Shoppers Stop is raring to go. It has posted consolidated net profit of `22.83 crore for the first quarter that ended on June 30, 2022, and has outlined an aggressive expansion plan. Besides opening new department and beauty stores, the company plans to introduce the SS Beauty app this month and revamp its website. Venu Nair, MD and CEO, Shoppers Stop, speaks to Akanksha Nagar about his vision of being a house of brands, the increasing importance of loyalty programmes, and the promise of smaller towns. Excerpts:
The company reported a solid start to FY23, posting a net profit for Q1. What will drive growth going forward?
The Q1 results are something that puts us in a strong position for the rest of the year. The company has four strategic focus areas— the First Citizen loyalty programme, the beauty category, omnichannel presence, and finally, our private brands. The business is based on the vision of being a ‘house of brands’ for our customers. In the last quarter alone, 79% of our total business came from our First Citizen customers and this gives us a very strong ability to engage with our loyal customers in a much more focused manner.
The company plays across categories. What is the contribution of each to the overall revenue?
The categories leading the growth are apparel and accessories, wherein watches are an extremely strong area, and beauty. Apparel contributes 60% to the total business, beauty is 16.4% and the rest comes from accessories, home, and footwear. In beauty, we play across makeup, skin care, and fragrances. Our private label Arcelia covers bath, body, fragrances, and deodorants and will soon have products for the face and lips. In the last quarter (compared to FY22), the brand saw a jump of eight times. The beauty segment’s revenue contribution will go up by this fiscal end. We operate all the standalone stores of Estée Lauder, Mac, Bobby Brown, Jo Malone, and Clinique. All of these will be available on the SS Beauty app as well, to be launched this month. We have also launched SS Beauty stores, a smaller format beauty store.
Online retail personalisation has emerged as a key differentiator at the point of sale. What is your strategy on this front?
The First Citizen loyalty programme gives a strong foundation to personalise the offer for our customers. Last year, we invested in a data lake that helps us to get a 360-degree view of our customers. With this, AI and ML we are able to create propensity models that tell us what products and brands are likely to be favoured by customers. Based on this we have built personas and cohorts and the communication that goes across the various channels to reach the First Citizen customers, is tailored to their individual needs.
The company has 90 department stores, 138 beauty stores and 11 Home Stop Stores. We also have stores at Mumbai, Bengaluru and New Delhi airports. The target is to open 10-15 department stores and 15-20 beauty stores this fiscal. We have already opened two department stores, one airport store and three beauty stores. Footfalls in the stores are close to pre-Covid levels but the number of customers we are serving right now is double the pre-Covid numbers.
Also, up to 80% of the stores that we are opening this fiscal will be in tier-I and II cities. Smaller towns are giving us very promising growth, the private brands have seen exceptional traction in these cities and we will continue to double down on this.
Are the lines between online and offline retail collapsing?
Online contributes around 5% to our total revenue. Increasingly, online and offline are merging. Our website will go through a complete revamp in the early part of 2023. We have revamped our UI/UX significantly, our customer satisfaction score on Play Store stands at 4.5, a massive improvement from the below three ratings 18 months back.
We have associated with a number of digital-first brands. In. fuse is our D2C brand, and we will continue to engage with the digital-first brands.
Give us a sense of the emerging trends.
Retail business has seen a good upward trend in customer footfall and engagement, consumer sentiment is strong, and omnichannel influence is growing. Customers continue to invest in their casual, home, and athleisure needs and are choosing more brands that have a legacy. The hybrid work culture combined with the festive season will offer growth opportunities in categories like footwear and Indian wear.