Q: How did this venture start?
A: Shoppers Stop started way back in 1991. We are proud of being the first department store chain in India, till about 1996. Post 1996, other department stores actually rolled out within India, the ones that you see right now, be it private labels or multi brands. It used to be previously called Amber, Oscar and Minor and those days it faced a big challenge because multiplex screens were charged with almost 100% tax. With such high prices we collected 10 to 12 Rs on a ticket and in turn earned only 50 paisa as the balance would go to the government. With such kind of severe taxation the business was facing a huge challenge, so the promoters decided why not convert into retail instead. They looked at Mr. Nagesh who came on board and originally started at the ground floor level with 5000 square feet of space, which over the next three years expanded to 52,000 square feet. Currently after adding more space we are almost a 65,000 square feet enterprise. The 5000 to 52,000 square feet journey was achieved in the first 3 years and consecutively the next year we opened up our second and third flagship store. In the first 10 years till 2001 we were a 6 store chain which grew to 36 stores by 2010. Over the period we have doubled with 4 million square feet space and 235 stores across India, along with adoption of new formats whether it is hyper city, home stop or the beauty chains of M.A.C, Estee Lauder, Clinique, Bobbi Brown etc.
Q: What is the overall market size that you are out to target?
A: The Indian retail market is about 500 billion dollars and out of that organized retail, what we understand today is just about under 10% i.e. 50 billion dollars. So out of that 50 billion I would say we target may be a 3 – 5% market share and that’s what we would really stick at for now.
Q: When you look at competition across all of these formats you are competing with a lot of different types of companies in every segment. Who do you see as primary competition?
A: I think we have different competitors in different segments for sure. In beauty there is really no competition per say because there is no one similar to us, neither in size, format nor in the brands we have. In Home Stop, there are two formats that we see closer to us. One of them which is Home Town which doesn’t seem to be performing well in current times and there’s Home Center, both within the home category. In the department store category private label formats are not competing head on with us. In multi brand there is Central from the future group and there is Lifestyle. Hyper City has multiple competitors too ranging from the small kirana store to a Star Bazaar and Big Bazaar. In every geography there is competition.
Q: How are you positioning yourself differently?
A: Each format there is a USP that is created. For beauty, I would say ‘Brands’ is definitely our USP. M.A.C, Estee Lauder, Clinique, Bobbi Brown each of this brands stand for certain value and quality. M.A.C stands for the international makeup, Estee Lauder for luxury skin care, Clinique for premium skincare and similarly Bobbi Brown which I would say for its premium makeup. As for the positioning these brands all standout in terms of pricing, product, presentation and I would say the experience of these stores is adopted by the frontiers across all the formats. So there we don’t see much of an issue. Hyper was established on the basis of how people remember the shopping experience, thus creating a benchmark with it stating that this is the best experience you can get! Overtime we have realized that the biggest thing customers look for is the value and in last two years we have been work around it in a big way. So offering value along with great product quality is the USP in Hyper City. With department stores we are trying to segregate ourselves by launching a number of brands which are unique and exclusive with us whether it is in beauty or luxury like Tommy Hilfiger, Calvin Klein, GAS. Along with this we are on the verge of launching a range with Sonam Kapoor in next three to four months’ time, while the Virat Kohli brand was launched recently. With Home Stop we are trying to really grow along with the customer lifestyle and working towards providing them a solution for coordinating their life.
Q: What about competition from e-commerce players where convenience is the value proposition?
A: Convenience is a new word that is surfacing after the launch of online. Until then it was all about the accessibility and about how many tiers of cities you can enter. India has got about 50 cities with 1 million population and we are currently present in about 30 of them. So that covers the accessibility part. Convenience part comes in when the customers anywhere can actually access your brand and for that you need not have physical presence. Online culture has been there in India for seven to eight years, but the biggest drive has come in the last 3 years, when about five to six billion dollars of investments and about a billion dollar of discounting and advertising happened. The actual share of this convenience is not more than 2%. So lot of times we seem to be over playing our understanding of the market as people still don’t have the confidence in the online shopping that they should have today. Maybe this is because the assortments are not complete, the brand delivery is not right, the experience is not right but over a period of time I think globally we are seeing that online takes in a share of between 8 to 15 %. India will logically reach that level in three to five year period for sure. Convenience is wanted by consumers because they have challenge in parking or reaching a store. In tier 1 if you see, most cities there are lot of malls and greater accessibility. You need not even go online as you can straight away pick up your monthly shopping. Online has brought in convenience but actually a better and easier form of convenience already existed. Indians are used to that convenience, used to that value as well. So I would say in a matter of time things will evolve and get better for online.
Q: Are you all moving towards having e- commerce as a separate channel within Shoppers Stop?
A: Logically it should be one seamless arm but yes customers do identify online as a separate channel today. Over a period of time it will start working seamlessly along with the physical store. Today it stands independent but in the future it will start merging in terms of the experience. That’s the path we are adopting within the 24 month period.
Q: What are some key milestones Shoppers Stop has surpassed over the years that make you proud?
