Shoppers Stop

Several people have been extremely helpful in making this project

successful. I would like to express my sincere gratitude to
Deepsikha ma’m Faculty Head (MIS) JIMS, Rohini.
 
Any endeavor is not possible without the love and support of family,
friends and God. So I would take this opportunity to thank them all.
 
Last but not the least I would like to thank Mr. David D’souza
(Store In-Charge, Shopper’s Stop, Indrapuram, Ghaziabad) for taking
his time out in discussing the problems and providing accurate data.
 India retail industry gives an employment of around 8% and contributing to over
10% of the country's GDP. Retail industry in India is expected to rise 25%
yearly being driven by strong income growth, changing lifestyles, and favorable
demographic patterns. Shopping in India has witnessed a revolution with the
change in the consumer buying behavior and the whole format of shopping also
altering. Industry of retail in India which has become modern can be seen from
the fact that there are multi- stored malls, huge shopping centers, and sprawling
complexes which offer food, shopping, and entertainment all under the same
roof.
  
 Today, retailing is about so much more than mere merchandising. It’s about
casting customers in a story, reflecting their desires and aspirations, and forging
long-lasting relationships. As the Indian consumer has evolved they expect more
and more at each and every time when they steps into a store. Retail today has
changed from selling a product or a service to selling a hope, an aspiration and
above all an experience that a consumer would like to repeat. Modern retailing
is all about directly having "first hand experience" with customers, giving them
such a satiable experience that they would like to enjoy again and again.
Providing great experience to customers can easily be said than done.
Shoppers’ Stop (SS) is the leading department store company in India. It has
built robust management systems to capitalize on the growth potential in the
organized retail space, particularly the department store segment. However,
the stock has priced in the bulk of its upside potential leaving little room for
positive surprise, in our view.
 
SS enjoys a unique advantage of having a strong presence in the niche
department store segment, which is likely to face limited competition from
both foreign and domestic players. In our view, income elasticity in this
business segment is high, and as India per capita incomes grows, SS should
capitalize on its growth potential. The company has a strong, loyal customer
base, relatively high earnings visibility and low business risk. Efficient
business systems, better/standard companywide business practices and a
balanced portfolio lowers SS’s business risk.
 
SS plans to enter new segments such as home improvement and
hypermarkets. These can give up further upside to the stock if successful.
 
Given the 30% growth predicted in organized retail and SSL’s retail expansion
plans, we expect the company to record revenue CAGR of 31.6% on a
consolidated basis over the next 3 years.
The Indian Retail Sector has undergone rapid
transformation by setting scalable and profitable retail
models across various categories and formats. Traditional
markets are making way for departmental stores,
hypermarkets, supermarkets and speciality stores. The
modern malls cater to shopping, entertainment and food,
all under one roof. It was estimated that India will have
over close to 50 million square feet of quality retail space
by the end of 2007. The growth in mall space has been
over ten fold in our years: from about 2 million square feet
in 2002 to 28 million square feet in 2006. The Indian
Retail market is estimated to be worth around Rs. 14,100
billion. The organized retail market has increased its
share from 3 % in 2004 to around 4 % in 2006 and is
valued at Rs. 511 billion (source: India Retail Report 2008,
Technopak Advisors Private Limited).
KEY DRIVERS OF THE ORGANISED RETAIL
INDUSTRY:
 
 
Favorable demographics, rising income as a
trickledown effect of the rising GDP are among the
major reasons for the retail boom.
 
