Euromedia and Rockaway – names that have belonged together for seven years now. This connection is a proof that a traditional and beautiful object like a book and the digital know-how of an investment company can complement each other perfectly. After all, as investment partner Robert Chmelař says, there are types of businesses that can be controversial in various ways for various people. But books? Nobody can have anything against books!
This time, the new Insider brings an interview with both Robert and the head of the Euromedia Group, František Mala.
WHAT DO THE TWO OF YOU LIKE THE MOST ABOUT THE BOOK BUSINESS?
FRANTIŠEK: I always liked books and reading, and I’m glad to have the opportunity to be involved in this sector, which is cultivated and naturally full of well-read people. It’s quite modern these days for companies to declare in their mission statement that their products and services are making the world a better place – and there are few sectors to which this applies as much as it does to ours.
ROBERT: Firstly, I like the product itself – we’re simply doing something nice. Over the past 25 years I’ve gotten to know lots of businesses that could be controversial from some perspective. Simply put, not everyone likes everything. But nobody can say anything against books. A book is a beautiful thing.
And secondly: for a while I thought that books were a dead medium in a new era where people have lots of other, far simpler opportunities for both experiences and relaxation. But books haven’t gone away. Though we don’t have statistics as to how many books that are sold are actually read – whether they don’t end up in a drawer or on a bookshelf – we see that people do read, particularly in the Czech Republic. I see it in my children, too, who read much more than I did. So I think that this medium will survive – people want to take a break from their phone, which they use several times a day, and perhaps sit down with a book.
What do I like about the investment itself? We’ve still got room for growth. The book market as such is relatively stable and isn’t growing rapidly, but in all verticals – in publishing, distribution, and retail, too – it is still very fragmented and we’re naturally consolidating them, which will take another five to ten years. And that’s what I like most about the book business.
WHAT DID YOU LEARN FROM EACH OTHER OVER THE TIME THAT EUROMEDIA HAS BEEN A PART OF ROCKAWAY?
FRANTIŠEK: I appreciate Robert’s ability to assume a strategic perspective on the business. He’s got an objective, pragmatic approach to problem-solving, yet at the same time everything takes place in a friendly and informal atmosphere. And it’s interesting for me to learn from Robert and see the business from an investor’s perspective. Before this I used to work for a corporation and there such a perspective was often quite remote.
ROBERT: I met František around fifteen years ago when he was in charge of the entire B2C segment at T-Mobile in the Czech Republic. And I think that this experience from telecommunications is key to Euromedia’s success, looking at the book business from a different perspective and in a structured manner. František is very analytical and thinks a lot, which combines with his rather introverted nature is greatly suited to the book business.
WHAT WAS THE GREATEST CHALLENGE FOR ROCKAWAY AND EUROMEDIA OVER THE PAST SEVEN YEARS?
FRANTIŠEK: It’s been three years now that we’ve been working together (Note: František Mala became CEO of the Euromedia Group in January 2021), and for me the last two have been the greatest challenge. The entire economy is experiencing a crisis that has also impacted the book market – mainly inflation, when the price of books grew substantially more slowly than costs, placing this market under great pressure.
ROBERT: There have definitely been several. Back when we purchased Luxor (Note: originally Neoluxor) it was in the red. So it was a great challenge to incorporate Luxor under Euromedia and to transform its business to make it work for both its customers and business partners.
When Covid came along, from day to day we had to start selling on-line – and back then Luxor wasn’t one of the market leaders, there were bigger players here. And we did a very good job. For example, we significantly improved our Heureka ranking from the perspective of customer experience.
And definitely also the shift to digital formats – audio books and e-books, which we worked on a lot last year.
WHAT WAS THE MOST IMPORTANT WITH REGARDS TO ROCKAWAY’S INVESTMENT IN EUROMEDIA FROM THE PERSPECTIVE OF DIGITALIZATION?
ROBERT: The move to on-line, today it represents 30-40 % of sales. At the end of the year we then launched a new platform for audio books and e-books, so today you can buy them from Luxor and then listen to them in the Luxor application. Though we did experience a small delay, today the service works great. And warehouse automation was a huge investment and a necessary one going forward; it’s working and we’re moving all goods into it right now.
FRANTIŠEK: The first step was development of BI reporting and analyses. Euromedia is a comprehensive business; we cover publishing, wholesale and retail. Our catalogue contains 150,000 titles and we sell around 10 million units annually. That places great demands on analyses, reporting, and decision-making. At the same time we started developing the e-commerce platform itself, so the e-shop and improvement in all associated processes. Thanks to this our customers’ satisfaction improved a lot and we basically got Luxor among the top-ranked players in the Czech Republic’s book business. Over the past two years we’ve been making significant investments into an automated warehouse that greatly increases our efficiency, quality, and capacity for growth. And last year we started a joint venture focused on distribution of electronic content, audio books and e-books, and simultaneously at the end of the year we launched the sale of audio books and e-books on Luxor.cz.
HOW HAS THE CZECH BOOK MARKET CHANGED SINCE 2017?
ROBERT: That’s definitely mainly a question for František. As for me, I’d say what hasn’t changed: a book is still seen as a very suitable and nice gift. There has always been the “heavy reader” segment, people who read, say, ten books a month, and then there’s the “book as a gift” segment. That certainly hasn’t changed, you can’t offend anyone by giving them a book. You can always find a suitable book for everyone.
FRANTIŠEK: We continue to see that the Czech book market is relatively fragmented, but consolidation is gradually taking place. Covid had a big impact, increasing the role of on-line sales, and symbiosis between on-line sales and brick-and-mortar shops showed itself to have the greatest value for customers. We are also gradually seeing growth in sales, sale of e-content, audio books and e-books. As far as individual genres are concerned, we’re happy to see that young people are taking an increased interested in literature. Young people are reading, reading is cool, and growth in this segment will mean a positive promise for the future. We see an opportunity for Euromedia in all these trends, and we are adapting our strategy accordingly.
WHAT ARE YOU LOOKING FORWARD TO IN 2024, AND WHAT ARE YOUR MAIN JOINT GOALS?
FRANTIŠEK: This year our main ambition is to accelerate the company’s growth, be it in retail, distribution, or publishing. In the coming months it’s putting the new warehouse into full operation, and we’re also looking forward to further sales growth in e-commerce – mainly e-books and audio books.
ROBERT: Utilization of AI. We’re experimenting with various processes, be it in publishing, audio books, and similar things. I don’t want to go into detail yet, but I’m also looking forward to additional acquisitions that to a certain degree will move the group forward and transform it. And from the perspective of customers I’m confident that thanks to all of the above we’ll deliver an even better experience.
WHAT BOOK HAVEN’T YOU READ YET, BUT KNOW YOU SHOULD?
FRANTIŠEK: I don’t have any one specific one, nor do I have a long “pending” list that I gradually cross things off of. I tend to go from book to book based on recommendations from friends, or read another book by a favourite author.
ROBERT: I’ll say it like this (laughs). On January 1 I quit drinking alcohol completely, and I’m planning to extend my dry January into additional months. Hence, I had lots of spare time and read a lot of things, over ten books just in the past month. I never liked challenges like Dry February, but somehow it happened that I arrived at this conclusion. I had a lot of books lying around in drawers and my bookcase that I hadn’t had time for, so now I’m gradually pulling them out and reading them.
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