s.

Frisking
ards at the
n the past
, Andreas
successor,
CAS E 6
over for a
en head of SHOPPER'S STOP-BUILDING A RETAIL BRAND
.isees at an
id Punjab,
'To be a global retailer in India and maintain No. 1 position in the Indian market in
ranchising
departmental store category.' This is the vision with which the foundation of Shopper's Stop was
his change
laid. Shopper's Stop has grown from one store in 1991 to twenty four stores across India in 2007.
-fiting, say'
It has managed to establish itself as a household name in the markets it chooses to operate in and is
. Sourcing
committed to retailing superior quality products and services and above all, creating a complete
l had come
shopping experience.
-re by 1999
:lropped to With an unparalleled assortment of the leading international and national brands in clothing
Iy. Indeed, for men, women and kids; accessories, fragrances, cosmetics, footwear; home furnishing and decor
products, the stores aim to provide shoppers a truly international shopping environment. It is a
term synonymous with 'lifestyle' retailing, a co-ordinated product offering and a superior shopping
fit with the
experience. This perhaps is the reason that it is the only retailer from India to become a member of
andas were
the Intercontinental Group of Departmental Stores (IGDS), along with 29 other retailers across the
-r company
world, including Selfridges (UK), Karstadt (Germany), Takashimaya (Japan) and Lamcy Plaza
vever, Nanz
(Dubai) to name a few.
ply did not
Creating a strong retail brand has been achieved through the synthesis of various elements
within the organisation. Providing the right product mix, adopting the right systems and processes
and providing the customer with a unique shopping experience has helped create a strong Indian
retail brand. In the year 2008, the company embarked on a repositioning strategy in the light of the
estions) changing retail environment in the country.
This case study examines the journey of this strong retail brand over a time frame spanning
permarket/ seventeen years.

country like COMPANY HISTORY

Shoppers' Stop was founded in 1991 by the K. Raheja Group of companies, one of the largest
players in the country in the business of real estate development and hotels. From one store
first mover occupying 2,800 sq.ft and retailing only men's wear, it has grown to a chain of 24 stores offering
Men's wear, Women's wear, Children's wear, Home products, Accessories, Cosmetics, Perfumes and
Jewellery. Besides, the stores also offer a music corner (Planet M), a book corner (Crossword)and a
coffee shop. ,
Shopper's Stop Ltd. has today metamorphosed from being a chain of retail stores to emerging
as a Fashion & Lifestyle destination, which now includes retail concepts such as bookstores, cafes
and high-end lifestyle merchandise for the growing affluent middle class in India. The company's
flagship business of department stores is manifest in Shoppers' Stop. A pioneer of organised retail
in India, Shoppers' Stop today, is the country's biggest department store chain. It houses a host of
international and domestic brands, across categories such as apparel, accessories, cosmetics, home
& kitchenware, as also its own private brands.
550 Retailing Management
success of'
FORMATS IN OPERATION take Desi (

Shoppers' Stop has launched Home Stop, a first-of-its-kind premium home concept store offering In Jul
thereby bi
a wide range of products and some of the most reputed national and international brands. It is a
one-stop-shop for all home needs ranging from home decor to furniture & recliners, bath offers the
music, sta
accessories to bedroom furnishings, mattresses to draperies, carpets, kitchen accessories and
and is fasi
appliances to modular kitchens & health equipment all under one roof. The store is positioned as a
complete home solution store which offers designs and style, quality and convenience. A typical
Home Stop store is spread over 30,000 square feet. Home Stop houses some of the most reputed JOINT"
national and international brands under one roof. For example, high end crockery from Corelle,
• Sh
premium steel utensils from Magpie and Artinox, exclusive down feather pillows and fine bedding op
from Paradies, Germany, bed linen and furnishing from Stop, Ivy, Fern, Portico, Maspar, Bombay be
Dyeing and home appliances from Phillips and Morphy Richards, bathroom linen from Welspun. an
Shoppers' Stop is the franchisee for the global retailer of baby products, Mothercare, who is the
• TI
leading specialist retailer for the mother-to-be & the parents of young children, offering the widest in
range of clothing, hardware & toys for the Pre-School child, in the UK and internationally. er
The Mothercare franchise fits well with Shoppers' Stop overall strategy as its department stores cc
also target similar high-income consumers. The company plans to open 25 Mothercare outlets se
within its department stores and as standalones over the next 5 years. Although this brand is niche- ~r
1
focused, it plays an important role in enhancing the company's overall portfolio quality. lt
The stores are 3000-6000 sqft and have a complete offering of the Mothercare product range r:
and offer the widest choice to the consumers. The company also plans to operate large format Flag (J
Ships in select cities with an average size of not less than 5000 sq ft. Mothercare operates Shop in A
Shops in most of the key Shoppers' Stop locations. These are generally 1800-2000 sqft. 3
The Mothercare India lines are in keeping with the absolute latest trend directions •l
internationally. With this goal in mind, over 70% of products sold in India are sourced from global J
vendors in over 13 countries. All products conform to rigid European quality standards. Even India I
made products are subject to Mothercare's international quality parameters and are made in
Mothercare certified factories.
A step up the evolutionary ladder from 'franchised coffee bars', Brio has been designed to be a _ In \
~
warm & friendly 'Oasis'-a place where you can relax, revive and reflect. Its classic yet sophisticated an ope
s
ambience, decorated in warm earth tones, uses natural materials such as Old Burma Teak furniture achieve
I '

