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Retail Analysis: Shoppers Stop


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Retail Analysis of Shoppers Stop

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Retail Analysis: Shoppers Stop

  1. 1. RETAIL ANALYSIS : Shoppers Stop
  2. 2. INDEXIndia : Retail Industry Overview 2011Shoppers Stop: An OverviewHistoryStore FormatsStrategic AllianceType Of Retail OutletsLocationApproachSegmentation, Targeting & PositioningMerchandising StrategyFinancial AnalysisLoyalty ProgramSWOT AnalysisCompetitor AnalysisImpact Of 2008 RecessionInternational Affiliations & Acquisitions
  3. 3. INDIA : RETAIL INDUSTRY OVERVIEW 2011  Indian Retail Market Share: 30% of GDP  Share of retail in private consumption: 53.3%  Total retail market : Rs. 1,948,916 cr.  Organized retail market: Rs. 126,680 cr. (6.5% of total market)  Growth rate of organized retail: 17.39% YOYSource: India Retail Report 2011
  4. 4. SHOPPERS STOP: AN OVERVIEW HEADQUATERS Eureka Towers,9th Floor, B Wing, Mindspace, Link Road, Mumbai, Maharashtra-400064 INDUSTRY Retail TYPE Public Company STATUS Operating COMPANY SIZE 8000 employees NUMBERS OF STORES 49 2011 REVENUES Rs. 439.2 crore NET PROFIT Rs. 11.7 crore TOTAL RETAIL AREA 3.93 million sq. ft. FOUNDED 1991Source:
  5. 5. SHOPPERS STOP: AN OVERVIEWAbout SHOPPERS STOP Ltd.Shoppers Stop Ltd., a pioneer in modern retailing in India, has been promoted by K Raheja Corp.Group (Chandru L. Raheja Group), one of the leading groups in the business of real estatedevelopment and hotels in the country.Shoppers Stop Ltd along with its Subsidiary Company Hypercity Retail (India) Ltd and Joint VentureCompanies Timezone Entertainment Pvt. Ltd and Nuance Group (India) Pvt. Ltd. operates more than3.93 million sq. Ft. in the country.Shoppers Stop and its associate companies are involved in retailing through department stores,specialty stores, entertainment zones and large hypermarkets.Management- SHOPPERS STOP Ltd.Chandru L Raheja Chairman / Chair Person B S Nagesh Vice ChairmanGovind Shrikhande Managing Director Ravi C Raheja DirectorDeepak Ghaisas Director Gulu L Mirchandani DirectorNeel C Raheja Director Nitin Sanghavi DirectorShahzaad S Dalal Director Nirvik Singh DirectorSource:
  6. 6. HISTORY OF SHOPPERS STOPRetail Mix/Year 1991 1992 1993 1994 1995 1996 Began the modern First step retail revolution in towards Location India with the pan-India launch of Men’s presence. ready-to-wear Launched its store second store in at Bengaluru Andheri(Mumbai) Launched an Consumer exclusive loyalty service program titled “The First Citizen’s Club” Offering Added Casuals, Kidswear Launched Merchandise expanded to and Non-apparel “STOP” the first assortment include section(Jewellary, in-house label suiting, Fragnances, Cosmetics boyswear and Watches) making and ladies Shoppers Stop India’s first merchandise ever departmental store Began its journey of exciting marketingCommunication promotions and in-store Mix excitement with the first of its kind “Festival of Britain”, celebrated in association with the commercial department of British ConsulateSource:
  7. 7. HISTORY OF SHOPPERS STOP Retail Mix/Year 1997 1998 1999 2000 2001 2002 Opened third Retail revolution took Opened stores at Opened stores in Opened store in store in roots in North Chennai and Chembur Pune and Bandra Kandivli (Mumbai) th th th Location Hydrabad India with the launch (Mumbai ) (8 and 9 store) (10 store) th th of stores in Ansal (6 & 7 store) Plaza(Delhi) and th th Jaipur (4 & 5 store) Launched a co- Consumer branded credit service card for its loyalty members in association with HSBC Launched Prikrama, aCommunication festival to Mix celebrate Indian tradition and culture Acquired Crossword- New India’s leading retail Formats book chain Shoppers Stop Sole retailer to Implemented JDAAccomplishments incorporated as a be awarded the Retail ERP. First body corporate Intercontinental retailer to adopt ERP Group of Department Stores (IGDS) membership Source:
