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Chapters, the big box bookstore banner is owned by Indigo.

Key Information

Chapters Inc. is a Canadian big box bookstore banner owned by Indigo Books and Music. Formerly a separate company competing with Indigo, the combined company has continued to operate both banners since their merger in 2001. As of July 2017, it operated 89 superstores under the banners Chapters and Indigo, and 122 small format stores under the banners Coles, Indigospirit, SmithBooks and The Book Company.[2]

History

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A Chapters in Markham, Ontario.
Inside Chapters in Markham, Ontario in October 2008.
Chapters' former Downtown Montreal store in the Castle Building in April 2006, eight years before closing. (closed October 4, 2014).

Chapters Inc. was created in 1994 when founder and CEO Lawrence Stevenson led the buyout and merger of Canada's two largest book chains at the time: Coles and SmithBooks (formerly the Canadian division of U.K. book chain W. H. Smith).[3] SmithBooks was acquired from Federal Industries and Coles was acquired from Southam Inc. Canadian General Capital and Pathfinder Capital bought these two chains to build large-format book superstores comparable to those of the American bookstore chains Barnes & Noble and Borders.

The new company was created in April 1995 and the first two book superstores were opened in November 1995. The original superstores were in Burlington, Ontario and Burnaby, British Columbia.[4]

Chapters quickly changed the face of Canada's book selling industry. Previously, companies like Coles and Smithbooks had many small stores. Chapters built large box stores with a much larger product selection. Chapters provided chairs and couches for their customers, as well as Starbucks coffee shops, and did not discourage reading inside the store. The company became Canada's largest book retailer, with 77 superstores branded as Chapters and more than 280 mall-based stores under the names Coles, SmithBooks (formerly the Canadian branch of W H Smith), Classic Bookshops, the Book Company, and Active Minds. However, the SmithBooks, the Book Company, and Classic Bookshops names have been gradually phased and locations rebranded as Coles stores in recent years. Canada's first book superstore, Toronto's World's Biggest Bookstore, once part of the Coles chain, was also owned by Chapters and had continued to operate under its original name.

Chapters grew quickly. It was criticized, however, for several reasons. It was blamed[by whom?] for the demise of several independent bookstores across Canada, especially alternative stores carrying obscure or controversial titles. Although it was said[by whom?] that Chapters also built its business around moving massive numbers of a few bestsellers, the majority of its sales came from backlist titles. As the company's market share grew, it represented the lion's share of many publishers' sales.

Chapters did not keep the box book store market to itself, however, with the opening of Indigo. Headed by Heather Reisman, Indigo began to compete with Chapters in select markets and opened 14 stores. Chapters aggressively expanded into online bookselling with chapters.ca to compete with Amazon and also was a minority investor in Pegasus, a book wholesaler. Pegasus was needed to be able to serve the online sales but the business was resisted by Canadian publishers and was not successful. In the autumn of 2000 Indigo launched a hostile takeover. Indigo was able to convince the Competition Bureau that Indigo was not a viable standalone business given the enormous losses that it was sustaining and thus had to be able to merge with the profitable Chapters retail chain. By early 2001, Indigo had been successful in purchasing Chapters, but kept both the Chapters and Indigo brands; subsequently a number of Chapters stores near Indigo locations were closed. In some cases, Coles and SmithBooks stores were shut down if they were too close to a Chapters site.

Although there are still some aesthetic differences between the store designs of the Chapters and Indigo banners, they now share many common elements. Moreover, aside from Indigo's larger focus on music, product selection and special offers are not generally distinguishable from one to the other. Indigo has adopted the Starbucks cafes that were in Chapters stores and has reduced the seating areas in Chapters stores and introduced a very wide range of non-book products which had been carried at Indigo.

Starting in 2014, the company began to diversify the types of products offered in store, such as coffee mugs and tea cups, cutlery, bathrobes, and throw blankets.[5] While these items are displayed near the front of most stores, the majority of floor space in Chapters locations continues to be dedicated to books, magazines and stationery.