Changing Demographic profile:
The composition of the Indian population is shifting
towards a larger composition of people in the age group
20-60 i.e. the working population with purchasing
power. This shift is expected to be a major driver of
consumption.
The low median age of the population means a higher
current consumption spend vs. savings as a younger
population has both, the ability and willingness to
spend. The younger population is also quicker at
experimenting. The Indian consumer in among the
youngest in the world as compared to the ageing
population of USA, China, Japan, UK etc. Higher
consumption is a direct booster for the retailing
industry.
Rising income levels
NCAER reports that the number of high-income households
has grown substantially. The reports indicate that:
• The Very Rich, with annual income of Rs. 215,000 stood at 6.2
million in 2006
• The Consuming Class, with annual income of Rs. 45,000 to
215,000 stood at 90.9 ml.
• The number of households in the Aspirants (Rs. 16,000 to Rs.
22,000 annual income) and the Destitute (less than Rs. 16,000
annual income) groups will decrease significantly (source: India
Retail Report 2008, Technopak Advisors Private Limited).
Increasing Middle class consumption growth
India has seen a significant change in the consumption of durables in recent years. The
changing income demographics, age profile and macro environment are visible in the
growth in consumption of durables. For example, the installed base of cars, cable
television subscribers and cellular subscribers has increased significantly over this
period.
 
Real Estate Boom
The positive growth in industry is driving the real estate boom in India. The
development of real estate focuses on two primary areas: retail and residential. The
growth in mall space has been over ten fold in four years: from about 2 million square
feet in 2002 to 28 million square feet in 2006 (source: India Retail SHOPPING. AND
BEYOND. Report 2008, Technopak Advisors Private Limited). According to an ICICI
study, malls are estimated to become a Rs. 384,470 million sector by 2010.
 
Technology
Technological changes are being adapted for use in retail. Retailers are using call centers and
cell phones to keep their customers informed of new developments, schemes and
offers.Technology is being used to improve the customer experience, customer information,
security, logistics and supply chain management resulting in finding favor with the
consumers and increasing operational efficiency thus enhancing profitability.
 
Fluidity
The retail segment is expected to become more fluid now, with an increasing number of
super-sized stores ranging in stocks from grocery to healthcare products. It is expected that
the traditional formats will collapse into each other (source: India Retail Report 2008,
Technopak Advisors Private Limited).
 
Exposure to international trends
The large Indian population traveling and employed abroad is facilitating creation of
awareness of modern shopping formats and also leading to change in consumer expectations
from the providers of shopping options in India. There is a large Indian NRI population.
Given that international lifestyle brands are readily available in their country of migration,
this population shops for similar quality merchandise at lower prices in India on their visits
here. In addition, inbound tourists visiting India and looking for shopping here seek similar
products at lower costs in a similar environment. Globalization has removed trade barriers
and promoted consumerism. Over the last decade, there has been an increase in branded
goods, both domestic and international, in the Indian market across product categories.
Both width and depth of product offering to the Indian consumers is increasing.
 
Dynamics of organized retail
Organized Retail derives its advantages from
generating operational efficiencies while
simultaneously catering to rising consumer
aspirations. Size drives economies on procurement,
and lowers logistics and marketing costs while
delivering better value to customers in terms of lower
price, better quality, greater selection, improved
service and in-store ambience.
CHALLENGES IN INDIAN RETAIL
 
Human Resource
The industry needs skilled manpower to fit the diverse roles at the front-end and back-
end of the new and complex retail formats. It is estimated that over 2.5 million jobs will
be created in the sector by 2010. The complexity of the operations requires trained
personnel. The modern formats require staff to handle administration, public relations,
advertising, store management, sourcing, and merchandising and information
management. A number of reputed institutes have started offering specialized courses
in retail management.
 
Technology
Technology is important to cut costs, improve efficiency, providing value to customers
and increasing the customer experience. IT solutions help in synchronizing activities
across various verticals such as procurement of inventory. Security from both external
and internal threats is also important when the scale of the operations increases
Logistics
The efficiency of logistics and supply chain management systems are curtailed due to
infrastructure constraints. The wider range of products make supply chain
management even more complex. Efficient logistics services help organized retailers
streamline their operational dynamics and thus more profitability.
 
Market Information and Presence
It is important to track demographic and socio-economic changes, evolving customer
needs and desires, behavioral transformation as it takes place. A multi-channel, pan-
India presence is essential for holding the leading position in the retail industry.
 