  8. 8. HISTORY OF SHOPPERS STOP Retail Mix/Year 2003 2004 2005 2006 2007 Stepped into East with the Opened stores in Opened stores in Pune, Opened stores launch of store in Kolkata. Malad (Mumbai), Juhu (Mumbai), in Mumbai and st Location Also opened stores in Kolkata and Bangalore and Lucknow (21 th th nd Mulund(Mumbai) and Gurgaon Bangalore Ghaziabad (17 ,18 , and 22 ) th th th th th th th th (11 , 12 & 13 ) (14 , 15 &16 ) 19 and 20 ) Created movie merchandise Merchandise history with unveiling of the assortment Om Shanti Om collection Brand positioning changed from “Feel the Celebrated the launch with Communication Mix experience to Shopping. Sharukh Khan, Deepika And beyond” Padukone and Arjun Rampal modelling the cloths at a fashion show. HomeStop- Home need Launched Signed a 50:50 JV with the New specialist store launched Mothercare in Nuance Group for Airport Formats in Bengaluru . India and F&B Retailing Launched MAC. outlets Brio and Signed an MOU with Home Crossword became a Desi Caf. Retail Group of UK to enter into wholly owned subsidiary Bought 45% of a franchise arrangement for the Timezone India Agro formats of catalogue & internet retailing Acquired 19% stake in Hypercity Retail (India) Ltd. Voted as India’s IPO oversubscribed Declared ‘Gold Shield’ Award for Accomplishments most favored retail overall by 17.25 times. “Retailer of the excellence in Financial destination of the Year” at Images reporting for year 2006 in the year by Images Fashion Forum category of “Manufacturing and Retail Reward trading Enterprises” by ICAISource:
  9. 9. HISTORY OF SHOPPERS STOP Retail Mix/Year 2008 2009 2010 2011 Expanded footprints to new Expanded to 49 stores across cities like Bhopal, Amritsar and 22 cities Location Aurangabad. Also added stores in existing cities like Bengaluru, Mumbai and Hydrabad taking store tally to 36 stores across 15 cities Pioneered mascot licensing in the Merchandise categories through assortment exclusive tie-up for certain products with Vodaphone for their product brand mascot Zoozoo Shoppers stop repositioned and Communication Mix reinvented as a “Bridge to luxury” brand with unveiling of the new logo and tagline, “START SOMETHING NEW” Increased stake in Hypercity New Retail (India) Limited to 51% Formats Awarded the “Emerging Recognized as ‘Most Accomplishments market retailer of the Respected Company in Retail Year” at the World Retail Sector’ by Business World congress in April 2008Source:
  10. 10. SHOPPERS STOP FORMATS Shoppers Stop Ltd. Consolidated with SSL SS Department Stores Business Subsidiary Companies 30% JV Companies 2 68% Sales Contribution Sales Contribution 2% Sales Contribution SSL Stake SSL Stake 51% 50% •No of stores: 1 •No of stores: 43 (incld. 2 duty paid airport stores) •GFA: 0.2 lacs sq ft • No of stores: 10 •GFA: 24.58 lacs sq ft. • GFA: 10.64 lacs sq ft. SSL Stake •Sales for 6 months as of Sep,2011 : Rs 920 Cr • Sales for 6 months as of Sep 45% •Sales for full year as of March, 2011 : Rs 1676 Cr 2011 : Rs. 369 Cr • No of stores:14 • Sales for full year as of March •GFA: 0.97 lacs sq ft. 2011 : Rs 597 Cr • No of stores: 8 No of stores: 35 SSL Stake • GFA: 1.37 lacs sq ft. GFA: 0.14 lacs sq ft. 100% • No of stores: 84 • Own Stores : 43 • GFA: 2.52 lacs sq ft. •No of stores: 7 •08 – 09 : 8.0 lacs visitors •GFA: 0.35 lacs sq ft. •10 – 11 : 35 lacs visitors Well diversified portfolio to capture the consumer’s wallet share Note : Above figures as of 30TH September 2011.Source: Shoppers Stop Annual Report 2010-11 GFA: Gross Floor Area