On January 1, 2018, the Chapters location in Bayview Village Shopping Centre was closed 18 years after its opening. As a result of changes proposed by the owner to develop the site, the LCBO store moved into the former Chapters location in 2019.[6]

Criticism and controversies

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Main article: Indigo Books and Music § Criticism and controversies

Since its takeover by Indigo, Chapters has been involved in several controversies, often tied to censorship concerns, or the strong support for Israel by the owner Heather Reisman and her husband Gerry Schwartz. Reisman and Schwartz head the HESEG Foundation, which provides scholarships for discharged lone-soldiers who served in the Israel Defense Forces.[7]

The book "Mein Kampf" by Adolf Hitler was removed from the shelves of Chapters. There was controversy in the fact that the book is sometimes used in a historical context[8] and some university or high school courses have the book on their syllabus.[9]

References

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Chapters (bookstore)

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Chapters is a Canadian chain of large-format superstores specializing in books, magazines, and products, established in 1994 through the merger of the Coles and SmithBooks operations. Following a competitive acquisition battle, Chapters Inc. merged with Books & Music Inc. in August 2001 to create Indigo Books & Music Inc., which operates as Canada's dominant bookseller and retains the Chapters banner for many of its superstores. The chain's expansive stores, often exceeding 25,000 square feet, emphasize a destination retail experience with curated selections of , , gifts, and home goods, contributing to its role as a key player in the Canadian retail landscape despite industry shifts toward online sales.

Origins and Development

Founding in 1994

Chapters Inc. was founded in 1994 by Lawrence Stevenson, who led the acquisition and merger of Canada's two dominant bookstore chains, Coles and SmithBooks, using over $70 million in private investor funding to form a consolidated entity capable of scaling operations nationwide. This move addressed the inefficiencies of the previously fragmented market, where Coles operated around 400 small-format discount outlets emphasizing low prices on remaindered books, and SmithBooks maintained a network of approximately 250 mall- and airport-based stores focused on convenience and periodicals. Stevenson's strategy drew inspiration from U.S. superstore models, prioritizing expansive inventory selection, comfortable browsing environments, and integrated non-book products like music and gifts to boost per-store revenue. The 1994 formation positioned Chapters Inc. as a transformative force in Canadian , shifting from traditional mom-and-pop and chain formats toward category dominance through in and centralized distribution. Although the merger's operational integration extended into 1995, the corporate entity was established that year, enabling rapid prototyping of the superstore concept with the debut of initial locations later. This founding emphasized aggressive expansion over legacy preservation, consolidating from roughly 20% combined under Coles and SmithBooks to a platform for further growth amid rising competition from online and international entrants.

Expansion into Superstores (Mid-1990s)

Chapters Inc. was formed in 1995 through the merger of Coles and SmithBooks, enabling the company to pursue a strategy of developing large-format superstores to compete with emerging big-box retail models in the sector. The first two Chapters superstores opened in November 1995, located in , and , , each spanning approximately 25,000 square feet and stocking over 100,000 titles to attract customers seeking broader selections and amenities like cafés. These initial outlets marked a shift from traditional mall-based bookstores to standalone or anchor-tenant superstores designed for higher foot traffic and extended dwell time. The expansion accelerated throughout and , with Chapters opening additional superstores in major urban centers across all Canadian provinces, capitalizing on prime retail locations to capture from independent booksellers and smaller chains. By the end of , the company operated around a dozen superstores, emphasizing diversified inventory including books, music, and gifts to drive revenue beyond print sales. This phase involved significant capital investment, funded partly through public offerings, and resulted in Chapters becoming Canada's dominant bookseller with enhanced bargaining power over publishers for discounts and returns. The superstore model proved successful in drawing consumers away from fragmented retail options, as evidenced by rapid sales growth and the closure of over 150 smaller affiliated stores to reallocate resources toward the larger formats. However, the aggressive rollout strained supplier relationships due to demands for favorable terms, foreshadowing later industry tensions, though empirical data from the period showed superstores outperforming traditional outlets in per-square-foot revenue. By mid-decade's close, Chapters' footprint laid the groundwork for national dominance, with superstores averaging higher customer volumes than predecessors.

