Rahva Raamat in Viru Keskus is one of the four best bookstores in the world. Member of the Board, Gertti Kogerman, tells us about management culture and connecting traditional business with contemporary e-business that has made the leading book-selling company of Estonia world-famous. Written by Helen Michaels.
Management culture supports entrepreneurial spirit
Gertti Kogermann and Viljar Ots are a tandem who started book-business already in 2001. The two of them built up the book business of Ekspress Group and redeemed Rahva Raamat from Ekspress Group together with co-shareholders in 2010. According to Gertti Kogermann, the 15 years of wholehearted book business has turned him and Viljar Ots into the top book-sales specialists of Estonia. As owners and board members, both men participate in everyday work of the enterprise and seek ways to modernize the business and operate better than before.
At Rahva Raamat, working well as always does not suffice. One must try to do better. Additionally to the budget and forecast, business plan of the sector is discussed together with all department managers each year. And it is not important, whether the department is wholesales, warehouse, purchase, marketing or any other, the main question to the department manager is how he/she will develop his/her area of responsibility. There are eight department managers and they should all be seen as entrepreneurs: they need to grasp on the big picture, they need to have the internal strive and right attitude. Because if one does things as things have always been done, the company will halt and this means regression. “It doesn’t matter how the business plan of a department manager looks like – contents of it is what’s important and what will be done better than before. Now, innovation proposals of business processes already come from inside the departments,” is Gertti Kogermann pleased.
Implementation of modern management model has brought these people to the company who offer thoughts, ideas and proposals for business development themselves. The whole way of thinking starts from a person, his/her attitude and whether there is a will to develop. “People seeking to work in comfort zone cannot do well within our organizational culture. They usually leave,” Kogermann says. Our people are above all expected to have the attitude and spirits as if they were pursuing their own thing. “Promoting own department is the fundamental thing to bring out in people as a leader,” Gertti Kogermann believes.
Days together with the employees
Regular communication with rest of the company employees is also very important to management members. “In most years, we and our other managers participate in inventories either in stores or the warehouse and are of help at some of our stores out during Christmas. This is a splendid opportunity to see the work organization and processes from another perspective and notice bottlenecks. A few years ago in December, Viljar and I received supplies at the back room of Rahva Raamat’s store in Viru Keskus and cursed the organisation of work. Our sales peak on December 12th to 24th. Products move in and out of stores by tons a day. 40 different product crates arrived at once, the list was printed on several sheets of A4 paper, and any book on that list could have been in any of those crates. At moments like this, we understand how much time and nerves are wasted due to a half-baked system and that it’s the eleventh hour for development,” Kogermann explains.
Book business seems pleasantly intellectual and peaceful, but Gertti Kogermann knows it to be an illusion. Reality is that the business is a part of highly competitive retail trade where the most efficient ones win – those who achieve the best results at the lowest cost. Additionally to great bookstores, Rahva Raamat has a growing e-business and a huge wholesale business. For instance, if everyday stock management service is provided to Selver or any other chain, then it is simply a question of efficiency whether the customer managers executes stock overview and makes related decisions within three hours or 30 minutes. “How fast is computer software able to generate a red list of products with warehouse stock below 10% or a list of products that are not selling, is important,” tells Kogermann.
It is quite common that hits arrive from a print shop on Friday at 13:00 o’clock and logistics become the main task of the bookseller. All is well if the system is fast enough to distribute the sales hits between the larger stores already on Friday. If not, Friday and Saturday and Sunday will be lost for trading. Too many weekends like that in one year reflects directly on the turnover and profit rows.
When technological updates or software version updates are executed in the company, the team of Rahva Raamat always gives the critical eye to business processes. “We do usually like the stability in style ”it has always been done this way”. Major software change enables to review all processes again and thing whether the two magic words – efficiency and productivity – have been implemented to their fullest,” Kogermann explains. After all, a company wins more if a new operating level is reached due to faster business processes. This is when a technology investment has served its purpose.
Well-timed e-business increases business
According to Gertti Kogermann, e-business development has been the greatest challenge of the last four years. Many people believe that an equal sign can be drawn between e-business and e-book, but e-business actually means purchasing a physical book from an online shop. The share of e-books on Estonian book market is only about 2%.
Rahva Raamat’s team launched online store about two years ago and retail trade’s most modern mobile application or app was added to it last year. Gertti Kogermann reminds the dilemma of book business: “On one hand, we must be a traditional conservative bookseller. Our 104 years old bookstore on Pärnu road is visited by elderly people who tell us that their grandmother took them to this bookshop when they were five years old. A shop with such history cannot be changed too much. On the other hand, we are dealing with innovative and rapidly developing e-business we only started to focus five years ago. Everything must be cutting edge in an e-store! Loyalty in an online shop is a very fragile thing. This means that if your e-shop is not fast, convenient, easy, flexible and sensible, the customer is gone in 20 seconds and getting him/her back is highly complicated. Our greatest challenge in developing our e-business has been changing our way of thinking and challenging our management.”