and counters, raw silk lamps and cappuccino painted walls, punctuated by friendly, helpful service. I Profit)
, Brio offers a mix of desserts, cookies, brownies, muffins, croissants and savoury puffs baked Sh<
fresh and served hot from the oven and freshly made sandwiches. It also offers a range of coffee Citizen
beverages that are perfectly suited for the Indian palette. In the year 2006-07, the Company had functic
increased the count of the Brio outlets to 16. I
Desi Cafe stands for everything that is global in its outlook, yet truly desi at heart. The menu is, BUYlf
expectedly, as full of perennial favourites as it is with yumtny twists. While Chhola Batura, Mumbai
Merch
Masala Sandwich, Pav Bhaji and Paapdi Chaat keep you comfortable in familiar territory, innovations
to be
like Kala Khatta Slush and Curry Puff tease your palate with adventure. The best part of the fare is
becorr
that it has something for every Indian. Be it the breakfast section, the snacks, or the mini-meals-
the choices are diverse enough to take you on a cross-country tour. And with the unbelievable
2comp:
3Comp:
1 Company Annual Report, 2006-07,
 Case 6 Shopper's Stop-Building a Retail Brand 551

success of the brand at InOrbit Mall and the domestic airport at Mumbai, that's where we intend to
take Desi Cafe.
In July 1, 2006, Shoppers's Stop became the master franchisee for Crossword owned outlets,
thereby bringing about greater operational efficiencies and synergies in the business. Crossword
offers the widest range of books for the young and old alike, along with magazines, CD-ROMs,
music, stationery and toys. Crossword operates 45 stores in various cities and towns in the country
and is fast emerging as India's fastest growing chain of bookstores. 2 •

JOINT VENTURES
• Shopper's Stop has entered into a 50:50 joint venture with The Nuance Group AG, for
operation ofduty free retail outlets at international airports in India. The joint venture has
been awarded contracts to operate duty free stores at the green field airports at Bangalore
and Hyderabad, which shall commence operations in 2008.
• The Switzerland based The Nuance Group is the global market leader in the travel retail
industry, operating 340 shops across 56 airports and 16 countries around the globe and
employing 4500 staff. In addition to its duty- and tax-free operations, the Nuance portfolio
comprises specialist shops as well as food & beverage operations, distribution, in flight
services and shops in other travel retail channels.
• The second joint venture is with Timezone Entertainment Private Limited. Timezone is a
leading fun family interactive entertainment centre that offers up to-date and the latest
range of attractive and popular interactive games. Timezone is a Joint Venture with LA!
(Leisure & Allied Industries) of Australia. LA!, Australia have more. than 200 such centres in
Australia, New Zealand, Indonesia, Singapore, China, Philippines and India. As on March
31, 2007, Timezone operated five gaming centres with a retail space of over 35,000 sq. ft.
directiol1,~+~, • UK's leading home and improvement retail group, Home Retail Group Plc, has drawn a
rom global ., Joint Venture to develop its Argos retail format with Shoppers' Stop and Hypercity Retail
Even Indi:a~2 -" - India. Under the agreement, Argos will provide its brand, concept and multi-channel
e made in.: -' expertise and IT support to the Joint Venture. The stores will be named HyperCity - Argos
and will start in Mumbai later this year.
led to be a,;'· In the year 2007, Shopper's Stop Ltd. achieved a gross retail turnover of Rs. 8996 million and
phisticated an operating profit of Rs. 787 million, which are higher by 33% and 39% respectively, than those
k furniture " achieved in the previous year. The consolidated turnover was recorded at Rs, 9283 million and
ful service:',.I<:. -"
Profit After Tax at Rs. 242 million.3
.uffs baked ~--~_- Shoppers' Stop also runs one of the largest retail loyally programmes in the country, with a First
e of coffee:, - Citizen base of over one million members. In the next sections of the case, we examine how various
npany had':i functions are organised within the organisation.
"
le menu is, v·c._.>",,__-~ BUYING AND MERCHANDISING
a, Mumbai
nnovations Merchandise Planning is a centralised function. The corporate objectives determine the turnover
: the fare is to be achieved. This determines the targets to be achieved by the various categories and that
ni-meals- becomes a category benchmark.
ibelievable
2Company Annual Report, 2006-07.
3Company Annual Report, 2006-07.
 Retailing Management