A: There are a lot of milestones. Our journey has actually taken pace from 2001 onwards, so 6 stores till 2000 then 30 stores by 2010 and now doubling to 72 plus. Adding multiple formats has definitely been one milestone. Second I would say, what is pretty unique, is our loyalty program with more than 3.6 million loyalty card members who contribute 72% of our sale. So that’s been one of the biggest highlights in our journey over the last 23 years. Plus a lot of other things like the advertising we do, our ERP, being the first ones to get ERP in place way back in 1999 – 2000 called JDA, JD Armstrong. JDA helps us to not only see what’s happening live in the store but also helps us auto replenishments and auto purchase order, connecting all our partners which are more than 400. So I don’t have to really feed them information on what is selling and what is not selling they already know about it and based on that information we can continuously work jointly on what needs to be done at a store level in terms of which styles are working, what styles are not working, what price points are working, what colors are working and keep on planning for the future. So that’s again a big USP.
Q: What are some new initiatives you are taking in the next 12 – 24 month time period?
A: We will expand in each of the formats, we are adding about 6 to 8 department stores, 2 to 3 three stores in Hyper City, 2 to 3 stores in Home Stop, about 4 stores in Crossword and 3 to 4 stores in the specialty formats so that would be our natural expansion. The big initiative actually would be working towards making department stores omni channel.
Q: What’s your strategy vis-à-vis private labels?
A: The private label is a combination of two parts; one is the exclusivity of design and second is margin. We have looked at private labels at different points of time with different lens. So way back in 2001 when we looked at it we wanted it to be a household brand for fashionable families. It was about 20% in 2000 we brought it down almost 15% at one point of time. Then we realized apart from playing the fashionable brands game we need to also create certain brand of our own which are fashionable and at the same time deliver margins. So Haute Curry was born through that thought process. It created the first fusion wear concept in India. Today we are about 17% and we believe we can take about it 20% – 25% over the next three to five year period.
Q: How much of analytics are you using in merchandise planning?
A: Analytics typically focuses more on the past and forecasting is slightly different. So I would say in analytics we have used various kinds of modules for understanding the customer behavior, their buy basket, adjacencies or a combination of thumb rules. Typically a man buys 4 shirts to 1 trousers that generally is the ratio on which he operates and when we looked at our main customers our realization was if they are going to follow that ratio we were selling at least 50% lower numbers than what we should be selling. So we went back and understood what the issue is and why are they not spending. So maybe 25 % of them didn’t like the fit of the readymade trousers and preferred it tailored; now making tailored trousers category a decent amount of business. For forecasting it is a different issue altogether. What can sell well in the next season is a bet, and that bet you pick up either from what you understand of fashion or from global markets like Hongkong, Bangkok or the streets of fashionable cities like Paris, London, Milan and New York. So forecasting is slightly tougher but again uses the base data as to whether the colors, fit or styling will work helping in projecting what can be done for the next season. There is always some gut feel. 100 products that you bet on any season just 60% succeed and 20% do ok while 20% completely fail.
Q: What have you done to improve the customer service in your stores?
A: We are addressing this by creating a culture for great customer service. Lots of things right from the designation that each one of us carry. So my designation is Customer Care Associate and Managing Director. The Store Manager’s card would say Customer Care Associate and Store Head. The person who is actually serving you his designation is Customer Care Associate. We realized the whole game in retail is about service and experience at the store. The CEO can be an MBA etc…it doesn’t matter. The person, who is serving you at the front end, is he good enough to understand what you want, is he good enough to segregate what is your like and dislike and is he good enough to make you really happy with your purchase, is all that matters. We all have empathy for each other and want to serve the customer our very best.
Number two is training them when they come on floor. So some of them can become department managers, supervisor, retail manager and then store manager and some of them have actually also become area controllers and regional heads. Salil Nair who’s my CEO was a store head, C.K Nair who’s my home Stop head used to be store head. So they have grown over the years. They have been there almost for 20 years in this company. How you really ensure that you identify the right talent and give them the tools for them to grow better in life and in turn help the customer and the company is important. Third one that we utilize every day is called anthem. So we play anthem everyday at 10:45 am across all our stores. The whole idea is at 11 o’clock when the store opens the doors for the customers, can we all be in sync with only one thought of serving the customer- Hadh Se Aage. The anthem is sung by Sonu Nigam and written by Gulzar with music by Ram Sampath and it not only gives big energy to us, but it plays across India within 72 stores and almost 10,000 people singing simultaneously. All of us know that at 10:45 am the entire focus is on anthem called Hadh Se Aage. I think that’s the whole big culture issue. And last but not the least is the values that we have adopted.
Q: What are you doing to train your staff better?
A: Training is as I said a continuous process and we have been evolving over the years in terms of how to train better. How to deliver training in a module by which people can keep on learning continuously is our focus. So two years back we started e-learning so people can actually logon on the desktop in their store or office and they can keep on learning. Recently we have just launched another module called Mobcast. It’s on mobile where we are now able to send our staff training programs to help them scale up. So how do you really deliver training at the most easiest way? Everyone has mobiles and Mobcast doesn’t require smart phone. It requires a normal mobile by which you can get all the data, all the information on your mobile itself and then you can keep on upgrading yourself and your skill set. That’s something we believe in very strongly.