Investments in Retailing in India
The Indian Retail market is estimated to be worth around Rs. 14,100 billion. The
organized retail market has increased its share from 3 % in 2004 to around 4 % in
2006 and is valued at Rs. 511 billion (source: India Retail Report 2008, Technopak
Advisors Private Limited). Food and grocery is estimated to be the largest single
block, but the contribution of the organized sector is at 0.8 %. The clothing, textile
and fashion accessories constitute the second largest block where nearly 17.5 % is
contributed by the organized sector. Footwear has the highest contribution from
organized retail (36 %).
Retailers have to continuously upgrade systems and
keep expanding their presence, both to provide better
services to customers and maintain their position in
the market. The retail industry has benefited from the
partial relaxation of restrictions on FDI in the real
estate sector. However, in the retail sector, FDI is
allowed only in the cash and carry formats and to the
extent of 51 per cent in single brand retail operations.
 
 
SS is one of India’s prominent retailers and is a part of the K
Raheja Corp Group (Chandru L Raheja Group), which is
among the prominent real estate developers and hoteliers
in the country. They are pioneers in setting up a nation-
wide chain of large format department stores in India with
professional management. They believe that the initiatives
taken by them have played a key role in developing
organized retailing in India. Their focus on bringing in the
international best practices into the retail operations, and
providing the customer with a unique shopping experience
has helped them become an industry leader.
They are a professionally managed and systems driven
organization. They believe in strong focus on customers,
supported by systems and processes and a committed work force
are the key factors that have contributed to their success and will
help them scale up as they embark on their strategic growth
plan. They believe that delighting customers is the key to being a
successful retailer, and hence have built the business model
around their customer. Their focus is centered on developing
Shoppers’ Stop and its various associate brands as leading retail
brands and capitalising on the emotional connect that they have
been able to create with the customers. Every employee in the
organization is called a Customer Care Associate (CCA),
including the MD, Executive Director and CEO who are
designated as ‘Customer Care Associate and Managing Director’
and ‘Customer Care Associate, Executive Director and CEO’
respectively to reflect their belief in customer care and service.
They offer their customers a shopping experience, comprising a vast
range of lifestyle merchandise, various services and aspirational
products made available to them in a globally benchmarked
shopping environment and complemented by superior customer
service. Their Service Mission Statement is ‘It’s Magical, It’s
Comfortable, It’s My Store’.
 
They benchmark with global retailers, and strive to enhance their
service offering in line with the emerging global trends. They began
by operating a chain of department stores under the name
“Shoppers’ Stop” in India. Currently they have twenty four (24) such
stores across the country and three (3) stores under the name
“HomeStop”. Over the years, they have also begun operating a
number of speciality stores, namely Crossword, Mothercare, Brio,
Desi Café, Arcelia, Stop & Go and MAC. They are also experimenting
with other formats of retailing through their various ventures.
 
Shoppers’ Stop
Shopper’s Stop is the flagship business of departmental stores. They retail a
range of branded apparel, footwear, perfumes, cosmetics, jewellery, leather
products, accessories, home products, electronics, books, music and toys in
their stores. They also retail their own private label apparel, footwear, fashion
jewellery, leather products, accessories and home products. These are
complemented by cafe, food, entertainment, personal care and various
beauty related services. Promotions and events are an integral part of their
service
offering to their customer, which helps them to create a unique shopping
experience. They retail products of domestic and international brands such
as Louis Philippe, Pepe, Arrow, BIBA, Gini & Jony, Carbon, Corelle, Magppie,
Nike, Reebok, LEGO, and Mattel among others, through their stores. They
retail merchandise under their own labels, such as STOP, Kashish, LIFE and
Vettorio Fratini, Elliza Donatein, Haute Curry, I Jeanswear, Insense, Mario
Zegnoti, Acropolis and Indi-Visual. Their designer section show cases some
of India’s prominent fashion designers (Ritu Kumar, Satya Paul and LABEL),
retailing affordable designer wear. They are also licensees for Austin Reed
(London), an international brand, who’s mens’ and womens’ outerwear are
retailed in India exclusively through their chain.
 
