Chapters was nice and warm and homey, with hardwoods and carpets, it encouraged people to sit down and read (almost like a library). People were sitting and reading at Starbucks, not buying. Indigo is cold, and dreary, often with bare concrete floors, and no chairs to sit. It is not as inviting, people want to get in and get out, with the books they paid for before their good mood is sucked out by the store.
Not surprisingly, they are more profitable, and are thus slowly replacing Chapters stores