Rahva Raamat: Digital Solutions Increasingly Vital in Book Sales
Source: Äri-IT Spring 2023
In late 2022, Estonia’s leading bookseller, Rahva Raamat, celebrated 110 years of continuous operation. As if a gift for its anniversary year, the company received significant recognition at the London Book Fair, where its Viru Keskus store was named the world’s best bookstore. What is the key to Rahva Raamat’s success, and what role do IT and digital solutions play in it?
Rahva Raamat’s origins date back to 1912, when Gustav Pihlakas’s bookstore and stationery shop and publishing house opened its doors at 10 Pärnu Road in Tallinn’s Old Town. Today, Rahva Raamat has 12 stores in eight cities, book cafes, an online store, and recently launched a new smart application for streaming audiobooks.
“Our history indeed began with a single store, and we have developed significantly over the century. We aim to be the number one bookseller and promoter of reading habits in people’s minds,” says Priit Peterson, Chairman of the Board and CEO of Rahva Raamat AS.
Although the internet and digital solutions have shifted a significant part of our lives to smart devices, he says this has not killed the sale of paper books. However, the proportion of books purchased online grows year by year: “In Scandinavia, it’s already over 50%, and in Finland, the book market has also grown primarily through digital solutions and the popularity of audiobooks. Digital solutions are also on the rise in Estonia, and we are prepared for this and keeping up with the trend.”
Ten years ago, Rahva Raamat set a vision to be Europe’s most reader-friendly bookseller. And this dream has come true, as they were awarded the title of the world’s best bookstore at the International Excellence Award, selected at the long-standing and highly recognized London Book Fair. Moreover, a few years ago, their Old Town bookstore was among the top three in the same competition. “We put in even more effort with the Viru store, and it paid off! Now we need to readjust our vision… perhaps we should aim to be the world’s best online store,” Peterson reflects. “But in reality, it’s a huge achievement for a small Estonian company to inscribe itself on the cultural map of Tallinn, Estonia, and the world! Additionally, we were named the best service company in our field in 2022.”
One in Four Estonians is a Rahva Raamat Customer
In Estonia, there are few companies whose name everyone knows and whose customer base includes one in four Estonians. But this is Rahva Raamat’s position. In addition to Estonian-language books, Peterson notes that the demand for English-language literature has clearly increased in recent years. “On one hand, this is due to Brexit, which increased the cost of shipping packages, including literature, from the UK. On the other hand, more and more young people have started reading foreign-language books, which is very positive. We’ve been reflecting with the team on what business we’re actually in, and we’ve concluded that it’s the business of wisdom, self-development, and cultural entertainment!”
Currently, the most popular genres are fiction and biographies, as well as children’s books. During the COVID-19 pandemic, when people had more time for themselves, the sales of investment and self-development books, home design, and cookbooks increased. Rahva Raamat sells most books published in Estonia to ensure customers have a good selection of the local market’s offerings. Exceptions are works that incite racism, violence, or war – these are not distributed.
Trust in Digital Solutions Grew During the Pandemic
According to Peterson, the pandemic years changed consumer behavior. “Physical stores were closed, and more people turned to e-commerce. This was also the case for us: books were purchased through supermarkets and our online store. I believe this period was a major challenge for all retailers and also made it clear how well a company’s digital solutions are designed and to what extent they can actually serve customers. Of course, it was also a considerable challenge for the logistics department, as assembling online packages is somewhat different from supplying books to resellers wholesale. Fortunately, we had made the necessary investments in our e-commerce at the right time. On the other hand, we clearly understood our challenges and future development opportunities.”
For example, it was recognized that the e-commerce platform’s capacity needed to be improved, the visual customer experience could be enhanced, and new business opportunities could be integrated. “It’s important that when sudden demand arises, we can keep up and offer even more than the customer expects. It’s a powerful feeling to anticipate market preferences before the market even realizes them,” says the CEO.
In summary, the company received a positive signal that people have developed trust in online shopping and digital solutions. Rahva Raamat realized that it must direct its future focus towards investments that would bring younger customers to books through their preferred channels. This continuous development has led the management to consider how to apply their experience and strengths outside of Estonia, although there are no concrete plans yet. However, never say never.
Recently, the company launched a new loyalty program that makes shopping more playful for customers – points can be collected from purchases and used to earn additional discounts. “Our cooperation with BCS Itera has been long-standing, as we have been using their business software for years. All software solutions are tailored to Rahva Raamat’s needs; for example, our logistics process involves three sales channels: physical stores, the online store, and the application. The core data is in one business software, but these data are also used by other partners’ specialized solutions, from warehouse and logistics modules to data analysis and online product entry. We work with every component,” Peterson explains. “Our database must be completely reliable, and data must move between software systems 100% on time. This requires good cooperation between all our IT partners: the business software provider, the e-commerce solution provider, and others. They cannot be rivals but must be united in ensuring the satisfaction of their customer, which is us.”
Rahva Raamat also manages its own logistics for books and other products, which includes its own warehouse, warehouse staff, and transportation. They serve more than 400 end-customer sales points. “One of our major strengths is that we are also a logistics company. We have developed our own program for order fulfillment and established supply chains. Additionally, we recently started a strategic partnership with Omniva to transform Estonian post offices into innovative stores where our products can also be purchased.”
Employees United by a Passion for Reading
Rahva Raamat employs 200–240 people, depending on the season. As of the beginning of the year, there are no vacancies in the company, indicating that people enjoy working there. All Rahva Raamat employees are united by a passion for reading, and everyone from service staff and store managers to top executives has sufficient knowledge to discuss books.
“Our strong work culture and internal climate are built on our people. Our pillars also include the products we sell and the environment in which we work and serve customers,” says the CEO. “We are a flat-structured organization; the absence of hierarchy is our internal strength, creating a pleasant atmosphere.”
Bookstores were, are, and will remain, but according to Peterson, their job is to understand where the market is heading, what the demand is, and how customers want to consume products in the future. “Based on this, we must adapt and invest in the right solutions at the right time, which is clearly the digital direction right now. Those who are not open to innovation will be left behind. For us, it’s important to preserve traditions and keep up with the times!”
Collaboration with BCS Itera
Nearly 15 years ago, BCS Itera implemented the international retail solution LS Retail at Rahva Raamat, based on the Microsoft Dynamics 365 Business Central business software platform. The solution’s structure is typical for retail, with four levels: head office, stores, cash registers, and e-channels, and its functionality is extremely rich. At Rahva Raamat, it covers almost all supply chain processes, such as finance, purchasing planning and inventory replenishment, paperless warehouse management, and of course, project, retail, and e-sales. Based on the specifics of the business, investments were made in warehouse management automation and planning in recent years. The solution has been continuously updated, and Rahva Raamat has implemented several newer versions.