While Category Management from the theoretical perspective, is not in practice in the • p
organisation, the company defines a category as an amalgamation of products or the coming
together of certain products, which serve a certain basket. In real terms, the business is looked upon • V
as a basket offering to the customers and the merchandise caters to those customers. The whole The
assortm-
process of Category Management is looked upon as a methodology of satisfying customers. The
Trading Manager, the merchandiser and the buyer work together to achieve the objectives of each
category. THE PF
In order to understand the process of buying and merchandising in the organisation, it is SS has s
necessary to understand the method in which categories are defined and handled. This is Haute C
illustrated in Figure 1. label. E:
Budgeting is done at the sub department, chain level. Once the budgets are frozen, the off takes •S
are determined in terms of value and quantity. This is the starting point of the Assortment \1
Planning Process. Thus, if women's wear has a budget of Rs.l 00 crores to be achieved, the
departmental break-ups would first be determined. Departments in Womens' wear are Indian wear,
· \
• I
Western wear, Lingerie and Nightwear. The merchandise in each department is then classified into
sub departments. For example, in women's western wear - tops would be a sub department. First the • I
brand mix of the total number of tops required is determined. Then the fabric mix and the colour
mix are determined. This is the starting point of Range Planning. r

The B&M department uses the Merchandise Management System functionality of a JDA • I
packaged software solution to support the planning exercise. The system helps the merchandiser Wh
determine margins, costs and quantities. Tools on the same system for Option Management will be margin:
implemented in June 2004.
Planning at SS is based on two seasons - Autumn-Winter and Spring-Summer,- typically EVALU
done six months in advance. As the budgeted numbers are available, an analysis is done of the past Each m
seasons sales. Other important factors taken into consideration are: footage
·
·
(
I Division I (

r o·
Cateoqry
3
·
Thr
(

k< Sub-Class' :1
helps fl
IAiR.Department'· j
space,
months
the rest
IT-thr
Cons id
Initiallj
the role
develoj
., and the
Aft
presen(

FIG. I The Buying [,. Merchandising Process at Shoppers' Stop

 Case 6 Shopper's Stop-Building a Retail Brand 553

:e in the
• Projections for the various brands.
~ coming 4
• WGSN forecasts for trends that can be adapted to suit Indian tastes, skins and sensibilities.
ced upon
le whole The direction for a particular category is then determined. The key to efficient B&M is
ers. The: assortment planning and then its implementation.
, of each
THE PRIVATE LABEL
on, it is SS has seven private labels in its basket of offering. Stop, Vittorio Fratini, Mario Zignoti, I Jeans,
This is Haute Curry Kashish and Life. In women's wear, 40-45% of the contribution comes from the private
label. Each private label caters to a different target audience.
off takes • Stop, the first private label from SS, is present across product categories and the proposition
rrtmenr it offers to the customer is value for money.
'ed,the Vittorio Fratini and Mario Zignoti are Premium Formal and Casual wear Men's Brands.
1n wear, . '",
ied into s, • Haute Curry is a Women's Fusion Brand.
<irst the • I Jeans is a Men's Jeans Brand.
~colour • Kashish is a premium ethnic wear brand for men and women. It offers kurta pyjamas in
menswear and formal salwaar kammez in womenswear.
aJDA • Life is a fashion brand in men's and womenswear, targeted at the young customer.
mdiser While brands are seen as the traffic drivers in the store, it is the private labels that generate the
will be margins. Sourcing at a better cost has always been a focus of the merchandise team for the labels.

picaIIy EVALUATION OF PERFORMANCE

le past
Each merchandise category is evaluated in terms of targets and the returns that it has achieved on
footage, labour and inventory, i.e.
• GMROI - Gross Margin Return on Investment
• GMROF - Gross Margin Return on Footage
• GMROL - Gross Margin Return on Labour
The returns on the category are compared with the benchmarks set for that category and this
helps further decision-making. Depending on the evaluation, a decision is taken to either increase
space, increase service intensity or to increase merchandise. This exercise is done once in six
months, at the end of each season, so that the sales and promotions for the period are covered and
the results are not biased.

