Shoppers Stop to focus on beauty to drive growth

Shoppers Stop plans to open five or six department stores and 10-12 beauty stores this year

Shoppers Stop, the retai chain which is part of the K Raheja Corp Group, will focus on beauty products and non-apparel to boost revenue, and on private labels to drive its margins, said Rajiv Suri, elevated last month as managing director of the company.

“The market for beauty is very strong and we are able to expand faster in the beauty market,” he said.

Shoppers Stop plans to open five or six department stores and 10-12 beauty stores this year, he added.

Shoppers Stop is looking to double the share of private labels in its total sales over the next three years. The present share is 10-11 per cent.

The chain is building a dedicated management team for private labels.  It has hired a head of design, head of sourcing and president for this.

It is also setting up infrastructure for private brands - a design studio, sampling unit and a testing lab.

“The plan is to turn around products much faster and in a unique way. Today, the time taken from design level to store is six months.

"Next year onwards, it will be three to four months. Closer to the season, the probability of getting the right trend is much higher,” said Suri.

The investment in new hiring and infrastructure will probably reflect in spring-summer 2019 and the big impact would be noticed in autumn-winter 2019, he said.

The share of private labels at Tata-owned Westside is 90 per cent. At Landmark-owned Lifestyle, 35 per cent.

The margins for private labels in fashion hover around 50 per cent and play a big role in boosting profitablity.

“Shoppers Stop retails over 400 brands across categories - apparel, cosmetics, fragrances, artificial and fine jewellery, footwear, personal accessories.

"It is hard to increase the share of private labels sharply because of our product assortment.  To increase the share by four times, it takes time. We can double it in the next three years,” said Suri.

A stronger financial position would enable them to expand, he explained. The chain reduced its debt from Rs 550 crore earlier to Rs 60 crore by March 2018 and further to Rs 14 crore by end-June this year.

It also has Rs 250 crore worth of Future Retail shares, which can be unlocked this year.

Online business

Eight per cent of Shoppers Stop’s catalogue is online on US giant Amazon’s website.

The chain has opened four fulfillment centres for Amazon in its distribution centres and opened Amazon kiosks in its Mumbai and Bengaluru stores.

“We are in discussion with them to speed up the rollout. Once that starts, visibility will start,” said Suri.

Currently, 1.5 per cent of annual sales come from online channels and the chain wants to double that every year.

Suri said they had introduced a concept called ‘click and collect’ where buyers could see and buy online, and collect offline.

Delivery time had been reduced by one to one and a half days.

Its ‘personal shopper’ initiative, where a shop executive guides shoppers, was doing well and sales there was three times the normal transaction size at store level.

There is also a ‘personal shopper@home initiative, wherein an executive visits a shopper's home or office, where sales have been five times the normal transaction size.

Photograph: Iqro Rinaldi/Reuters