Challenges and Restructuring (Late 1990s)

In the late 1990s, Chapters Inc. encountered mounting financial pressures stemming from its rapid superstore expansion earlier in the decade, which had inflated operational costs and debt while market saturation eroded profit margins. By fiscal 1999, the company reported revenues of approximately CAD 500 million but struggled with cash flow issues, including delayed payments to publishers that strained supplier relationships. Publishers expressed frustration over inconsistent remittances, with some major houses threatening to withhold shipments due to outstanding balances. A key restructuring initiative occurred in 1999 when Chapters converted its large Brampton, , warehouse and distribution center into Pegasus Trading Company, a wholesale arm designed to streamline inventory management, accelerate payments, and act as an intermediary with publishers to rebuild trust. This shift aimed to mitigate bottlenecks in the , where previous direct-retail models had led to inefficiencies and disputes over terms. Pegasus handled and distribution, allowing Chapters to offload some while maintaining superstore operations. However, the move did not fully resolve underlying overexpansion effects, as evidenced by reports of over CAD 10 million owed to Canada alone by early 2000, with much of the debt accruing before Christmas 1999. Intensifying rivalry with Books & Music exacerbated these challenges, as both chains vied for dominance in the Canadian superstore segment, driving promotional spending and price competition that squeezed margins further. Chapters publicly denied rumors of severe financial distress in late 2000, attributing such reports to competitive tactics and initiating legal action against media outlets like the for allegedly spreading unsubstantiated claims of insolvency. Despite these efforts, the company's stock price volatility and creditor pressures underscored the need for strategic overhaul, foreshadowing the 2001 merger with .

Merger and Integration with Indigo

Financial Pressures Leading to Merger

Chapters Inc., the parent company of the Chapters bookstore chain, faced mounting operational losses and challenges in the lead-up to its 2001 merger with Books & Music. The company's aggressive expansion into large-format superstores during the mid-1990s incurred significant capital expenditures for real estate, fixtures, and inventory scaling, which strained liquidity amid stagnant book sales growth in a consolidating retail sector. By fiscal 2001, Chapters reported a net loss of C$84.5 million on revenue of C$686.5 million, exacerbated by charges and underperforming units. A key contributor to these pressures was the heavy losses from Chapters Online, the company's arm launched in 1999, which posted a C$7.8 million loss in the second quarter of alone, dragging down overall profitability. While Chapters recorded a reported profit of C$17.2 million on approximately C$660 million in revenue for , this figure included C$41 million in one-time gains, masking underlying operational deficits from high fixed costs and competitive pricing pressures in physical retail. Further compounding issues, Chapters faced payment delays to publishers, such as disputes with and Raincoast Books in summer , which eroded supplier trust and access to credit. These financial vulnerabilities left Chapters exposed to hostile takeover attempts, including a bid from Retail Enterprises in early 2001, after securities regulators invalidated the company's proposed "poison pill" defense strategy. The board pursued the merger as a survival measure, anticipating cost synergies through store closures of underperformers and duplicate locations, which were projected to boost operating margins in the merged entity. This consolidation addressed the unsustainable debt load and eroding from overexpansion, as the Canadian bookselling industry grappled with thinning margins from publisher discounts and emerging online competition.

The 2001 Merger Process

In early 2001, , founder of Books & Music Inc., pursued the acquisition of the larger rival Chapters Inc. amid its financial struggles, culminating in a $121-million purchase by Reisman and her husband Gerald Schwartz in February 2001, which resolved a contentious takeover battle against other bidders including Chapters' management and Trilogy Enterprises. The deal positioned to absorb Chapters' extensive superstore network, but required regulatory scrutiny to address antitrust concerns in Canada's concentrated market. The conditionally approved the merger on April 5, 2001, mandating the divestiture of 13 underperforming superstores and 10 mall-based stores to mitigate market dominance, with specific locations disclosed on April 30, 2001. Final endorsement came from the Federal Competition Tribunal on June 7, 2001, clearing the path for integration while preserving competition through the required asset sales. Merger details were publicly unveiled on June 13, 2001, outlining plans to close additional poorly performing outlets and integrate operations under the Indigo Books & Music Inc. banner, with Reisman and Schwartz holding approximately 47% of the combined entity's common shares. Chapters shareholders ratified the transaction at a special meeting on July 26, 2001. The process concluded with official completion on August 14, 2001, establishing Indigo Books & Music Inc. as Canada's dominant bookseller, retaining both Indigo and Chapters store brands.