  11. 11. STRATEGIC ALLIANCE • Shoppers Stop Ltd. has entered into a non exclusive retail agreement with world-renowned cosmetics major Estee Lauder to open M.A.0 Cosmetics stores in India. • Shoppers Stop Ltd. has a 19% stake in Hypercity Retail (India) Ltd. • Mothercare PLC of UK, the largest specialist retailer for infant and toddler care, is now in India. • Shoppers Stop Ltd.s entry into airport retailing is marked by a joint venture with The Nuance Group AG of Switzerland, the worlds leading airport retailer. • Shoppers Slop Ltd has forayed into the Entertainment sector by acquiring a 45% stake in Timezone Entertainment Private Limited which is in the business of setting up & operating Family Entertainment Centers (FECs). It has 5 outlets in Ahmedabad, Hyderabad. Kolkata and Mumbai.Source: Shoppers Stop Annual Report 2010-11
  12. 12. TYPE OF RETAIL OUTLETS Shoppers Stop Ltd. Departmental Store- Specialty Retailing-93 Hypermart- HyperCity -10 Shopper’s Stop- 43 Beauty, Cosmetics Retailing- Home Products Retailing- Parenting Products- MAC, Estee Lauder Clinique Crossword Book store(43) HomeStop (8) Mothercare(7) (35)Source: Shoppers Stop Annual Report 2010-11
  13. 13. LOCATION SS Home Mother MAC/Estee City Dept. Crossword Stop care /Clinique Hypercity Total Amritsar 1 1 1 1 4 Bangalore 5 9 2 1 4 2 23 Chennai 2 1 1 2 6 Delhi 5 2 1 1 9 18 Gurgaon 1 1 Hyderabad 4 5 1 2 1 13 Jaipur 2 1 3 Kolkatta 3 2 5 Lucknow 1 1 1 3 Mumbai 8 19 2 2 11 3 45 Noida 1 1 2 Pune 3 1 1 2 7 Ghaziabad 1 1 Siliguri 1 1 Durgapur 1 1 Bhopal 1 2 1 4 Ludhiana 1 1 2 Aurangabad 1 1 2 Indore 1 1 2 Vijayawada 1 1 1 3 Total 43 43 8 7 35 10 146 More than 3.93 million sq. ft. area, across 20 cities As on 30th Sep 2011Source:
  14. 14. NUMBER OF STORES 46 44 42 40 38 36 34 17 32 30 28 13 26 24 13 5 Sum of West 22 10 3 Sum of East 20 18 Sum of South 10 3 8 16 9 3 7 Sum of North 14 7 4 12 4 2 10 6 2 8 5 2 4 4 1 4 13 6 2 3 11 12 1 2 10 4 1 2 2 2 1 5 6 2 1 1 3 3 3 3 4 4 0 1 1 1 1 2 3 5 7 9 10 13 16 20 22 27 31 35 43 1991 1995 1998 1999 2000 2001 2002 2003 2004 2005 2006 2008 2009 2010 2011Source: Shoppers Stop Annual Reports,
  15. 15. North South 6 6 5 5 4 4 3 3 2 2 1 1 0 0 Hydrabad Bangalore Chennai Delhi Gurgaon Amritsar Jaipur Ghaziabad Lucknow Noida AP Karnataka Tamil Nadu Delhi Haryana Punjab Rajasthan UP West East 12 3.5 10 8 3 6 2.5 4 2 2 0 1.5 Indore Mumbai Pune Bhopal Aurangabad Jaipur 1 0.5 0 Durgapur Kolkata Siliguri Maharashtra MP Rajasthan In North and West Shoppers Stop is entering new cities while in South it is restricting itself to only 3 cities. In East also it is expanding its market slowly.Source: Shoppers Stop Annual Reports,
  16. 16. Store Division: City Wise Store Division: Zone Wise 18 17 12 16 10 14 8 12 11 10 10 6 8 4 6 5 4 2 2 0 0 Aurangabad Amritsar Kolkata Delhi Hydrabad Lucknow Bangalore Ghaziabad Mumbai Noida Bhopal Gurgaon Siliguri Chennai Indore Pune Durgapur Jaipur East North South West Store Division: State Wise 16 14 14 12 10 8 Shoppers Stop’s main market is North 6 5 5 5 and West. Also in West it is mainly 4 4 3 focused in one state and mainly 2 2 2 1 1 1 Mumbai city. Also it has more number 0 of stores in metros as compared to non-metros.Source: Shoppers Stop Annual Reports,
  17. 17. TYPE OF APPROACH SSL aims to stick to the top 10 cities including Pune, Bangalore, Hy derabad and metro cities. 75 per cent of the total sales of SSL comes from metros and Tier- 1 cities.METRO AND TIER 1CITIES
  18. 18. VISIONTo be a Global Retailer in India and Maintain No.1 position in the Indian Market in the Department Store Category.