IT-the backbone of growth

Considerable effort and energy has gone into developing the IT systems in Shoppers' Stop.
Initially, when the first store opened, a five-member team identified the information needs of all
the roles in the organisation across departments and hierarchical levels. A Fox Pro based system was
developed to support these requirements. However, the information was largely people focussed
and there was no consolidation.
After 1995, a number of new entities entered the retail marketplace. SS had also increased its
presence from one store to three stores and the management felt the need for implementing an

4WGSN :Worth Global Style Network.

554 Retailing Management

integrated enterprise-wide software solution. After studying the market at the end of 1997, JDA was when stocks
identified as being the most appropriate integrated packaged software solution. After getting VSAT system auto
connectivity, the company went live onJDA in March 1999. In the following two years, 2002 & 2001, replenished
the company showed losses on its balance sheet and many considered the IT system to be the cause Similar
of failure. chain. This
The leadership tasked a 12-member team to review the way in which the JDA solution had been design of rr
implemented and to identify changes required. System changes were implemented as part of an Before
over organisational re-structuring programme. Today, IT helps integrate various functions like dependent
Warehousing, Supply Chain Management, Buying & Merchandising, Finance and HR. Various most. of the
softwares like Oracle for Finance and Accounting, JDA and Arthur Planning for Buying and particular i
Merchandising and HRMS for HR are used today, as shown in Figure 2: The or
excess stocl
find sometl
vendors, w:
Apart f
link with 1
vendors as
received a
Merchandi
FlG. 2 IT - the Integrating Force
the: :,nut O(

The organisation has also moved on from VSAT connectivity to a dedicated leased line, so that CREATiNI
the service office provides 24 x 7 support. Achieving people efficiencies was sought, and this to a
great extent, has been achieved as, from a team of forty people handling 3 stores, today there are Shoppers'
170 people handling 13 stores. customer.
increase in
SS has close to 400 vendors supplying merchandise. Of these, 110 suppliers are integrated with
the system in operation. While warehouse logistics are outsourced, integration of the suppliers has One ol
helped reduce cycle time. Going ahead, the IT team is now probing the option of providing mobile Award. Th
cashiering to the stores, gold card members and is looking at avenues in e-commerce. this was ve
a lllllque e

INTEGRATING THE SUPPLY CHAIN

Given the largy vendor base that it has, initially, the company had a distribution centre attached to
each of the stores; now, with an online supply network system, the company has opted for regional
distribution centres. Regional Distribution Centres exist at Mumbai, New Delhi and Bangalore,
which service the stores in and around these places, for example, the distribution centre at
Bangalore services the Chennai store.
The nucleus of retail management is buying right and replenishing right so that the availability
is optimum. The online supply network based on the ERP package handles merchandise
management, warehouse management, automated replenishment and sales management.
The merchandising management module helps decide on the right kind of products that have
to be bought for the store. It can be anything ranging from a particular brand, fit, style, material
and colour of trousers, for instance. The module identifies vendors, fixes the buying price and
selling price and even raises purchase orders. It also points out what merchandise a particular store
is carrying at that point of time. On the other hand, the automated replenishment system indicates
 Case 6 Shopper's Stop-Building a Retail Brand 555

7,JDAwas when stocks have to be replenished. For example, if out of 50 Arrow shirts, five have been sold, the
tingVSAT system automatically orders for replenishment. This ensures that with minimal effort, the stock is
J2 & 2001, replenished.
~ the cause Similarly, the warehouse management system manages the inventory throughout the supply
chain. This module indicates from which part of the warehouse to pick up a particular colour or
1 had been design of merchandise.
part of an Before the online ERP package came into function, the distribution system was completely
ctions like dependent on individuals who were in charge of receiving, tagging and storing the stocks, and since
R. Various most of the stocks were stored in cartons, it was difficult to identify the stocks in the absence of the
uying and particular individual who had received the stocks.
The online supply network has increased the availability as well as restricted the buying of
excess stock. The objective is to see that the customer doesn't leave the store because he couldn't
find something that he wanted. Apart from ensuring efficiency in the supply network between the
vendors, warehouses and the stores, the system has increased customer satisfaction.
Apart from the current online supply network, the retail group has also implemented a B2B
link with 125 vendors through a Web-based technology. This gives online information to the
vendors as to how a particular brand is selling, and the stocks situation. At present, merchandise is
received at least once a day by the local stores and twice a week by the outstation stores.
Merchandise is received at the stores only in the morning before 11 am, so as to ensure that it is on
the shelf before the first customer walks into the store.