Their loyalty program, called First Citizen, had 781,951 and
971,537members as on March 31, 2007 and December 31, 2007
respectively. It is one of the largest loyalty programs in the country. First
Citizens accounted for over 62% and 61% of their Retail Sales for the
year ended March 31, 2007 and nine months ended December 31, 2007.
They offer them First Citizens rewards points on their purchases,
special offers and discounts, and invitations to exclusive events and
promotions. They are the only member of the Intercontinental Group
of Departmental Stores, (IGDS) from India. IGDS, headquartered in
Switzerland, is an international association of department stores
enterprises who, in order to increase their economic efficiency and
productivity, have agreed to closely cooperate on mutual know how
accumulation, networking and joint services in respect of all issues
relating to the department store industry.
Membership of the IGDS is exclusive and includes
renowned department stores such as Marks & Spencer
(UK), Selfridges (UK), Karstadt (Germany),
Woolworth’s (South Africa), Central (Thailand), Far
Eastern (China), Matahari (Indonesia), Parkson
(Malaysia), C.K. Tang (Singapore), Marshall Field’s
(USA) and Manor (Switzerland).
Crossword
Crossword is a speciality store in the leisure bookstore
category. The store focuses on methodical classification,
clear signages, and dedicated enquiry/order desks. There are
cafes, reading tables and stores within the store to enhance
the customer experience. The product mix consists of books,
magazines, CDROMs, music, stationery and toys. Forty eight
(48) Crossword stores are currently being operated, out of
which twenty six (26) stores (including 10 shops in shops) are
run by the Company and twenty two (22) are
Run by external franchisees
HomeStop
HomeStop is a format which retails hard and soft
furnishing and home accessories. Their offerings
through HomeStop ranges from hard furnishing such
as home furniture, modular kitchens, health
equipment and recliners, and soft furnishing such as
mattresses, draperies, carpets and home accessories
such as decorative accessories, kitchen accessories and
appliances,. They are currently three (3) HomeStop,
one each in Mumbai, Bangalore and New Delhi.
Brio and Desi Café (F & B)
Their foray into Food and Beverages (“F & B”) began
with Brio. Brio has been designed with the intention of
providing a warm and friendly place to relax, revive and
reflect. It currently operates twenty (20) Brio stores.
They have started an Indian cuisine concept under the
name of Desi Café as another concept to add to the food
and beverages offerings. It currently operates three (3)
Desi Café stores in Mumbai, Lucknow and
Rajouri.
Hypercity
They have a 19% stake in Hyper city Retail (India) Limited,
which operates the store named “HyperCity”. The store, having
an area of approximately 124,500 square feet offers food and
grocery, general merchandise and apparel. Currently, there is
one HyperCity store in operation.
 
Hypercity Retail (India) Limited has also opened three (3)
stores called ‘ExpressCity’ in Jaipur and one (1) store in Thane,
to experiment with smaller versions of the format. ExpressCity
is a retail format which is similar to a convenience store format
primarily retailing food, grocery and household needs
Shopper’s Stop business has grown from one store in Mumbai in 1991
occupying an area of approximately 0.05 million square feet to
approximately 1.50 million square feet across twenty seven (27) (including
HomeStop) stores located in the cities of Mumbai, Delhi, Kolkata,
Chennai, Bangalore, Hyderabad, Pune, Jaipur, Lucknow, Gurgaon,
Ghaziabad and Noida.
 