Post-Merger Rebranding and Consolidation

Following the completion of the merger on August 14, 2001, Indigo Books & Music Inc. emerged as the corporate entity overseeing the combined operations of the former Chapters and Indigo chains, marking Canada's largest book retailer by store count and market share. The integration process prioritized operational efficiencies, including a two-year turnaround plan to unify supply chains, inventory management, and distribution systems previously siloed between the competitors. This consolidation addressed pre-merger redundancies, with the company operating 88 superstores and 179 smaller mall outlets under multiple banners immediately post-merger. Store rationalization formed a core element of the consolidation, targeting underperforming locations and geographic overlaps to reduce costs and improve profitability. Merger terms included commitments to divest certain assets for antitrust compliance, such as selling nine Chapters superstores in regions like , , , and . In the fiscal period following the merger, Indigo closed 24 mall stores—primarily under the Coles banner—while adding five new Chapters superstores, though efforts to offload up to 23 additional properties faced market challenges. Executives projected closures of as many as 15 superstores within 18 months to streamline the footprint, contributing to a net revenue increase of 7.2% to C$735.5 million in the fiscal year ending March 2002, despite an initial operating loss of C$47.9 million. By fiscal 2003, these efforts yielded a modest of C$1.4 million on revenues of C$779.2 million, signaling stabilization. Rebranding remained limited in the immediate post-merger phase, with the Chapters banner preserved for most superstores to maintain customer familiarity and avoid alienating established clientele. The unified website, chapters.indigo.ca, blended elements of both legacies to support online sales of , gifts, and media. Corporate emphasized Indigo's name for investor communications and governance, but physical store signage and operations retained dual identities—Chapters for large-format superstores and Indigo for select urban locations—through the early 2000s. Over subsequent years, selective renovations began shifting high-traffic Chapters outlets toward aesthetics, with formalized rebranding accelerating in the ; for instance, by 2015, renovated sites incorporated branding alongside expanded non-book sections like toys and products. This gradual evolution reflected a strategic pivot from pure to a broader retail model, informed by post-merger data on consumer preferences.

Business Operations

Store Formats and Locations

Chapters superstores represent the primary large-format retail model pioneered by the chain in the mid-1990s, featuring expansive layouts averaging more than 22,000 square feet to accommodate vast inventories of books alongside products, seating areas for browsing, and on-site cafes. These stores emphasize a destination experience, often located in standalone buildings or prominent mall anchors in urban and suburban settings. As of December 30, 2023, Books & Music Inc., which encompasses the Chapters banner post-2001 merger, operated 89 superstores under the combined Chapters and brands, distributed across Canada's provinces with heaviest concentrations in , , and . Specific Chapters-branded locations persist in cities like , and , , maintaining the original superstore identity amid partial rebranding efforts toward the unified aesthetic. In parallel, the company maintains smaller-format stores under banners such as Coles and Indigospirit, totaling 83 outlets as of the same date, which are compact mall-based outlets focusing on core book selections and convenience-oriented sales rather than the immersive environment of superstores. These small formats, inherited from pre-merger acquisitions, contrast with Chapters superstores by prioritizing accessibility in high-traffic retail corridors over size and amenities. All locations remain exclusively within Canada, serving a national footprint without international expansion.

Inventory and Product Strategy

Indigo, operating Chapters superstores, centers its product strategy on a curated assortment of books as the foundational category, encompassing , , , and academic titles across major genres. This core inventory is selected through partnerships with publishers and data-driven to prioritize bestsellers, seasonal releases, and Canadian-authored works, reflecting a commitment to national content amid competition from retailers. To mitigate declining physical book sales due to e-books and digital alternatives, has pursued diversification into non-book categories since the mid-2010s, expanding into , gifts, , and items such as scented candles, journals, and home decor. These additions, often branded under Indigo's private labels, aim to transform stores into lifestyle destinations, with dedicated sections for toys and gifting comprising a growing share of shelf space in Chapters locations. This strategy has included designing exclusive products like inspirational and seasonal merchandise to boost margins and customer dwell time. Inventory management employs an merchandising approach, integrating store and online channels for holistic selection and allocation. This involves optimizing stock levels through for high-turnover items, just-in-time replenishment for seasonal products, and SKU rationalization to reduce overstock risks, particularly in larger Chapters formats where space allows for broader assortments. In fiscal 2023, this optimization contributed to merchandise sales growth of 0.5% year-over-year, despite external disruptions like incidents.