ne, so that CREATING THE BRAND EXPERIENCE

cl this to a
y there are Shoppers' Stop has always aimed at providing a superior shopping experience to the retail
.1 customer. Keeping this in mind, it has created events and promotions which target either an
1
increase in the business at the store or provide a unique experience to the customer.
~ated with
opliers has One of the first events to be organised by Shoppers' Stop was DOTY - The Designer of the Year
ing mobile Award. This was awarded to young and budding designers for Image, Design and Creativity. While
this was very popular with the students, it did not do much for the customer. Keeping this in mind,
a unique event, 'The Festival of Britain in India' was organised.

utached to
rr regional
hngalore,
centre at

availability
-rchandise
It.
; that have
.~, material
price and
cular store
1 indicates Creating the experience for the customer - The festival of Britain in India.
556 Retailing Management

Photograph Courtesy: Shopper's Stop Limited Overall'

Taking the experience platform further, the festival of India, 'Parikrama' was created in the year
Augu
1998. Over the years, Parikrama has been redefined as a festival, which celebrates and enjoys
Indian culture. Last year, this festival was held for a period of seventeen days, beginning August 8th
to 24th, across its 13 stores around the country. Artists from different states ofIndia showcased their (Scores out t

unique talents like Miniature Painting, Bead Jewellery, Terracotta, Sholapith Work, Lacquer Toys to
Palm Leaf Etchings, Pattachitra, Coir Toys, Dance, Music and much more. For this special occasion,
loyalty
the in-house design team had created an exclusive line of ethnic wear for women, under the private
label STOP and KASHISH. The collection had festive colours combined with regional flavours, The Con
crafted in a medley of rustic and rural techniques, fused with exclusive fabric and embellishments Citizens I
using bead work, mirror work and traditional prints. The colours used were Indian reds, flame First Citi:
oranges, turmeric yellows, chutney greens, indigo blues, majestic purples and soothing off-whites. tiers-Cl:
A unique festival, which focused on both sales and the customer experience, was 'The Seven tiers on t
Wonders Festival'. For this festival, each store reflected the characteristics, sights, sounds and feel First
of the seven wonders - The Eiffel Tower, the Leaning Tower of Pisa, the Pyramids of Egypt, the Citizens r
Great Wall of China, the Great Barrier Reef, Niagara Falls and the Grand Canyon. • Re
In addition to the decor of the store, Shoppers' Stop also brought in international performers me
like the unicyclist, 'the Statue Man' from Italy-a man who refused to budge, a juggler from France • Ex
who juggled with things like knives and devil sticks, dancers, painters and a troupe of colourful Red 6 Ex
Indians who performed traditional Native American rituals among many other added attractions. A pr<
large number of attractive offers were also in store for the shopper.
• In'
While the events and promotions have brought the customer to the store, the courteous and e He
helpful staff has ensured that the customer stays loyal to the store.
• Ex
Creating a unique brand experience being the central theme of all the advertising, promotions
First (
and events, in the year 2006-07, the Company had an exciting Christmas festival, 'Fly to Santa
best of of
Land', in the month of December. This two weeks long festival offered the lucky customers a unique
First. Thr
opportunity to fly to the Santa Claus Village in Finland to meet the real Santa. The other major
phones, si
events that conducted were 'Gear up for School' for school going children, Salwar Kameez Dupatta
Exchange in association with Concern India Foundation and 'Do Your Denim' festival for the youth. The (
credit can
The most awaited calendar festival, 'Parikrama' celebrated the exquisite embroideries of India
purchases
this year. During the Parikrama festival, customers also got an opportunity to interact with local
attractive
artisans who were specially brought to the stores to promote and sell their crafts of embroideries
stores. For
they master in.
March, 20
CUSTOMER SATISFACTION & LOYALTY
IN KEEPI
Shoppers' Stop strives to provide its customers with the best overall experience of shopping. To
The last f,
measure the customer experience, the Company conducts customer satisfaction surveys to evaluate
retail moc
a range of parameters, including merchandise range and quality, store environment, staff,
formats m
.transaction efficiency, loyalty programme, schemes and promotions to name a few and undertakes
global ret:
improvements in various areas.
Furtht
The Company also includes select competition stores in the surveys in order to measure
firming ul
experience in the stores as compared to competition.
investmen
investors t
 Case 6 Shopper's Stop-Building a Retail Brand 557

