CASE STUDY >
Selling in volume
Written by: Jason Hovet
When it came to creating a
catchy company name, the owners of Levné knihy got straight to the
point. Its brand (Cheap Books) speaks for itself, and its target
is any literate Czech.
JAN MAIVALD has moved a long way from selling inexpensive books
out of a stand at Prague's Hlavní nádraží to travelers running
late. Now with 28 shops around the country - including 10 in the
capital - the aptly-titled Levné knihy KMa has become one of the
biggest booksellers in the country. "From the beginning, when
I started with the book stand, it was my goal to come with something
new," says Maivald. "There was already an abundance of
common, classical bookstores, which meant big competition." However,
seeing that economical changes in the early 1990s had made a lot
of books unattainable for many readers, Maivald got "the idea
to offer customers what they wanted: a cheap book."
Along with his sister/co-owner, Helena Šimková, the two started
by scouring bookstores and suppliers around the country looking
for the best deals on books and buying up surpluses. A short while
after starting with the bookstand, the pair were able to secure
their first proper shop in 1994 - in Prague, on Vodičkova Street.
With business proving a success, the group set its sights on other
larger cities. "My goal was always to build a network of Levné
knihy shops in the center of every big city," Maivald remembers.
The shops aren't the company's only revenue-maker. In 1998, Levné
knihy became Tesco's exclusive supplier of books, filling the shelves
in around 30 stores. Today, the bookseller also stocks Carrefour
and Kaufland stores. It has struck deals with a number of distributors,
too. Taking advantage of technology, the company has a steady stream
of customers - both the public, as well as libraries and schools
- buying from its website. The company has also diversified its
stock with music and videos, which now account for half its turnover
(although the owners wouldn't share an exact number).
Keep it low
- Passing low costs on to the customer
- Handling both publication and retail aspects of business
- Launching an e-shop for extra sales and promotion
- Flexibility and steady expansion
What really helps the firm, according to Dana Ledvinová, who is
in charge of KMa's day-to-day operations, is the publishing side,
which was started in 2000. Through mass printings and using basic
materials, the company is able to sell classic titles in its outlets
for only CZK 59. "The main idea was to make [these books]
accessible to students," says Ledvinová, mentioning that this
group makes up a large proportion of their customers.
But publishing is only one aspect where the company has managed
to stay true to its name, while still making a profit and expanding.
Levné knihy has the advantage of selling through its own outlets
- along with supplying distributors and hypermarkets. It has also
built up long-term relationships with printers, and keeps the design
and materials cost to a minimum. Just as well, as Maivald points
to the "ability to take a risk" when buying printing
rights on a particular title. More important is the speed in which
books are circulated. Ledvinová says "published books don't
sit [in the warehouse] for more than 24 hours."
To move stock quickly in the shops and keep it fresh, Levné knihy recently upgraded
its internal computer system. Apart from digitalizing most of the business, Ledvinová
says the computer system - that the firm invested several hundred of thousands
of crowns into - was instrumental in modernizing the business. Each store is
connected through the system and can access daily updates on each other's stock,
as well as future shipments.
While Maivald has no set pricing strategy in the shops, Ledvinová says that working
in volume pushes prices down (a practice that has led to attacks from the competition
for unfair pricing.) Keeping with a no-frills mentality, Levné knihy shops are
also minimal - most books are sold out of crates and off pallets, and interiors
are decorated sparingly. "Customers know what to expect," Ledvinová
says, referring to the attractive lack of luxury.
A bare-bones shop is also more mobile. Levné knihy has always looked
for high-pedestrian areas, but in recent years it has benefitted
from an unofficial "here today, gone tomorrow" strategy
- meaning it's not afraid to sign a short-term lease in a space
that may be, for example, between occupants. The reason for this?
Besides cheaper rents and penetration into new areas, Ledvinová
says it can be a form of advertising. "Customers in the
area can get acquainted with our goods," she says. This
has led them into a few shopping centers, including a space in
the Arion shopping mall in Brno and the new Eden center in Prague.
Ledvinová admits that in nicer locations like these they put
a little more into the interior design.
Maivald tries not to think about his success and can't even remember
a time when he realized Levné knihy had become successful. Levné
knihy's owners plan to continue expanding the publishing arm and
retail outlets, including into Slovakia, where it already has two
stores operating under the name Lacné knihy. It also wants to use
advertising more - which is a change from the past, says Ledvinová
- focusing on the internet, newspapers and mainstream magazines.
Maivald also knows situations can change quickly. "The biggest
crisis in the firm's history was in 2002 when the floods destroyed
our [Prague 6-Bubeneč] warehouse," he says, adding he had
to decide quickly how and where to continue. (The firm's central
warehouse is now located in Čakovice.) Still, Maivald only wants
to look to the future. Asked if he would have done anything differently,
he replies: "You can't change the past, you can only learn
A big turning point for Levné knihy was when it became
one of its own suppliers. In 2002, the publishing arm started
with buying the copyrights to classical European and American
literature. Recently, the firm has applied this idea to
include a number of Czech authors, many of whom had been
banned prior to 1989. Still, Ledvinová points out that
Levné knihy shops aren't aimed at one particular group,
but tries to offer "something for everyone." With
that, a large proportion of printings are for hobby books,
cookbooks, and crossword puzzles. There are also plans
to begin publishing a set of encyclopedias that will be
priced under CZK 1,000.