The Australasian owner of Borders' Asia Pacific operations is looking at a new store concept that will bring together music and DVD with books and stationery.

REDgroup Retail - which also owns book chain Australian book chain Angus & Robertson and Whitcoulls, a leading New Zealand books, stationery and DVD retailer - plans to open its first A&R Extra store in Sydney early in 2010.
At the same time, the group aims to continue to expand the Borders brand, both through new stores in the region and an expanded online offering.

REDgroup last month announced a 300% leap in EBITDA to $42.4 million New Zealand ($31.5 million) for the 2008-09 financial year. The result reflected the first full year contribution from the 32 Borders stores in Australia, New Zealand and Singapore, which the company acquired in June 2008. However, the integration of the Borders business also brought off a one-off cost of $12.6 million New Zealand ($9.4 million).

Managing director Dave Fenlon tells that the company's retail brands had weathered the economic downturn well, and with Borders' now fully integrated into the business there were opportunities for expansion across the group.

He is particularly excited about the first A&R Extra store, which would be 500 square metres and would carry a similar sort of product range as British retailer W.H. Smith. Fenlon believes that the Australian market potentially could sustain between 20 and 30 Extra outlets.

"We think it is a huge opportunity," he says. "It's not exactly pinpointing another competitor, I think it's a market that is spread somewhere between book stores, news agents and department stores."

Fenlon expects music and DVD to account for around 30% of the floor space, with stationery making up another 15%; books would make up the remainder of the offering.

The intention is for A&R Extra to carry around 2,000 music SKUs (stock keeping units), with a section aimed at the more mature "middle Australia" customer. "It's going to be about service and range, it's not targeting the younger end of the market," he says.

Fenlon also sees growth opportunities for Borders in both Australia and Singapore. A major new outlet in Melbourne is due to open early in December and he hopes to open another four or five stores in 2010.

He would also like to add to Borders' portfolio of Singapore stores. The group currently operates two stores in the territory but Fenlon believes there is scope for five or six Borders outlets in Singapore.

Although REDgroup has no plans to increase Borders footprint in New Zealand, Fenlon says the group will continue to upgrade its Whitcoulls chain. "We've got five Whitcoulls stores under renovation and we have seven more of those planned next year," he says.

On the online front, Borders now has its full transactional book site up and running, with music and DVD set to be added early in 2010. But while REDgroup is looking at the opportunities presented for digital books, Fenlon has ruled out a music download component. "I think iTunes have got that well and truly covered," he says.