Overall Customer Satisfaction Index

the year
:l enjoys
lsust 8th
.ed their (Scores out of 100) Source: Company Annual Report, 2006-07.
~Toys to
.ccasion,
loyalty Programme
~pnvate
Javours, The Company had pioneered India's first retail loyalty programme - "First Citizens". The First
shments Citizens base grew from 632,000 to over a million in the year 2008. During the year 2006-07, the
s, flame First Citizens contributed 61 % of the Company's annual sales. The First Citizen programme has 3
f-whites. tiers-Classic Moments (entry level), Silver Edge and Golden Glow, Members fall into the various
.e Seven tiers on the basis of their spends with the store .
and feel First Citizens also earn differential reward basis on their current tier of membership. First
:ypt, the Citizens receive :
• Reward points on all their spends. Reward points can be redeemed for a wide variety of
formers merchandise at the Company.
1 France • Exclusive schemes, benefits and promotions,
rful Red • Extended and exclusive shopping hours-specially during the festive season. Special
.tions. A previews before the sale periods.
• Invitations to exclusive events-both in-store as well as those organised outside the stores,
ous and • Home delivery of altered merchandise.
• Exclusive First Citizens lounge at select stores to relax after hectic shopping.
motions *'l
First Citizens always stay updated with all details pertaining to their membership as well as the
:0 Santa
best of offers and privileges available, through a unique service launched last year-First Citizens
I umque
First. Through this service, First Citizens get all the information that they want on their mobile
T major
phones, simply by sending an SMS.
Dupatta
e youth. The Company, in association with Citibank, has offered its First Citizens an option to add on a
credit card to their existing loyalty cards. This enables First Citizens to add on a credit line to their
ofIndia
purchases. They also have the added advantage of being able to choose from amongst various
ith local
attractive financing options, cash back schemes, EMI schemes ete. for buying at the Company's
oideries
stores. For customers who are averse to credit, there is an option of activating a debit card. As on 31
March, 2007, the number of members in the eo-branded card programme crossed 114,000.

IN KEEPING WITH THE CHANGING TIMES

Jing. To
The last few years have seen rapid transformation in many areas, setting scalable and profitable
evaluate
retail models across categories. Indian consumers are rapidly evolving and accepting modern
It, staff,
formats overwhelmingly. Retail space is ne more a constraint for growth. India is on the radar of
:lertakes
global retailers and suppliers/brands worldwide are willing to partner with retailers here.
Further, large Indian corporate groups, as also foreign investors and private equity players are
neasure
firming up plans to identify investment opportunities in the Indian retail sector. The quantum of
investments is likely to sky-rocket as the inherent attractiveness of the segment lures more and more
investors to earn large profits.
 Retailing Management

With the largest young population in the world-over 890 million people below 45 years of
age - India is indeed a resplendent market. India has more English speaking people thari in the
whole of Europe taken together. Its 300 million odd middle class, the 'Real' consumers, is catching
the attention of the world. As the economy grows so does India's middle class. It is estimated that 70
million Indians earn a salary of over INR 800,000 ($18,000) a year, a figure that is set to rise to 140
million by 2011. The number of effective consumers is expected to swell to over 600 million by
2010 - sufficient to establish India as one of the largest consumer markets of the world.
Favourable demographic and psychographic changes relating to India's consumer class,
international exposure, availability of increasing quality retail space, wider availability of products
and brand communication are some of the factors that are catalysing organised retail in India. Over
the last few years, many international retailers have entered the Indian market on the strength of
rising affluence levels of the young Indian population along with the heightened awareness of
global brands and international shopping experiences and the increased availability of retail real
estate space. Development of India as a sourcing hub shall further make India an attractive retail .FiG.3
opportunity for the global retailers. Retailers like Wal-Mart, GAp, Tesco, j C Penney, H & M,
Karstadt-Quelle ete. are stepping up their sourcing requirements from India and moving from En
third-party buying offices to establishing their own wholly owned/wholly managed sourcing and level, ,~,
buying offices, which shall further make India as an attractive retail opportunity for the global the uni
players. Th
With the changing face of retail, the Indian consumer is in for a rapid transformation. platfor
Consumer spending continues to grow at double digit figures. According to India Retail Report Th
2007, the total private consumption touched INR 20,000 billion (US $ 445 billion) at current prices like AI'<
in the calendar year 2006, with organised sector accounting for INR 55,000 crore ($12.4 billion) TomID'
worth of business increasing its share to 4.6 per cent of the total Indian Retail Value that stood at
Ac
INR 12,000 billion ($270 billion). Moving forward, organised retailing is projected to grow at the
its exis
rate of about 37 per cent in 2007 and 42 per cent in 2008. Organised retail in India has the potential
plan tl
to add over INR 2,000 billion ($45 billion) worth of business by the year 2010.
ventur
This consumer spending is ultimately pushing the economy into a growth-and-liberalisation
years.
mode. The Indian market is becoming bolder by the day, with the economy now expected to grow at depart
over 8 per cent and average salaries being hiked by about 15 per cent, there will be a lot more
Sh
consumption - and a lot more potential for organised retail.
from 1
In the year 1991, department stores were on the top of the perception map, the increase in the
formal
types of stores and choice available to the customer. The repositioning of the department store had
TI
happened in the perception map of the customer. This change was not attributed to anything done
by the customer but due to the maturing of the customer. 12 tiel
The customer had evolved to a different lifestyle and the Company realised that it could not S~
afford to be where it was in terms of positioning. In some categories, the store had kept pace with Store;
the changes in the customer and in some cases, it lagged behind. At this point in time, the Company Grout
made a conscious decision to move upwards as Shoppers' Stop the brand. It was envisaged that this preser
entire exercise would be spread over a period of 15-18 months.
The first step taken towards this repositioning was to rework all the touch points which would
have an impact on the consumer. These were identified as the brand itself, the space, the 5 The F,
communication and the overall experience. This is illustrated in Figure 3.
 Case 6 Shopper's Stop-Building a Retail Brand 559

