We are bringing in new international private labels

Written by Mona Mehta | Updated: Aug 23 2009, 04:40am hrs
PeopleGovind shrikhande
During the third quarter of the financial year 2009-10, Shoppers Stop Ltd posted 7% dip in same stores sales growth due to economic downturn and liquidity crunch. Now, the company is chalking out plans to improve profitability and topline by the end of this year. Govind Shrikhande, who has been recently elevated as president and CEO of Shoppers Stop Ltd, spoke to Mona Mehta of FE on the future outlook and the companys new retail plans to improve its topline. Excerpts.

How do you foresee the retail growth in India in the near future

The Rs 40,000-crore retail sector has witnessed about 10% growth in the second quarter of this year, as compared to 5% growth during Q4 2008-09. We predict that the sector would grow further, but not at the 35% growth rate which it witnessed during the previous corresponding quarter.

What are the major challenges faced by Shoppers Stop in expanding its retail stores including specialty stores

Organised retail industry is battling challenges like government apathy, unprofessional approach of developers towards retail, low margins, high power and rental costs and lack of skilled manpower and high attrition. Since Shoppers Stop has witnessed 7.5% de-growth in all formats like-to-like (LTL) growth wherein all format sales per sq ft de-grew by 10.6% and the volume de-grew by 9.7%, the transaction size of LTL stores grew by 6% during the period. Hence, the key challenge will be to improve LTL sales and volumes.

Is Shoppers Stop planning to launch new private labels

Yes. We are planning to bring in new international brands for the first time in India in the form of private labels for which talks are currently on. Since the private label mix decreased by 2.5%, from 20.4% in Q1 2008-09 to 17.9% in Q1 2009-10, we have done away with some private labels during Q1 2009-10.

How is Shoppers Stop planning to revive sales growth of its premium branded apparel

Since premium branded apparel for men such as Pepe, Levis, Adidas and Reebok present in Shoppers Stop stores is available even in malls and standalone formats in India, we have witnessed a dip in their demand. Hence, we feel that by enhancing brand visibility and providing prominent display for premium branded apparels, the demand for mens apparel should pick up. For this purpose, a special display offer would be made to premium brands at Rs 1,500 per sq ft. At Shoppers Stop, premium brands such as French Connection (Fcuk), Tommy Hilfiger and Pierre Cardin are being provided special displays with enhanced brand visibility and prominent display.

How are you doing to improve your topline during Q2 2009-10

Shoppers Stop is chalking out new retail plans, which include setting up 16 Shoppers Stop stores in 10 new cities in the next four years and other specialty stores at an investment of Rs 500 crore. As part of the strategy, we will set up at least four new Shoppers Stop stores per annum (which is 1 mn sq ft every year from the present 1.8 mn sq ft retail space) in newer cities apart from strengthening the presence of stores in existing cities. As for specialty stores, plans are on the anvil to add 2 lakh sq ft retail space by setting up five new Mac stores in four months, four new Clinique stores, two new Estee Lauder stores and four new Mothercare stores in shop-in-shop formats. The company has witnessed dip in the sales growth of apparels business from 60.2% during Q1 2008-09 to 57.9% during Q1 2009-10 apart from 12% dip in private labels sales across 27 Shoppers Stop stores.

What big is your advertising plan in terms of spending this festival season as compared to previous festival seasons

Shoppers Stop invested significantly in advertising during the last festival season, which coincided with the launch a new logo and a new advertising campaign on Start Something New. However, during this festival season, we will be spending less. Our advertising will mainly include highlighting premium brands being launched at Shoppers Stop.