Businesses can learn much from Dymocks' 130-year retail evolution, writes Belinda Williams.
There are many lessons to be learnt from a notoriously gloomy prediction made two years ago that online shopping would see the end of Australian bookshops.
"In five years, other than a few specialist booksellers in capital cities, we will not see a bookstore; they will cease to exist," then federal small business minister Nick Sherry stated at the time while launching a program to encourage small businesses to expand online.
Today, Dymocks bookstores are still standing. In fact, the bookstore claims to have sold more books last year than ever before.
But customers' reading appetites cannot be solely credited for the 130-year-old bookseller's endurance. The collapse of REDgroup (parent of Borders and Angus & Robertson chains) saw the abrupt departure of Dymocks' footpath competition.
It created breathing space for those left behind, but did not guarantee longevity.
Dymocks was taken over by former BRW Rich 200 list veteran John Forsyth (founder William Dymock's great-nephew) in 1981. His desire to preserve the company's heritage meant the bookseller had to move with the times.
In recent years, Dymocks has engaged in a notable diversification strategy under the leadership of former CEO Don Grover.
In 2010, it purchased chocolate and nut confectioner Paton's, complementing its Arapala Macadamia Farms on NSW's mid-north coast. The previous year, it acquired 80 per cent of Healthy Habits, a sandwich bar franchise.
While the company owns the flagship bookshop at George Street in Sydney's CBD, local stores have operated on a franchise model since 1986. It's these mum-and-dad small business owners that have helped the chain survive, according to Dymocks' managing director, Steve Cox.
With 20 years' retail experience, the former general manager at David Jones and Speciality Fashion Group has no doubt the politician's prediction is wrong.
"Bookstores still have a tremendous future," Cox said.
"The Australian consumer's reading appetite is as strong today as it's ever been. In fact, it could be argued that it's growing."
According to Dymocks' figures, it sold 7.4 million books in 2012 (compared with 5.7 million in 2003). It would not say how many books it sold five and 10 years ago.
Nielsen BookScan (which tracks more than 90 per cent of general retail book sales within Australia) recorded 56.6 million units sold in 2012 - down 6.3 per cent from the previous year.
Dymocks first offered ebooks in November 2007 (in what was an Australian-first). But today, the format accounts for less than 5per cent of its sales.
A digital book offering was necessary to retain "customer loyalty for years to come", Cox says.
"In today's markets, our franchise owners need to be able to provide their customers with whatever format book their customers want, through whichever channel."
Dymocks' new stores (such as in Indooroopilly, Queensland) have been designed to entice, with customer-friendly lighting, colours and visual merchandising.
Not every experiment has worked. In 2011, Dymocks launched D Publishing, allowing authors to self-publish books in partnership with Dymocks. But 15 months later it scrapped the venture.
"Dymocks has always been a business that has tried to push the boundaries of bookstore retailing," says Cox.
Today, Dymocks has 72 bookshops in Australia and 12 in Hong Kong. In the past two years, the company has opened 13 stores - but closed 10.
When asked why its stores close, Cox says: "I wouldn't want to attribute any one particular reason.
"Without a doubt, you want to be in the right places, but like everything, it has to be commercially viable. Rent in Australia is not cheap."
He says landlords need to take a more long-term, strategic view.
"Bookstores attract customers to shopping centres," he said. "People will stop coming to shopping centres if all they get when they get there is 10 banks and 20 nail spas.
"We work very hard at building relationships with the landlords so they understand the customer that we attract.
"Just like we have to compete with the online world, shopping centres have to compete with the online world as well."
There are also overseas price differentials to compete with. Sherry's ominous words were all the more aggravating for the local industry given his own party rejected a Productivity Commission's recommendation to remove parallel importation restrictions on books.
The regulatory regime forces Australian booksellers to buy from local publishers despite cheaper offerings overseas.
Cox offers five tips for retailers: ■Make the customer the centre of everything you do.
"If you keep absolute focus on the customer and really strive to understand what they're looking for, why they're visiting the stores ... then that helps you evolve the business," he says.
■Assess your strengths and opportunities.
"Without a doubt, we've got a tremendous brand, tremendous heritage, we have locally owned and operated stores that really understand their customers and we continue to focus in on that strength."
"Eighteen months ago we used to send broad-brush emails to everybody on the database.
"We've done a lot of work in the last six to eight months on customer data and understanding the life cycle of our customers, understanding the purchase behaviours of our customers and being able to use that information to make sure that our stores have the relevant offer for that customer."
■Invest in your people.
"We've got regional business managers and their goal in life is to help our stores achieve the best results that they can," he said.
"Every day I receive 50-60 pieces of customer feedback.
"The thing that comes through loud and clear when I read that feedback every single morning is the people in those stores make that difference."
■Don't focus on what you can't change.
"Control your controllables and don't worry so much about the things that you can't control, like the broader economic environment."
For example, keep a cash-flow forecast up to date and envisage what the physical store environment can offer and "bring that to life".