The The
Communication Entire

pro The
Retail
The
idia. Space
Brand
reng
rrcne
redil
tiveF(j' ;FIG. 3 Enhancing the customer touch points

Enhancing the customer touch points also included among other things, changes at the ground
level, which included a change in the look of the customer care associates, starting with a change in
the uniform.
The change in the communication was also in terms of changing the Company's positioning
platform from, Feel the Experience while you Shop, to Shopping and Beyond.
lil u ~.-~.~< "<"'~"''''r'f
The look of the retail stores was also enhanced, which included the introduction of new formats
Ent nri'rp,:.i!
like Arcelia and new brands being added to the portfolio, like Lancome, FCUK, Mac, Clinique and
4 billion)
Tommy Hilfiger among others.
t stood
According to media reports, Shoppers' Stop Ltd. will be adding 2.7 million sqft, ofretail area to
ow at the
potential, its existing spread of 1.3 million sqft, over the next three to four years, as part of a Rs 1,000-crore
plan that will include investment in new acquisitions, its other formats and the airport retail joint
venture. The Company is looking at an investment of more than Rs 250 crore over almost four
ralisation
years. Overall, the Company sees an increase from the 1.3 million sqft of the Shoppers' Stop
:0 grow at
departmental store, towards 4 million sqft across all formats.
lot more
.. ~ Shoppers' Stop has earmarked Rs 50 crore for increasing its stake in HyperCity Retail (India),
from 19% at present to 50% by December this year, and Rs 500 crore on expanding the HyperCity
ase in the
format.
store had
ling done The retail major plans another 24 more stores in 24 cities within the next four years, looking at
12 tier-II cities like Ludhiana, Aurangabad, Amritsar, Surat, Baroda, Vijaywada and Vizag.
.ould not Shoppers' Stop will invest Rs 150 crore to expand its formats like Mothercare, Crossword Book
pace with Store and HomeStop and it will invest Rs 25 crore in its airport retailing venture with the Nuance
:::ompany Group AG. Shoppers' Stop is also looking at increasing the size of its new stores from 65,000 sqft at
l that this present, to 85,000 sqft, which will give it.space for another 50-80 brands.5

ch would
iace, the 5 The Financial Express, March 13,2008.
 560 Retailing Management

Going forward, consider the following: Exhibit 1

1. In a scenario where the existing stores have been set up in the major metros and mini metros,
is a scalable model possible for a department store like Shoppers' Stop. If yes, what is the Profitabiliy

strategy that can be adopted by Shoppers' Stop to enter these markets? No. of StOrE

2. In a world where the department store model is on the decline, what can Shoppers' Stop do Income

to sustain its leadership position in the Indian marketplace? Gross RE

Less: v«
3. How can the retailer create an effective e-tail model, to enhance its existing business?
Gross RE
Other Or

Expenditu
Cost of \
Employs
Operatin

EBIDTA
Interest
Deprect
Profit8E
Profit AI

Balance!
Share C
Reserve
Loan Fl
Capiial
Fixed A
Net Wo

Profit & I
Sales (.
Sales (I
Gross I
Operati
Operat
PBT M
PAT M:
Interes

Balance
Debtor
Creditc
Stock'
Curren
Assets
Debt E
Return t
Returr
Returr
Book'
EPS (
I
I
Cash
Dividenc