E-Commerce and Digital Shift

Chapters, prior to its 2001 merger with , established an online retail presence in 1999 as a separate publicly traded entity, emulating the model of Amazon.com to counter emerging digital competition. Following the merger, the unified chapters. platform was launched in 2001, integrating physical and online sales under Indigo Books & Music Inc. By 2003, the site expanded to include music sales with 24-hour shipping options, enhancing its capabilities amid growing online book demand. In response to the digital shift, Indigo invested in e-reading technology by spinning off Kobo Inc. in 2009, which launched its first devices in 2010 and the Kobo Touch in 2011, the latter praised as the best by Wired magazine. However, facing intense competition, Indigo sold a majority stake in Kobo to in 2012 for US$315 million, shifting focus away from proprietary digital hardware while retaining partnerships for distribution in stores and online. This move allowed Indigo to prioritize strategies over deep e-book dominance, differentiating from Amazon by emphasizing physical store experiences complemented by online fulfillment. To adapt further, Indigo opened a dedicated online distribution facility in September 2010 and redesigned chapters.indigo.ca in 2013 with mobile optimization, integration, and "buy online, ship to store" services, which had been introduced earlier in 2003. These enhancements aimed to bridge digital and physical retail, countering Amazon's pure model by leveraging Indigo's store network for hybrid convenience. In 2012, the platform added an online textbook shop for rentals and purchases, targeting student markets. During the , Indigo accelerated digital adaptations with express pick-up, curbside options, and partnerships like for rapid delivery starting in 2020. Despite these efforts, Indigo's e-commerce growth has been tempered by Amazon's dominance, prompting a strategic pivot toward non-book merchandise online and in stores to sustain margins, as pure book sales faced . The company's online sales recognition, such as chapters.indigo.ca ranking among Internet Retailer's Hot 100 Websites in , underscores early viability, though long-term adaptation relies on integrating lifestyle products rather than competing head-on in digital-only formats.

Ownership and Governance

Evolution of Corporate Control

Chapters Inc. was formed on November 1, 1994, through the merger of Coles Book Stores and SmithBooks, two of Canada's largest bookstore chains, under the leadership of Lawrence Stevenson, who assumed the role of CEO and held controlling interest. The company went public on the Toronto Stock Exchange in 1995, enabling rapid expansion to over 70 superstores by 1998, establishing Chapters as Canada's dominant bookseller with approximately 50% market share. This public listing diluted Stevenson's direct control but retained his influence through significant shareholdings and board positions, while institutional investors gained stakes amid growth ambitions. By the late , Chapters faced mounting financial pressures from overexpansion, high debt levels exceeding CAD 200 million, and inventory mismanagement, resulting in net losses of CAD 34.6 million in fiscal 2000. These issues eroded shareholder confidence and Stevenson's authority, prompting multiple unsolicited bids, including from U.S. retailer Borders Group in 2000 and Indigo Books, Music and More Inc. in early 2001. Internal board divisions and creditor demands further weakened Chapters' independence, with Stevenson attempting defensive maneuvers like share issuances that were later scrutinized by regulators. The pivotal shift occurred in 2001 when Trilogy Retail Enterprises, a acquisition vehicle backed by and private equity firm with CAD 125 million in financing, secured over 50% of Chapters' shares in July, ousting Stevenson and paving the way for immediate merger with Indigo. The amalgamation closed on August 14, 2001, creating Indigo Books & Music Inc. as the surviving public entity listed on the TSX, with —founder of Indigo in 1996—emerging as CEO and consolidating control through her executive role and aligned investor support. Post-merger, Indigo integrated Chapters' operations, closing underperforming stores and rebranding many as "Chapters-Indigo" hybrids, while Reisman's leadership centralized decision-making, reducing prior dual-chain fragmentation. Under Indigo Books & Music Inc., corporate control evolved toward family-influenced stewardship, with Reisman maintaining majority voting power via dual-class shares introduced in subsequent years, enabling strategic pivots like expansions without broad veto. This structure persisted through public trading phases, balancing institutional ownership—such as from Canadian pension funds—with Reisman's directive authority until external pressures prompted later delisting considerations.

