What does it take to save a physical media business from extinction?
In Japan the answer to that question appears to be “bring on the iPads” and building what has been called “one of the most beautiful bookstores in the world.”
Tsutaya, the Blockbuster Video of Japan, operates over 1,400 video rental stores, bookshops and boasts 38 million members. Like many retailers on Japan’s sickly high street Tsutaya has been suffering of late and has been struggling to survive the digital age.
“Tsutaya is definitively hurting, and the bleeding will not be stopping anytime soon,” says Tokyo-based technology analyst Steve Nagata.
So concerned was Muneaki Masuda, founder of Tsutaya and one Japan’s richest men, that he made a management buy-out of the once listed company behind Tsutaya, Culture Convenience Club, so he could drag his business into the digital uplands without shareholder interference.
Vital to his firm's survival: The championing of high-grade physical bookstores. In that battle, somewhat ironically, the iPad is playing a leading role.
Tsutaya fuses silicon and mortar
The company’s stunning showcase flagship store T-site was opened recently in an upscale region of Tokyo. Tsutaya’s Daikanyama T-Site is a campus-like complex that combines boutique spaces with the central idea of merging the digital and analog worlds according to its creators.
Dotted around the buildings are 225 iPads. The artfully constructed bookstore has 111 tablets, while a cafe/bar uses 80 iPads to allow customers to order drinks, peruse a catalogue of free paper magazines for browsing and even buy artwork displayed in the space. The remaining tablets are dispersed through other shops in the complex.
In the bookstore iPads are placed at the ends of each bookshelf to do the job of sales staff -- reserving books, printing receipts, searching for books and even guiding browsers to each physical book’s exact location. A concierge like “curator” is on hand in each section; so human help has not vanished altogether.
As all books, magazines, DVDs, etc, are IC tagged and arrayed on smart shelves, so there is no need to que to pay. Customers can just scan and pay using the self-checkout and POS kiosk system.
Customers are also discreetly tracked physically and via their iPad usage, adding to a mine of data that Tsutaya already has on its members.
Curiously, although Tsutaya has a large (by Japanese standards) e-book virtual store on Android devices, the on-premise T-site iPads have no such digital store. However, members can spend virtual coupons received through Tsutaya’s syndicated point system, the largest in Japan, with over 30 million users.
Using its 37-million member point card system, when customers who have purchased a print book buy its electronic version, they are awarded points worth half the price of the e-book. The points can be used for future purchases analogue or digital.
Tsutaya anticipates the service will spur sales of print books and magazines, which are in decline in Japan. But whether T-site can confound the recent downward trend leading to the demise of brick-and-mortar stores spreading in Japan and make a decent ROI remains to be seen.
Mr Nagata, for one, remains sceptical. “I can't image that T-site is, or ever will be, remotely profitable. The building alone cost a mint, and daily revenue probably barely covers maintenance and staffing.
"As such, I don't think we'll be seeing too many of these [stores] popping up around Japan.”