Their growth strategy is based on increasing the reach and penetration
across the country by opening new stores and through multiple retailing
channels and formats, and furthering Shoppers’ Stop as an experiential
retail brand through unique national and international products. They
also look at enhancing their merchandise width by adding new product
categories and services, and strengthen their offerings by adding new
brands and private labels to offer a better depth in each category.
They also endeavour to enhance their base of loyal
customers through the First Citizen Programme. They
believe that as they grow in size and scale and expand
the reach further, their current economies of scale
would be further enhanced. They also continue to focus
on at enhancing their operational efficiencies and
human capital, which is critical in any service driven
industry such as retail. They are also investing in other
formats by way of joint ventures, licenses and
franchisee arrangements. The following are the
initiatives under such arrangements:
M.A.C.
They have opened M.A.C. stores under a Supply and License Agreement with the
cosmetics major Estee Lauder. Currently it is operating four (4) MAC store in Mumbai,
Bangalore and Delhi.
Arcelia
Arcelia is a new retail concept aiming at the bridge to luxury segment, with a strong
emphasis on experience and indulgence and is primarily caters to discerning women
shoppers. It primarily retails cosmetics, fragrances, fine jewellery, footwear, handbags
etc. They currently have two (2) stores operational in Delhi and Pune.
Mothercare
Under an exclusive franchisee arrangement by virtue of a Development Agreement with
Mothercare UK Limited, they have opened Mothercare stores, which market a variety of
products for expecting mothers, babies, toddlers and children, the focus being on style,
function and safety. It currently operates eighteen (18) Mothercare stores; out of which
ten (10) are shop in shop and eight (8) are standalone stores.
 
Nuance Group
They have forayed into airport retailing through our
joint venture with The Nuance Group AG, Switzerland.
They will handle the retail operations in the domestic
terminals while the joint venture company will handle
the operations at the duty free zones in international
terminals. The joint venture company, called Nuance
Group (India) Private Limited, has already bagged
contracts to operate outlets at the international
airports at Bangalore and Hyderabad
Timezone
Timezone marks their foray into entertainment retail.
They have acquired a 45% stake in Timezone
Entertainment Private Limited which is in the
business of providing family entertainment centres. It
currently operates six (6) outlets in Mumbai,
Ahmedabad, Kolkata and Hyderabad.
 
HyperCity-Argos
They have ventured into new formats of retailing,
namely catalogue stores, call and collect stores,
internet retail website and telephone orders through
their subsidiary, Gateway Multichannel Retail (India)
Limited under the name of ‘HyperCity-Argos’.
Currently operating five (5) stores at Thane.
 
Their Vision
“To be a global retailer in India and maintain its No. 1
position in the Indian Market in the Department Store
Category.”
 
They are clearly focusing on the Indian market, which they
believe offers tremendous opportunities to department stores.
At the same time, they benchmark themselves with leading
retailers in the segment worldwide. It is the constant endeavor
to bring in global best practices into the business and
consistently upgrade themselves to offer to the customers an
international shopping experience.
Their Background
One of their Promoters, Ivory Properties & Hotels Private Limited
(“IPHL”), commenced its retail operations in the year 1991 under the
brand name ‘Shoppers’ Stop’ with its first store at Andheri, Mumbai. It
started off with ready to wear men’s wear and thereafter added women’s
wear in 1992, children’s section and cosmetics, perfumes and accessories
in 1993.
 
 The company was incorporated on June 16, 1997. Soon after
incorporation, IPHL executed a conducting agreement with them dated
November 3, 1997 giving them the right to participate in running the
departmental stores. This agreement was terminated and a fresh
Conducting Agreement was executed with IPHL dated March 31, 2000.
The brands, trademarks and goodwill of Shopper’s Stop division of
IPHL were also assigned through a separate agreement. In 2005 they
made an initial public offering of 6,946,033 equity shares of Rs. 10/-
each at a premium of Rs. 228/- per share to fund the opening of 11 new
stores and the renovation and expansion of certain existing stores.
 
They were awarded ‘Most Admired Shopping Destination of the Year’
by the Images Fashion Forum, ‘Retail Destination of the Year’ at the
India Retail Forum and ‘the Advertising Campaign of the Year’ at the
CMAI Apex Awards, in the year 2005.
 