Kogermann says that in the future, Rahva Raamat wants to be the most preferred bookseller of Estonia both in traditional bookselling business as well as e-business. “Customers don’t buy their books from only one place. They buy simultaneously from physical shops as well as e-shops. Rahva Raamat of the same quality must be there for its customers everywhere,” Kogermann describes the dynamism of contemporary book business.
No-one in Rahva Raamat’s management has doubts about the necessity of e-business anymore. Kogermann however admits that it was changing of the team’s attitude towards e-business that was the greatest challenge. “We did not know five years ago, how much digital sales channel and digital content will change the book business. We only knew that if e-books will really change the world as much as it was believed back then, we want to be the leaders in Estonia,” Gertti Kogermann admits.
Service chain must be consistent
So, the company started to introduce the new way of thinking – to provide services to toe customer on the best possible level in all sales channels. Rahva Raamat had an online shop already in 2006, but it was very small back then. “The whole thinking pattern of the company in all departments from the warehouse to marketing had to be changed for launching e-business. All our employees had to leave their habitual ways of thinking and be open to innovations,” Kogermann recalls.
Rahva Raamat did have a large central warehouse, but it does not include all books since total editions of many books are distributed between stores. For successful selling via e-store, a customer service person of Rahva Raamat in Viru Keskus collects the books ordered online. E-store of Rahva Raamat was the first e-shop in Estonia to offer a 24-hour delivery service instead of delivery within a week in Estonia. “Why on earth, many asked. E-business sales seemed so small that a 24-hour delivery didn’t seem to be worth it,” Kogermann describes the emotions in the company. The fact that sales can grow when logistics is good, had to be explained a lot back then.
Management members of Rahva Raamat have gained a lot of knowledge while travelling the world and seen which business processes work in different societies and which do not. Kogermann describes what he learned in England: “Five or six years ago there were over one thousand e-shops in England selling book among other products. The manager of their largest wholesaler said that their business blossomed only when they were able to launch 24-hour delivery service in Great Britain.” The team of Rahva Raamat set a similar goal and was able to execute it within a few months.
After launch of the Rahva Raamat application last year, Kogermann personally went to tell the shop managers how important it is to introduce the app to the customers. It is of utmost importance that the store managers and customer service persons understand the ever-closer connection between traditional book business and e-business. The mobile app helps the customer to find the necessary product faster in a physical shop. It also helps to be up to date with the book world by offering news and book introductions or browse quotations to scare away boredom while waiting somewhere in a line. “Despite of the store the user of Rahva Raamat app purchases his/her book, he/she is our customer and the service chain must be consistent,” Kogermann notes.
This spring, the Finnish publishers nominated the Viru Keskus store of Rahva Raamat for the Bookstore of the Year Award competition of the London Book Fair. Additionally to Rahva Raamat’s Viru Keskus store, there are three other bookstores that made it to the finals: Readings from Australia, Hoepli from Italy and Sanlian Bookhouse from China with a total of more than a thousand bookstores. Why was the Viru Keskus store of Rahva Raamat chosen among the four best bookstores out of 168 candidates? According to the official statement, provision of services, displays and atmosphere were evaluated. “Finnish publishers who nominated us said that they don’t have any bookstores that are as cool as our store. I believe, that in the Nordics, we are the top,” Kogermann says and adds that this is a glorious recognition of 15 years of work.
Even on holiday trips, Gertti Kogermann never misses an opportunity to hop in local bookstores or meet local booksellers. “There has always been someone to show me the shop for half an hour. Now, after the Bookstore of the Year Award, a management member in London Waterstones Piccadilly six-storied bookstore attended to us for as long as four hours and mentioned that they are not yet such hotshots as us,” Kogermann smirks.
Constant self-improvement ant the courage to make mistakes
It is not always easy to understand, which decisions are right and which are not even when observing world trends. Answer to questions how much, into what and when to invest usually emerges when you have faith in an idea. “Many investments must be made while looking into the future. We got the last impulse for an app from e-business conference in USA when we were looking at the statistics about how much of information is consumed via mobile channels and apps,” Gertti Kogermann explains.
There are, indeed, easier investment decisions. For instance, iPad based paper-free warehouse investment was decided based on thorough calculations turning everything into units – for how many litres and kilograms would the process be easier and faster. It seemed on the paper, that a paper-free warehouse will pay off within a year but it actually paid off much faster. According to Kogermann, the greatest challenge of the management is to see which investment is required for improving the competitiveness of the company as a whole. “All investments cannot be measured,” is Kogermann convinced. You just have to understand how they affect the whole business and facilitate its development.