L _
~
 Case 6 Shopper's Stop-Building a Retail Brand 561

Exhibit 1 Financial Highlights

(Rs. in million)
ii metros,
aat is the Profitabiliy Slatement 2006-07 2005-06 2004-05. 2003-04
No. of Stores 22 20 16 14 12
, Stop do Income
Gross Retail Sales 8,850 6,660 5,001 3,953 2,949
Less: Value Added Tax 387 311 114 110 25
:SS? 8,463
Gross Retail Sales (Net of taxes) 6,349 4,887 3,854 2,924
Other Operating & Miscellaneous Income 258 191 79 91 81
8,721 6,540 4,966 3,945 3,005

Expenditures
Cost of goods sold 5,688 4,322 3,421 2,712 2,077
Employee costs 585 403 288 224 172
Operating and administrative expenses 1,661 1,249 920 764 560
1; 7,934 5,974 4,630 3,700 2,809

EBIDTA 787 566 336 245 196

Interest and finance charges 44 24 39 40 32
Depreciation 256 139 90 75 58
Profit Before Tax 487 402 207 130 106
Profit After Tax 262 271 190 120 106
Balance Sheet Items
Share Capital 348 344 274 274 265
Reserve & Surplus 2,665 2,356 673 511 389
Loan Funds 1,131 586 874 589 494
Capital Employed 4,185 3,285 1,821 1,374 1,148
Fixed Assets 1,450 1,225 1,096 770 660
Net Working Capital 2,247 1,713 614 501 380
Profit & Loss Ratios
Sales (Chain level growth) 32.7% 33.2% 27.3% 34.0% 22.8%
Sales (Like to Like growth) 21.0% 17.0% 9.1% 12.0% 9.1%
Gross Profit Margin 31.4% 30.4% 29.3% 28.9% 28.7%
."Operating Exp,,:nses Ratio 25.4% 24.8% 24.2% 25.0% 24.8%
Operating Margin (EB1DTA) 8.9% 8.4% 6.7% 6.2% 6.6%
PBT Margin 5.5% 6.0% 4.1% 3.2% 3.5%
PAT Margin 3.0% 4.1% 3.8% 3.0% 3.5%
Interest Coverage 13.7 18.1 8.2 5.9 6.2
Balance Sheet Ratios
Debtors No. of Days 3 2 2 2 2
Creditors No. of bays 55 54 65 63 57
Stock Turnover Ratio 3.7 3.9 3.4 4.1 5.8
Current Ratio 2.9 3.0 1.9 1.9 1.9
As!>ets Turnover Ratio 2.4 2.6 3.1 3.1 2.4
Debt Equity Ratio 0.4 0.2 0.9 0.8 0.8
/ Returntoi~v~stors
•• ,' _.... • -'.'<' ,,- . ~ •

Return on Nelworth 9.2% 14.9% 22.0% 15.4% 13.9%

Return on Capital Employed 6.4% 11.3% 14.2% 12.4% 13.0%
Book.Value Per Share (in RS.) 87.23 80.86 34.55 28.70 24.85
EPS (taking equity share at Rs. 101- each) (In Rs.)
Basic 7.58 8.12 6.94 4.44 4.04
Diluted 7.57 8.10 6.91 4.42 4.04
CashEPS 15.00 12.41 10.22 7.23 6.23
Dividend Per Share 1.50 1.50 1.00
Source: Company Annual Report 2006-07, page 29.

- ---- .~- .. --
 ,-

562 Retailing Management

Exhibit 2 A Graphical Presentation of Customer Entry and Conversion ratio

Customer Entry
25

20
19.9
,
18.3
1°10
E Cp..7-
E C~
c 15
= "The be
2:- but we',
C 12.2
Q)

Q)
E
.2 10
C/)
:> Sam walton
U
the customs
5 shop at var
In a ye,
Wal-Mart w
0 Diluted ea!
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 8.:L per cer
Year
\ val- ~vI
(Source: Company MIS)
for the Co
record for
Conversion Ratio
about $30
[-u- Conversion Ratio I more imp:
40 global ret:
\Val-~
35 cases, it a
This
30
~
0
become ,I
0 25
~ COMPA
~I
0 20
.~ The birt
(J)
>
c 15 Permey,
0
o employn
10 further {
In S
5
variety E

0
20.01-02 2002-03 2003-04 2004-05 2005-06 2006-07
'This case
Year (Source: Company MIS) 1Compan
2Compar
Source: Company Annual Report 2006-07. 3Compar