In the journey of reaching 27 stores, They have received various
awards and honours, some of which are, “Most favoured retail
destination of the year” (2004), Retail Destination of the Year, at the
India Retail Forum (2005) and the Advertising Campaign of the Year,
at the CMAI Apex Awards, (2006), Gold Shield Award for excellence
in financial reporting in their annual report for FY 2005-2006 as “The
Best in Manufacturing and Trading Enterprises” category in January
2007 by ICAI.
THEIR COMPETITIVE STRENGTHS
 
They believe the following key strengths have helped
them emerge as a prominent domestic retailer:
Experienced professional management team
They have an experienced professional management team led by
Mr. B. S. Nagesh, their CCA & MD, who is a prominent professional
in the retail sector in the country and has been the first Chairman
of the CII Committee on Retail in 2001 and has received various
awards over the years including ‘Retail Professional of the Year’ for
the years 2003, 2004 and 2006 by CMAI, ‘Retail Professional of the
Year’ in 2005 at the ICICI Retail Excellence Awards,
‘Entrepreneurship Award’ at the Enterprise Scions Awards by DNA
Money in November 2006 and the ‘Visionary Award’ from ICFAI in
2006. He is supported by Mr. Govind Shrikhande, CCA, Executive
Director and CEO.
Strong focus on systems and processes
They have a strong focus on systems and processes. They have
been able to capture their learning over the years and use them
to create Standard Operating Procedures (‘SOPs’) for each of
the activities, right from planning and setting up of new stores
to their day to day operations. Their SOPs are available on the
Intranet, which helps their employees to access them whenever
required helping them to achieve consistency in their decision
making process across the chain. They also have a Manual of
Authority, outlining the framework of financial and legal
decision making authority at all levels in their Company, right
up to the CCA & MD and the CCA, Executive Director & CEO.
They believe this will help them as they embark on the
growth strategy and enhance their reach with the
customers and help provide them a consistent brand
experience across their stores. As they grow in size,
systems and processes will be the key driver and
differentiator to organised operations and enhanced
profitability.
Extensive use of Information Technology (IT)
systems

They have deployed state of the art international IT

systems for retail operations across their business
processes and operations. Most of the processes are
linked online, and utilize some of the leading
technologies available to deliver overall control and
efficiency.
With changing customer aspirations and requirements,
immediate monitoring of information on sales trends is
critical. Their IT systems help them not only to monitor
customer purchase patterns, but also allows the organization
to quickly respond to it by facilitating decision making and
providing the tools to adjust their operational strategy
accordingly. Their systems also facilitate them to conduct their
business efficiently by
helping them to optimize their resources including their store
space, inventory, manpower and overall capital deployed in
their business. They have received the IT user award from
NASSCOM for Best IT Practice in Retail Category in 2003.
Strong distribution and logistics network and supply
chain
They have created a strong distribution and logistics network,
with their four Distribution Centers covering 303,382.20 square
feet handling over 400,000 SKUs per year, and working 24x7.
 
The distribution and logistics setup is networked and on line
allowing them to deliver merchandise to the store within 48
hours of receipt / generation of auto replenishment order,
which has helped them optimize in store availability of
merchandise
The Distribution Center management is outsourced to service
providers such as Toll (India) Logistics Private Limited. They
believe their existing Distribution Centres, which have been
designed to scale up, will be able to meet their growth
requirements as they expand the number of stores. They have
undertaken various initiatives in further improving the
efficiencies of their supply chain, which they believe is critical
for any retailer. These aim at meeting the conflicting
requirements of reducing their inventory whilst ensuring
availability of products at all stores as per customer needs, as
well as reducing their operational costs.
 
Vast range of lifestyle products and services
Their merchandise ranges across apparel, accessories,
perfumes, cosmetics, home and kitchen products with
over 400,000 SKUs, which are complemented by their
services offerings. They offer their customers a variety
of national and international brands as well as their
in-store brands (private labels) under one roof.
 
Internationally benchmarked shopping environment
They believe and focus on providing their customer a globally
benchmarked shopping environment with the best in class service
which has been instrumental in their success. They engage
international designers such as Portland Design Associates (UK)
to design their stores, sourcing the fixtures in domestic as well as
international markets. They periodically provide the managers
exposure to international department stores through IGDS to be
able to capture and implement best practices in their operations.
 
This has helped them to create a niche in the customers’ mind,
and enhance their brand equity. It is because of this service and
ambience that they offer, has created a differentiation in the mind
of the customer versus their competitors where similar products
and brands are available.
Strong understanding of the real estate business
The benefit from the Promoters’ association with the real
estate business and their relationships with developers, which
have helped them acquire preferred properties at competitive
rates. They enjoy Anchor Tenant status in most of the malls
that are presently located in due to their high brand awareness
and trust, ability to draw a large number of customers and
occupy a significant space in the mall. As Anchor Tenants, they
occupy a prime location in the malls on terms that they believe
favourable to them as compared to the other occupants.
 
