Despite being the dominant retailer in its sector and a well-known brand to its target market, the Co-op Bookshop was facing a double conundrum. First, how does a retailer specialising entirely in university textbooks and learning materials manage to maintain its customers once they’ve graduated? And second, how does such a niche company, specialising in a declining market like hard-copy textbooks, manage to achieve growth? Easy — diversify.
Under the direction of its former COO and new CEO Thorsten Wichtendahl, the Co-op expanded its physical footprint, product range, and digital presence, which made considerable leeway in restructuring its operating model and key offerings. Though this attracted more long-term members, currently sitting at an impressive 2 million-plus, it still wasn’t enough. So the retailer then made headlines by buying out the flailing educational retail chain — Australian Geographic — with plans to revitalise the iconic Aussie brand.
“Acquiring Australian Geographic was a great opportunity for us to bring
two great brands together and focus on extending the value proposition for our members.”
Diversifying for growth
By all accounts, it was a rescue mission. Former owners, Melbourne’s Myer family, announced that the chain was set to close in July 2016 due to ongoing losses unless snapped up by a new buyer, who would save 700 jobs in the process. Seeing huge potential to extend the Co-op’s value proposition, Thorsten jumped at the chance to salvage this iconic retail chain. This was one of many strategic moves that took the Co-op from a specialist merchant, backed into the corner of its niche, to a disruptive player in education retail.
After working with the Co-op as COO for 5 years, and leading the company in strategy and acquisitions, Thorsten focused on improving the diversity of the brand. This included a greater array of products and services, such as university merchandise, accessories, stationery and gadgets, and ensuring textbook sales dropped from 90 per cent of all company revenue to 60 per cent. “Textbooks are declining by 1 to 2 per cent a year, but by selling more of the other stuff we can futureproof our business and become more relevant to our student members,” says Thorsten. “From energy drinks and sweaters, to phone chargers, we’ve got it.”
He also led the considerable growth of the company’s physical footprint, expanding it from 39 stores to 64 nationwide, and increasing turnover from $90 million to $150 million per annum. But still the Co-op’s member reach was failing to extend beyond tertiary education. For years, Thorsten and his team racked their brains trying to come up with an enhanced member value proposition for graduates, until finally the opportunity presented itself.
“Acquiring Australian Geographic was a great opportunity for us to bring two great brands together and focus on extending the value proposition for our members, while allowing the Co-op to maintain its identity as a campus brand,” Thorsten says. While the Co-op is focused on “making university life more affordable and stress-free”, Australian Geographic provides a larger shopping centre brand for which the company will launch the new tagline ‘Feed Curious Minds’.
Targeting lifelong learners
Under previous management, Australian Geographic had become “too much of a toy store”, according to Thorsten, linking the business offering closely to department stores with similar products. By refining its product line and focusing on its core niches, Thorsten says Australian Geographic will become a stronger, more upmarket brand with a unique offering. “Australian Geographic will be number one in telescopes, drones, robotics, programmable games and toys — very niche products you wouldn’t find at another retailer,” he says. “We’re targeting people with a passion for science, technology, adventure, and lifelong learning.”
The acquisition also ensures that the retailer’s physical footprint can continue to grow, with aims to take the chain from 63 stores to 80 in 18 months. “There are 71 Co-op outlets and only around 86 university campuses in the country, so there isn’t much growth potential for a university retailer,” says Thorsten. “Now we can be accessible in major shopping centres too, leveraging both brands’ strengths, and staying relevant to our customer throughout all stages of their life and career.”
The Co-op will also be looking to vamp up Australian Geographic’s digital presence, leveraging the company’s previous developments in this space, with more than 20 per cent of its revenues stemming from digital channels. After all, you can’t become the leading retailer for a market of ‘digital natives’ without keeping abreast of the latest technology trends. “We were one of the first to introduce Click & Collect in our stores. That has been
a great improvement in our customer service over the years and continues to be a growth engine for us,” says Thorsten. “We’re continuing to invest in digital capabilities across our website. We provide e-books, and we are rolling out digital screens though all our Co-op stores instead of posters, which are centrally managed and updated.”
Two brands, one future
Looking ahead, Thorsten says he can only see both brands growing bigger and better, with the potential to eventually add a third brand into the mix. “We aren’t actively looking to incorporate a third brand in the short term, but it is a highly likely scenario in a few years from now,” he says. “For now, we are bringing together the 2 teams, talking about having ‘two brands, one future’.” Despite the challenges that came with integrating two brands, Thorsten says culture remains one of their greatest strengths. “We have a young, hungry, and energised team. We also run a more entrepreneurial and lean environment than most traditional retailers,” he says.
“We’re more like a start-up. We’re very nimble, we don’t have the same unaffordable overheads, and we make decisions very quickly.” When Thorsten became CEO, he says the first thing he did was eliminate the C-suite and replace them with 7 departmental general managers. “Now instead of a CFO, we have a general manager of finance, and so on. Instead of the typical C-level executives, I now have general managers reporting to me directly and therefore we make decisions much faster,” he says. “We have the right team, the right strategy, and the right model to keep growing, and we’re not afraid to take on challenges like rebuilding a business. While every other retailer might be scared, I say ‘Bring it on’.”
He has miscalculated the university students of Sydney. I know more now going to book depository seeing we cannot get many books at point of sale anymore. This is the last time I will be duped into buying books at COOP.