  19. 19. TRANSITIONED THE SHOPPERS STOP BRAND FROM PREMIUM TO BRIDGE-TO-LUXURY Luxury Bridge to Luxury 2009 Premium 2005 Contemporary Popular MassSource:
  20. 20. SEGMENTING Fall between the age group of 16 years to 35 years, A large number of Non - Resident Shoppers‟ Stop‟s Indians visit the The majority of core customers shop for ethnic them being represent a clothes in the families and young couples strong SEC A international skew environment they are accustomed to. With a monthly household income above Rs. 20000 and an annual spend of Rs.15000Source: Shoppers Stop Investors Presentation
  21. 21. TARGETING 1993- Added casuals, kidsw ear, jewellery, f Offering ragrances, cos expanded to metics and suitings, boys watches and ladies making merchandise in Shopper‟s stop 1992 India‟s first They started in Departmental 1991 as a Men’s store. ready to wear storeSource:
  22. 22. POSITIONING This changed to Start Something From enjoying the New in 2008 as a international part of the Brands shopping Makeover experience to strategy, but still Feel the experience shopping for connecting to the while you shop in emotional current mindset of 1993, fulfillments for customers to example, buying a constantly upgrade • Shopping. And beyond. in 2005, diamond ring for your and experiment. From the Ultimate loved one to express Shopping your love or flaunting Experience in your status. 1992 The evolution of the brand Shoppers Stop began when the baseline of the brand logo changed with ever-rising customer aspirations. PRICING Shopper’s stop follows premium pricing strategy that is offering high quality products at high price.Source:
  23. 23. RETAIL STRATEGY On an average stores 30000 pieces of different products. Merchandise sourced from 250 exporters in Delhi, Mumbai, Bangalore Centralized buying for all products except cosmetics and perfumes to avoid sales tax Carries 63 days of stock.Source: Shoppers Stop Investors presentation
  24. 24. REVENUE MIX Category Wise Sales (%) Category Wise Sales(%) Apparels Non-Apparels Non-Apparel Category includes Cosmetics, Personal Accessories, Jewellery, Leather goods, Home Ware, Electronics, 38.80% 39.60% 40.50% 41.20% Books and Music. These are all lifestyle products which have high aspiration value. 61.20% 60.40% 59.50% 58.80% An increase in sales of such products is an indication of an increasing consuming class. 2007-08 2008-09 2009-10 2010-11 Diversified portfolio 2010-2011 2004-2005 35% 41% Apparels Apparels Non-Apparels 59% Non-Apparels 65%Source: Shoppers Stop investors presentation
  25. 25. REVENUE MIX Division Wise Sales (%) 2004-2005 2010-2011 35.0% Mens 31.0% Mens 38.0% 41.3% Ladies Ladies Children Children Non-Apparel Non-Apparel 7.0% 18.9% 20.0% 8.7% Non Apparels consist of Home, Leather, Watches, Jewellery, Electronics and Personal accessories Children includes Mother Car „Mens‟ has reduced by a significant percentage while there is a significant increase in non-apparel. Mr. Govind Shrikhande (MD, Shopper Stop) says that ladies are buying very highly in categories like beauty, ladies western wear, leather as well as home. Hence the company should more on attracting women.Source: Shoppers Stop investors presentation
  26. 26. MERCHANDISE MIX Private Label & Private Brand Private Label Sales mix % 21% 20.1% 19.9% 20% 3.31% 19% Decrease 18.1% 18% 17.5% 17% 16% Private Lable Sales mix % 2007-08 2008-09 2009-10 2010-11 Shoppers stop repositioned and reinvented as a “Bridge to luxury” brand in year 2008 with unveiling of the new logo and tagline, “START SOMETHING NEW” and it started focusing on having more brands for fashionable families. Mr. Govind Shrikhande (MD, Shopper Stop) says, “To make that kind of the statement positioning, private label automatically has to come down because I am positioning my store for brand and the kind of brands that I am adding that is Mac, Clinique or Estee Lauders or any one of those like Tommy or Calvin Klein or French Connection, obviously