CASE STUDY >
A binding enterprise
Written by: David Creighton
Photo by: Jan Vágner

When Jan Kanzelsberger launched what was then the Czech Republic's largest bookshop, critics said it wouldn't survive. Not only did it survive, but it has become one of the most successful businesses in the country.

Jan Kanzelsberger, Jr.

JAN KANZELSBERGER was always ahead of his time. When he ran a bookshop in Prague during the Communist era, he adopted business practices he saw on travels to the West. This proved invaluable later on. "Before the Velvet Revolution my father dreamed of a very large bookshop as in Western Europe," says his son, Jan. This dream started to become reality in 1990, when he acquired the bookshop he previously managed. "At the beginning nobody knew how to do private business, so my father had a certain advantage because he was always wandering around bookshops in Germany," he adds.
When Kanzelsberger senior founded the company it was registered under his name, as a legal person. From the outset it was to be family-run: several members were involved, and later his sons, Jan and Martin, became directors. Their father remained sole shareholder. As the company had virtually no starting capital, it took out a bank loan of CZK 4 million, which was used to finance the refurbishment of the store on corner of Wenceslas Square and Štěpánská. The branches, which opened later in Prague, were financed by funds generated by the operations.

Getting ahead
Kanzelsberger senior knew that his shops had to be different. Anywhere else the old-fashioned selling methods prevailed: books were still sold behind the counter. "Many competitors felt that the customer was not the main person," says Kanzelsberger junior. But his father had another perspective because his experience in Germany motivated him to think ahead, believing that innovation would pay off. His strategy stood out from the competition: he introduced self-service and in 1994 started a database of the books sold. Creating it was demanding but ultimately rewarding. "After four years we had calls from internet companies wanting to buy the database," says Kanzelsberger junior, adding that "It's the largest and most up to date of its kind in the Czech Republic."

Benchmark - Adopting western selling practices - Staying ahead of competition using IT applications - Customer care with emphasis on knowledgeable staff - Creation of network stores throughout the CR - Building strong brand awareness with the family name

The firm grew continually, enabling further development, and Kanzels-berger's dream really came true when he opened the flagship store at Můstek, the biggest milestone thus far. Steady levels of book buying and greater consumer purchasing power were two reasons behind this decision, but, more importantly, bookshops were getting much larger in the West and inevitably this would happen in the Czech Republic. "It was only a question of time when a large shop would be opened and if we didn't, somebody else would," says Kanzelsberger junior. The prime location of the store was important too because of the volume of passers-by. "Rents were high, and we needed to sell lots of books - but where better to locate than Wenceslas Square?," he adds.
Millions of crowns were invested in the 1,000 square-meters store which, when it was opened, was the largest in the country. Critics doubted if shelves would be filled, but having the database to organize stock helped avoid any problems of scarcity. Now 1,000 square meters is standard, and 99% of the shop capacity was filled when the store doubled in size in 2002.

Expansion and consolidation
In 2000 Kanzelsberger had a turnover of approximately CZK 200 million, compared to CZK 40 million in the first years. The firm was still Prague-based, but it wanted customers outside the capital to enjoy good bookshops too. The quality of those outside Prague was poor and they were often small, around 70 square meters. Despite problems such as the newness of the firm outside Prague, its strong position and long experience enabled Kanzelsberger to expand with confidence: "We knew where our strengths and weaknesses were," says Kanzelsberger junior. Consolidation came in 2002, when Kanzelsberger took over a chain of 17 bookshops called Knihcentrum, all outside Prague. The takeover was not without problems: Knihcentrum was bankrupt and debts had to be paid. Although Kanzelsberger had acquired many new stores, it had to deal with its problems all at once, rather than if it had opened new shops individually. Despite this, he claims the takeover benefited the firm greatly. "It was a unique, unrepeatable opportunity to take over competitors," he says, adding that it was also a chance to breathe new life into book retail outside Prague. Today the firm, which in 2002 became a public limited company, is a leader in the Czech Republic, with 34 stores, 350 employees and a turnover of CZK 400 million last year. But it does not take its success for granted: the firm's rivals have followed its changes closely. "A few years ago our competitors were four or five steps behind us, now they are one or two," says Kanzelsberger junior. As well as keeping an eye on the competition, the firm has to take increased customer expectations into account. Its response to these pressures is to keep innovating.
Currently it is concentrating on the design of shops and making shopping more of an "experience", with features such as comfortable sofas for browsers, who it is hoped will find the shop more attractive, spend more time there and ultimately spend money. "We need to care more for design and don't regret spending money on it," Kanzelsberger junior says, pointing out that customers are pleased with the new shop layouts. Now the company is preparing for a new chapter in its history as more shopping malls continue to be built and with them come opportunities for bookshops. "Prague is heading for a new wave of development in bookshops and the next two or three years will be groundbreaking," he concludes.