Privatization in 2024

In February 2024, Books & Music Inc., the parent company of the Chapters bookstore chain, received an unsolicited non-binding proposal from Trilogy Retail Holdings Inc. (TRHI) and Trilogy Investments L.P. (TLIP), entities controlled by investor Gerald Schwartz, to acquire all outstanding common shares not already owned by them for C$2.50 per share. At the time, TRHI and TLIP collectively held approximately 56% of Indigo's shares, reflecting Schwartz's significant prior involvement alongside CEO , his spouse. On April 2, 2024, Indigo's board approved the transaction, valuing the minority shares at an estimated C$27 million and expecting closure in pending and approvals. The deal proceeded via a statutory plan of arrangement under Canada's Business Corporations Act, aiming to delist Indigo from the (TSX) and eliminate public reporting obligations. Shareholders approved the on May 27, 2024, with the transaction completing on May 31, 2024. Indigo's shares were subsequently delisted from the TSX on June 4, 2024, and the company ceased being a reporting issuer on June 11, 2024, transitioning fully to private ownership under Trilogy's control. This shift was positioned to provide operational flexibility amid Indigo's recent financial challenges, including declining sales and issues, without quarterly disclosure pressures.

Controversies and Criticisms

Antitrust and Monopoly Allegations

The proposed merger between Chapters Inc. and Books & Music Inc., announced in late 2000, prompted significant antitrust scrutiny from Canada's , which expressed concerns that combining the two largest bookstore chains would substantially lessen in the retail market for English-language books, potentially leading to higher prices and reduced . The Bureau's review, initiated in early 2001, involved extensive analysis of market shares—Chapters held approximately 50% of the superstore segment and controlled much of the upscale retail niche—highlighting risks of coordinated pricing and supplier leverage post-merger. Independent booksellers and some publishers voiced allegations that the deal would entrench a near-monopoly, squeezing smaller competitors through in purchasing and . On April 5, 2001, the conditionally approved the merger, requiring the companies to divest 13 superstores, 10 mall-based stores, and 17 trade paperback outlets to independent buyers within specified timelines to preserve competitive alternatives in overlapping markets. This remedy addressed the Bureau's finding that without divestitures, the merged entity would control over 60% of certain regional markets, enabling potential monopsonistic pressure on publishers for unfavorable terms. The formalized the approval on June 7, 2001, after reviewing evidence of entry barriers like high fixed costs for large-format stores, though critics argued the conditions were insufficient to prevent long-term dominance. Compliance with divestitures was monitored, with the Bureau retaining oversight to ensure sales to viable competitors rather than affiliates. Post-merger, Books & Music Inc. (the surviving entity) faced sporadic monopoly allegations from independent retailers and online entrants, particularly as it maintained a dominant position in physical sales, estimated at 40-50% of the national market by the mid-2000s. In 2002, lobbied against Amazon.ca's launch, alleging tactics that undercut local retailers, though this was framed as protecting Canadian rather than entrenching its own power. No formal antitrust lawsuits succeeded against for monopolistic practices in physical retail, but the company's scale drew complaints of unfair supplier negotiations, echoing pre-merger concerns. In the digital realm, the Competition Bureau in January 2015 sought court-ordered records from Indigo and its Kobo subsidiary amid an inquiry into e-book distribution, following allegations of restrictive practices that could hinder competition in electronic formats. The probe examined potential collusion or bundling tied to broader e-book price-fixing investigations involving publishers, but Indigo was later confirmed not to be a primary target, with no enforcement action resulting. These episodes underscored ongoing tensions over Indigo's influence in both print and digital segments, though regulatory outcomes affirmed no violations warranting structural remedies.