these are going to take space as well as share of sales from something else, so there is no point in fighting anyone of these brands with a private label. So it is our conscious decision to reduce private label “. He says that it is related completely to the positioning. The positioning has an upside as far as long-term potential goes. Shoppers Stop’s focus on premium consumers places the company in a unique position as rising per capita incomes and an emerging middle class (currently a small part of the population) will help to increase store penetration and sales. Although private labels generate significantly higher margins compared to branded merchandise, SSL does not want to bear the associated high inventory and obsolescence risk. In FY10, private labels contributed 18% of Shoppers Stop’s revenues while international brands contributed over 50%. Hence going forward, SSL plans to maintain the share of private label close to 20%.Source:1. Shoppers Stop Limited Quarterly Results Conference Call, February 01, 20102., News: Shoppers Stop to go easy on private labels, Tuesday, 21 September 20103. Live Mint, Shoppers Stop braces for expansion challenge, January 11,2011
  27. 27. INTERNATIONAL BRANDSImproved Product Mix and Brands Profile to Attract “Aspirational” Customers • Jack & Jones, French Connection, CK Jeans, GAS, ESPRIT, Tommy Hilfiger, Mustang & Mango in apparel segment • Loccitane, Lancome, MAC, Clinique & Estee Lauder in cosmetics • CK, Armani & Gucci in sun glasses • Burberry, Nina Ricci, Diesel & Boss in watches PRIVATE LABELSSHOPPERS STOP PRIVATE LABELS•Stop- Mens formal/casual/ethnic/womens western/ethnic, kids casual/ethnic•Kashish – Mens & womens ethnic•Life- Mens & womens Fashion•Vettorio Fratini- Premium formal& semi formal mens wear•Haute curry- fusion wear for women•Elliza Donatein- corporate womenswear•Ijeans wear- Mens denim
  28. 28. BRAND PORTFOLIOAPPARELS Jewellery Music FragrancesArrow Facet Planet M Christian DiorLouis Phillipie Carbon Music World YslPark Avenue Parx Sparkles Home Décor DavidoffVan Heusen Tanishq FQ Yamini JoopZodiac Swaroski Four Seasons DieselStop Gili Viva LancasterCaliber Oyzsterbay Welspun NicosBlackberries Sarvoski Borosil Jil SanderScullers Estelle Corning Ware Calvin KleinGivo Pedrini BoucheronOrly Shoes Pyren PoliceLee Lee Cooper Jdel PozoLevice Red Tape Hair Styling MyrurgiaPepe Picasso Habbibs Etienne AigerKiller Stop XmLee Cooper Life BooksWrangler Crossword SunglassesSpykar Ray BanLifeAllen Solly WatchesProvouge CasioWills Esprit Fossil Titan
  29. 29. PHYSICAL CHARACTERISTICS OF THE STORE Shoppers Stop Second First Floor Third Floor Floor Personal Women’s Men’s Accessories Care Wear Wear Reason for such layout: Men are usually serious buyers and also mostly accompanied by a lady. So women’s section is kept before men’s, so as to attract them as they are impulse buyers. On the first floor the products kept are to attract the customer leading him/her into the store and also impulse buying.Source: Shoppers Stop investors presentation
  30. 30. INTERNATIONAL AFFILIATIONS & ACQUISITIONS • Shoppers‟ Stop is the only retailer from India to become a member of the prestigious Intercontinental Group ofInternational Departmental Stores (IGDS). The IGDS consists of 29 experienced retailers from all over the world, which include Affiliations established stores like Selfridges (England), Karstadt (Germany), Shanghai No. 1 (China), Matahari (Indonesia), Takashimaya (Japan), C K Tang (Singapore), Manor (Switzerland) and Lamcy Plaza (Dubai). This membership is restricted to one member organization per country/region. • The Organisation, in the year 2000, along with ICICI ventures also acquired the reputed bookstore, “Crossword”, which offersAcquisitions the widest range of books along with CD-ROM, music, stationery and toys. Services like Dial-a-book, Fax-a-book and Email-a- book enable customers to shop from their homes. Crossword currently has 18 Stores.