Large base of loyal customers
They had 19.9 million customers entering the stores in
the year ending March 31, 2007. They believe that the
emotional connect that they have been able to create
with their customers through their service offering
and special promotions has helped them convert many
of them into loyal customers. This is clearly proven by
their large and constantly growing base of First Citizen
members.
THEIR GROWTH STRATEGY
 
They believe that the department store format offers significant
opportunities in the country with the changing consumer aspirations and
drive for a better lifestyle. They believe that a younger population with
higher disposable incomes and willingness to experiment would drive
customer aspirations for lifestyle products.
 
They are thus primarily focused on the Indian markets in the department
store format although they are experimenting with other formats to
enhance growth opportunities. At the same time, they consistently evaluate
other opportunities and may look at alternative delivery formats or product
categories or even within their existing offerings should they find the
opportunity compelling or to strengthen their existing format
THEIR GROWTH STRATEGY
 
They believe that the department store format offers significant
opportunities in the country with the changing consumer
aspirations and drive for a better lifestyle. They believe that a
younger population with higher disposable incomes and
willingness to experiment would drive customer aspirations for
lifestyle products.
 
They are thus primarily focused on the Indian markets in the
department store format although they are experimenting with
other formats to enhance growth opportunities. At the same
time, they consistently evaluate other opportunities and may
look at alternative delivery formats or product categories or even
within their existing offerings should they find the opportunity
compelling or to strengthen their existing format
Their growth strategy is based on:
 
1. Increasing their penetration in existing cities and expanding their reach across the
country
2. Furthering Shoppers’ Stop as an experiential retail brand through differential
service and unique national and international promotions
3. Getting enhanced share of the organized retail market through multiple formats
and retailing channels
4. Enhancing the merchandise width by adding product categories
5. Introducing new brands and developing private labels to offer a better depth in
each category
6. Increasing the First Citizen base
7. Utilizing economies of scale as they grow in size and expand their reach
8. Enhancing the operational efficiencies
9. Enhancing the human capital
Increasing the penetration in existing cities and
expanding their reach across the country
Increasing their penetration in existing cities with a larger
number of stores, increasingly of larger size, will enable them
to penetrate into new catchment areas within these cities and
optimize their infrastructure. Enhancing their reach to cover
additional cities amongst the top 50 cities of the country, will
enable them to reach out to a larger population and become a
preferred shopping destination for them. This will help them
provide a platform to domestic and international brands
wanting to reach out to domestic consumers with the same
profile as their customers.
Furthering Shoppers’ Stop as an experiential retail
brand through differential service and unique
national and international promotions
They are continuously inducting and training CCAs to
deliver a differential service, which they measure and
improve through their customer satisfaction studies done
through CSMM. They continue to focus on unique events
and promotions to reinforce the Shoppers’ Stop
experience and their brand image amongst their
customers to become a destination of choice for them.
 
Enhancing the merchandise width by adding
product categories
Consumers tastes are shifting and the propensity to
spend on new categories of merchandise like cellular
phones, Personal Data Assistants, digital cameras, writing
instruments, designer clothing, etc, is increasing along
with needs for new services.
Their focus will be to add on such new categories in the
stores along with developing existing categories to
increase the share of not only existing customers, but also
acquire new customers.
Introducing new brands and developing private labels to offer a better
depth in each category
They continuously focus on enhancing the depth and width of their
merchandise. The private label and private brands initiative is part of such focus
and offers a differentiating factor as compared to competition at the same time
helping them to enhance margins.
 
