foundations in place, and the ability to then move on from that space.
JG: How does a legacy business such as Dymocks deal with digital disruptors, such as Booktopia?
SC: Booktopia is a very small part of the Australian market. Amazon is far and away a much larger part. I encourage local Australian booksellers, whichever format that they’re doing, and a strong competitive marketplace is in everybody’s interests. We’re getting even more growth through our online channel now than those guys are in the Australian market. But we’re coming off a much lower base in that particular space.
Really, the competitor in the online space is the Amazons and Book Depository that we’ve been competing with over many, many years, and the nature of that competition will evolve over time. The Amazons will come here and set up warehouses over time – that will happen at some point. Exactly when, no one quite knows, but it could be sooner rather than later.
JG: What do you make of the physical bookstore that Amazon opened in Seattle recently?
SC: We’ve got somebody who’s just come back from visiting that store, and reviewing the customer experience at that store to dissect what was the experience there, and what wasn’t. It’s interesting – even Amazon, with all of its size and its focus on growth as opposed to bottom line profitability, are looking seriously at the physical space, and how they can engage with customers in their physical space.
Our great competitive position is our physical stores. They’re locally owned and operated, so most of our stores are franchises. These are people that know the people in the local community. They’re part of the local clubs. When people come into their stores, they’ve got the book saved for that person. They offer something that is not possible to be offered in the digital space, to that level.
JG: How many stores has Dymocks are in the Dymocks network at present?
SC: We’ve got 60 across Australia. [The store count] has been relatively stable. We grew a few, lost a few. Like all retail, leases come and go at various different periods of time. You might lose a couple and you gain a couple. It’s relatively stable. Certainly not in high growth mode at this moment in time, but we’re just about to open the Chatsworth store – a brand new store. We’ve got another couple of stores that are in the pipeline at the moment.
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