  31. 31. STORE SPACE RAMP-UP Total Gross Floor Area (in 000s) 2500 2,287 2,047 Total Gross Floor Area 2000 1,822 1,602 11.7% 1500 1,171 Increase 950 1000 752 500 0 FY05 FY06 FY07 FY08 FY09 FY10 FY11 Year Shoppers Stop is targeting higher growth by increasing the number of stores and hence the total gross floor area. Mr Govind Shrikhande (MD) says that increasing number of stores is strategic decision by SSL: 1. Home category does not have many big players and hence taking a set ahead will help to strengthen its position. 2. Increased number for stores actually came through once SSL has turned around the existing format. 3. All the stores that SSL has signed have been signed along with either the Shopper Stop being anchor in the same mall or another anchor where either HyperCITY is the anchor or SSL believes very strongly in that particular mall.Source: Shoppers Stop Annual Report, 2010-11 Shoppers Stop Earnings Call
  32. 32. CUSTOMER ENTRY 35 30.9 30 Customer Entry (in Mn.) 24.9 32% 25 22.8 23.3 Increase 19.9 20 15 10 5 0 2006-07 2007-08 2008-09 2009-10 2010-11 Year Customer entry is the number of people entering the store (footfall). In year 2008-09 there is a decrease in footfall due to mainly two reasons: 1. Competition in catchment area: One of our biggest stores is Malad in Inorbit Mall and that is on the link road, but biggest competition that has emerged is Oberoi Mall which is a five minute ride from Inorbit Mall and Inorbit Malls entry has dropped by more than 35% because of opening of Oberoi. The same thing has happened in Saket, Delhi versus Ansal Plaza. Shoppers Stop opened three more additional stores vis-à-vis Ansal Plaza, which is right there in the center. Hence the entry degrowth is due to cannibalization of customer entry by competition or by Shoppers Stop own stores. 2. Due to recession window shopping went down and only serious shoppers were coming in, so only the classical shoppers entering the store. In 2010-2011 there is a good increase in customer entry because of new store openings in smaller cities like Aurangabad, Bhopal, Amritsar which drove it up by more than 50%.Source: Shoppers Stop Annual Report 2010-11,Shoppers Stop Earnings Call – 2009,2011
  33. 33. CONVERSION RATIO 29% 28% 28% 27% 27% Conversion Ratio(%) 27% 26% 25% 3% 25% Decrease 24% 24% 23% 22% 2006-07 2007-08 2008-09 2009-10 2010-11 Year Conversion ratio is the number of transactions versus the total customer entry into the store. During recession (2008) there was an increase in conversion ratio as the customer entry into the store reduced and only serious shoppers were coming in, so only the classical shoppers entering the store more and more and shopping more and more. In 2010-11 there is a decrease in conversion ratio due to heavy increase in customer entry. This is due to entry of Shoppers stop into new cities where it entered for the first time. When a brand like Shopper Stop enters a small city for the first time, there is always a lot of aura around it and so lot of people want to come and see it and that is why the conversion has degrown slightly.Source: Shoppers Stop Annual Report 2010-11, Shoppers Stop Earnings Call