Political Activism and Boycotts

Indigo Books & Music Inc., which operates Chapters stores, has faced organized boycotts primarily from pro-Palestinian advocacy groups since late 2023, centered on CEO Heather Reisman's philanthropy toward the for Lone Soldiers. The foundation, co-founded by Reisman and her husband in 2005, provides scholarships, mentorship, and financial support to non-Israeli serving as lone soldiers in the Israel Defense Forces (IDF), having aided over 2,000 individuals as of 2023. Boycotters, including groups like Canadians for Justice and Peace in the (CJPME), argue this constitutes indirect funding of Israel's military actions in Gaza, labeling it complicity in alleged war crimes following the October 7, 2023, attacks. Protests escalated in 2024 and 2025, with coordinated actions at over 50 and Chapters locations nationwide, including silent pickets, leafleting, and storefront demonstrations urging consumers to avoid purchases. On September 26, 2024, protesters gathered outside stores, distributing materials accusing the company of supporting "" through Reisman's donations, estimated at tens of millions via the foundation. Similar events occurred on September 6-7, 2025, targeting malls like Burlington Centre, where participants highlighted Reisman's control of over 68% of Indigo shares alongside Schwartz. Vandalism incidents, such as the November 10, 2023, defacing of a Toronto with red paint and posters claiming "funding ," prompted debates over definitions, with some labeling it hate-motivated while activists framed it as legitimate protest. In response, Indigo pursued legal action against boycott campaigns, securing a Federal Court temporary order on September 17, 2024, to block the "Indigo Kills Kids" website and accounts for and brand damage, particularly via imagery mimicking Indigo Kids branding. The company condemned the efforts as , including customer intimidation and book defacement with stickers alleging murder, while pro-Israel groups like the Centre for Israel and Jewish Affairs (CIJA) described the protests as part of a broader antisemitic BDS (Boycott, Divestment, Sanctions) extension revived post-October 7. The withdrew Indigo as a sponsor in February 2025 amid related pressure, citing the foundation's IDF ties. Earlier instances of political engagement include Reisman's 2001 decision to ban Adolf Hitler's from all Indigo and Chapters stores, citing its potential to incite harm, which drew criticism for censorship but aligned with her stated opposition to . In 2022, Indigo declined to stock Pierre Poilievre's 'Pierre Poilievre: A Political Life' no, wait—actually, it refused to carry Andrew Lawton's book on the 2022 Freedom Convoy protests, prompting accusations of suppressing conservative viewpoints amid claims of market dominance influencing content decisions. These actions reflect selective inventory curation tied to leadership values, though they pale in scale compared to the ongoing over .

Operational and Ethical Complaints

Employees at the , Chapters store accused Indigo Books & Music of union-busting in December 2023, following the announcement of the store's closure in January 2024 after union organizing efforts began. The Ontario Labour Relations Board received an application to decertify a union at the , Chapters store in May 2023, filed by an employee amid ongoing disputes. In January 2024, workers at a Toronto-area Chapters received termination notices shortly before , prompting negotiations that resulted in Indigo conceding to demands for severance packages and employee transfers to other locations. Customer complaints regarding operational issues, particularly e-commerce fulfillment, have been prevalent. Online reviews on indicate a 1.5 out of 5 rating from 312 users as of late 2025, with frequent reports of delayed shipping, inaccurate delivery estimates, and unfulfilled orders. Sitejabber aggregates show a 1.4 out of 5 rating from 132 reviews, highlighting dissatisfaction with order processing and communication failures. The Better Business Bureau recorded 67 complaints against Indigo Canada Inc. over three years ending in 2025, including issues with product delivery and refunds. Ethical concerns have centered on labor practices and vendor relations. Indigo's Vendor Code of Conduct, updated in September 2025, mandates suppliers avoid forced labor, , and wage failures, with immediate termination for severe violations, though independent verification of compliance remains limited. Reports from former employees describe challenges in unionizing, including perceived retaliation through store closures, as detailed in personal accounts from 2021 organizing drives at locations. These allegations, while attributed to workers, lack conclusive rulings from labor boards, underscoring tensions between and employee rights in retail environments facing pressures.