They have a tie up with Austin Reed (UK) wherein they are their licensee for
India for men’s outerwear such as tailored clothing to include suit, jackets,
trousers, shirts, ties and men’s smart casual wear to include trousers , jackets,
shirts, knitwear and all items of women clothing. They continue to evaluate
such opportunities for tie ups with national and international brands, which can
be introduced in India through their stores. They may, in the future, also offer
these brands to the customer through independent chain of stores that they
may promote, should the market opportunity justify the setting up of the
They have tied up with MotherCare UK Limited under
an exclusive franchise to retail their product in India.
MotherCare is a retailer of Kids wear and maternity
wear and accessories.
 
Increasing their First Citizen base to enhance their base of loyal
customers
The number of First Citizens increased from approximately 632,086 on
March 31, 2007 to 781,951 on March 31, 2008. First Citizens accounted
for 62% of their sales in the year ending March 31, 2008. As on
December 31, 2008, the number of First Citizens stood at 971,537and
their contribution to the sales in the period between April 1, 2008 and
December 31, 2008 was 61%. A higher base of First Citizens exposed to
the Shoppers’ Stop experience, would help them to build customer
loyalty. They believe, their new business intelligence software (called
Business Objects) will help them understand the customer at an
individual level, which may help in making more profitable sales to
them, as well as meeting their needs in a focused manner.
Utilizing economies of scale as they grow in size and expand
their reach
They believe that their existing corporate infrastructure and software
systems have been designed for a higher scale of operations than
their current size, and can help them with their growth plans
without the need to significantly increase costs.
 
They have in place their core distribution and logistics
infrastructure, which can handle larger business volumes at
marginal addition to costs. Higher business volumes will also
improve their negotiating powers and help them get further
economies of scale in their buying with opportunities of incremental
margins.
Enhancing their operational efficiencies through better
systems and processes
They have a consistent focus on enhancing their operational
efficiencies and monitor key operational parameters on an ongoing
basis using concepts such as GMROF, GMROL and GMROI to
improve their productivity on space, labour and inventory.
 
They benchmark their stores within the chain on performance
parameters on historical as well as comparable basis to seek areas for
improvement to reduce their operating costs and enhance their
productivity levels. Their Baby Kangaroo Programme was recognized
as top innovative HR practices by Delhi Management Association
with Erehwon Innovation Consulting in 2006.
Enhancing their human capital
They periodically assess their CCAs across all levels through
assessment centers to identify competency gaps and use
development inputs (i.e. training, job rotation etc.) to bridge
them. They benchmark their compensation and benefits
through consultants, with the best in the industry to pay the
associates accordingly
 
Validation of improvements is done through Customer
Satisfaction and Employee Satisfaction studies. This ensures
that there is a constant endeavour to align human capital to
organizational objectives.
Their acquisition of 100% shareholding of Crossword
Bookstores Limited
Pursuant to a share purchase agreement dated February
28, 2005, they have acquired 49 per cent of shareholding
in Crossword Bookstores Limited held by ICICI
Trusteeship Services Limited. Crossword Bookstores
Limited is 100 per cent subsidiary after the acquisition.
They believe that this gives them a strong brand name,
that is, Crossword and the infrastructure and expertise in
operating a speciality store.
 
Their option to acquire a controlling shareholding in Hypercity Retail
(India) Limited (“Hypercity”), setup to venture into mixed retailing
One of the promoter companies, Inorbit Malls (India) Private Limited
has incorporated Hypercity Retail (India) Limited. The objects of the
said company inter alia include the running and managing of
hypermarkets, supermarkets, etc. The company runs a store under the
name ‘HyperCity’, in Malad, Mumbai, which is the business of food and
mixed retailing, i.e. to provide all kinds of products to consumers at
competitive prices through a hypermarket format. The company has also
started three (3) stores called ExpressCity in Jaipur and one (1) store at
Thane.
 
In the event they view that the investment in Hypercity would be
beneficial to them, they may acquire such shares. They believe that this
option would be beneficial to them as it would allow them to participate
in new retail formats as and when they consider such a venture
profitable. As and when they acquire shares in Hypercity Retail (India)
Limited, the same would be subject to regular market risk as any other
equity investment. They have acquired 19 per cent equity stake in
Hypercity Retail (India) Limited on March 17, 2007