Market Impact and Reception

Dominance in Canadian Retail

Indigo Books & Music Inc., through its Chapters superstore banner, maintains a commanding position in Canada's physical retail sector, operating 89 large-format stores as of December 30, 2023, alongside Indigo-branded equivalents, which together form the backbone of the company's superstore network spanning all ten provinces and one territory. This extensive footprint, inherited from the 2001 merger of Chapters Inc. and , has enabled the chain to capture nearly 50% of total book sales in via its approximately 170 retail outlets, including smaller formats, underscoring its role as the industry's . Chapters stores, typically exceeding 20,000 square feet, emphasize expansive inventory in books, gifts, and products, differentiating them from smaller independents and positioning Indigo as the holder of the largest in the book stores industry according to industry analyses. While online competitors like Amazon have eroded some physical sales—particularly post-2020—Indigo's superstores continue to drive a significant portion of brick-and-mortar revenue, with fiscal third-quarter reaching $370.6 million, reflecting resilience amid sector-wide declines. Historical critiques of near-monopolistic control, dating to the early consolidation that sidelined Borders and independents, have not led to recent antitrust interventions by the , which instead probed e-book practices in 2015 without targeting physical retail dominance. This dominance manifests in supply chain leverage, where negotiates favorable terms with publishers, often influencing print runs and distribution priorities for Canadian titles, though independents argue it squeezes smaller players via scale advantages in returns and shelf space allocation. Despite operational challenges, including store closures reducing small-format outlets from 89 in 2021 to 83 by 2023, the Chapters model sustains 's preeminence, with superstore counts stable at 89, bolstering its status as the go-to destination for in-person purchasing amid fragmented competition. Recent efforts in 2024 aim to refocus on core without altering this entrenched retail .

Adaptations to Industry Changes

In response to intensified competition from online retailers like , Books & Music, which operates Chapters stores, repositioned its physical locations as experiential "cultural department stores" emphasizing curated lifestyle products alongside books to encourage impulse purchases and differentiate from pure models. This included introducing proprietary items such as branded reading socks, scented candles, and wellness accessories, which by 2019 contributed significantly to non-book sales reaching 43% of . Such diversification aimed to leverage higher-margin goods amid stagnant print book demand, with products like herb-growing kits and throw pillows designed to appeal to browsing customers seeking multifunctional retail experiences. To optimize its brick-and-mortar footprint amid declining foot traffic in less viable locations, implemented spatial strategies including the closure of 15 smaller-format stores in May 2020 and a broader contraction of its network to prioritize superstores in high-density urban areas like the . This refocusing maintained a physical presence for experiential shopping while reducing overhead, with the company operating 182 stores as of mid-2020 and emphasizing formats that support curated assortments in categories such as wellness, gifting, and . By 2022, these efforts informed the "store of the future" concept, featuring expanded sections for , , and to align with evolving consumer interests in purposeful, culture-inspired retail. The accelerated adaptations in physical operations, with introducing curbside pickup and in-store fulfillment for online orders to bridge hybrid shopping habits, while store traffic recovered to 70% of pre-pandemic levels by September 2020, particularly challenging downtown sites due to shifts. Following its privatization approval on May 27, 2024, pursued further merchandising refinements, committing to elevate books' share of total sales and lower return rates through improved inventory management and publisher collaborations, signaling a strategic pivot toward core viability in a consolidated industry. These measures addressed broader sector pressures, including disruptions and shifting reader preferences, by enhancing without fully abandoning physical retail's tactile appeal.

Long-Term Viability Assessments

Indigo Books & Music Inc., which operates Chapters stores, reported a 12% year-over-year revenue decline to C$370.6 million in its fiscal third quarter of 2024 (ended December 30, 2023), alongside a 70.5% drop in to C$10 million, reflecting ongoing pressures from reduced and challenges. These figures underscore a pattern of volatility, with same-store sales historically contracting amid from retailers and e-books, contributing to cumulative losses that prompted the company's . The delisting from the on June 4, 2024, and cessation as a reporting issuer on June 11, 2024, shifted Indigo to private ownership under founder , potentially enabling unencumbered pivots but obscuring transparent financial tracking. In the broader Canadian book retail sector, physical chains face existential threats from Amazon's dominance in and digital formats, which have eroded for brick-and-mortar outlets; independent bookstores, by contrast, have expanded with over 30 new locations since 2019, leveraging to achieve year-over-year growth. Indigo's diversification into products—such as blankets and gifts—has buffered declines but drawn for diluting its core identity, with high store overheads exacerbating profitability strains in a low-margin industry. Post-privatization efforts to refocus on s, including improved publisher relations and private-label development, have sparked cautious industry optimism, as these could yield higher margins if executed amid emerging trends like print resurgence. Analyst views on Indigo's trajectory remain divided, with recommendations emphasizing cost reductions, online strengthening, and experiential store formats to counter economic headwinds and executive instability—such as the 2023 departure of COO Peter Ruis—which signal operational risks. While affords agility absent public market pressures, sustained viability demands verifiable profitability rebounds, as persistent revenue erosion in a consolidating sector could render large-format chains like Chapters obsolete without adaptive innovation.

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