  34. 34. SALES SALES (LIKE-TO-LIKE GROWTH %) (DEPARTMENTAL STORES) 25 SALES PER SQUARE FEET (in Rs.) 21 8800 8671 Sales(like-to-like growth %) 7% Sales per square feet(in Rs.) 20 8518 17 8600 14 8400 8218 15 8200 7973 7955 10 8000 7800 5 4 7600 1 7400 0 2006-07 2007-08 2008-09 2009-10 2010-11 2006-07 2007-08 2008-09 2009-10 2010-11 Year Year Gross sales both at chain level and for like-to-like stores showed an improvement as compared to last year. The growth in gross retail turnover of Shoppers Stop departmental store business is 23%. Post recession (2008) there was a significant decrease in customer entry and sales and hence sales per square feet. In 2009-10 although there was a marginal increase in sales but due to addition of significant number of new stores, the sales per square feet remained low. While in 2010-11 also opening of new stores continued and hence the customer entry but there was a significant rise in sales as well which resulted in increasing sales per square feet.Source: Shoppers Stop Annual Report, 2010-11 Shoppers Stop Earnings Call
  35. 35. AVERAGE SELLING PRICE (ASP) ASP (Like-to-Like) Departmental Stores 1000 913 Average Selling Price (Rs.) 950 900 856 821 6.6% 850 Increase 800 759 750 704 700 650 600 2006-07 2007-08 2008-09 2009-10 2010-11 Year Average Selling Price is the Gross Retail Sales divided by the number of units sold. Tracking ASP helps the retailer to align the offerings as per the customer segment as well as improve productivity of floor space As the cotton prices had increased in year 2010-11, apparel prices went up and so the ASP. High price increase also directly impacted volumes to some extent.Source: Shoppers Stop Annual Report 2010-11, Shoppers Stop Earnings Call
  36. 36. TRANSACTION SIZE Transaction size (Rs.) Departmental Store 2500 2207 2029 Transaction Size (Rs.) 2000 1843 1713 1562 9% 1500 Increase 1000 500 0 2006-07 2007-08 2008-09 2009-10 2010-11 Year Transaction Size= Total Sales/Number of cash memos Transaction size represents the amount spent be each customer on his buying. There is a close to 9% increase in transaction size in year 2010-11 over last year. Increased transaction size indicates an increased ticket size for the company.Source: Shoppers Stop Annual Report 2010-11 ,Shoppers Stop Earnings Call
  37. 37. LOYALTY PROGRAM • The First Citizen Shoppers’ Stop’s customer loyalty program is called The First Citizen. The program offers its members an opportunity to collect points and avail of innumerable special benefits. Currently, Shoppers’ Stop has a database of over 2.5 lakh members who contribute to nearly 75% of the total sales of Shoppers’ Stop.Source: Shoppers Stop Annual Report 2010-11
  38. 38. LOYALTY PROGRAM First Citizen Members (in 000) 2500 2017 Despite a 25% increase in First 2000 25% Citizen members over last year, their 1611 contribution to total sales has 1500 1277 1013 reduced by 2%. 1000 This means that the company need 500 to relook at the efficiency of its loyalty program. 0 FY08 FY09 FY10 FY11 First Citizen Contribution to Total Sales % 76% 75% 74% 73% 72% 72% 2% 70% 68% 66% 65% 64% 62% 60% FY08 FY09 FY10 FY11Source: Shoppers Stop Annual Report 2010-11
  39. 39. CUSTOMER SATISFICATION INDEX (CSI) CSI 85 81 80 80 75 70 63 63 65 60 60 55 50 Jan-06 Aug-06 Nov-07 Feb-09 Apr-10 Customer satisfaction index is calculated based on the following parameters: There was a significant increase in Merchandising Range and Quality customer satisfaction from year 2007 Store Environment to year 2009, although there is a small Staff decrease in customer satisfaction in Transaction Efficiency year 2010 from year 2009. Loyalty Programme This may be due to increased choices Schemes offered to the customers by other Promotions stores and hence increasing Customer experience in Shoppers Stop wrt the expectations of the customer competitor storesSource: Shoppers Stop Annual Report 2010-11
  40. 40. PRODUCTIVITY/OPERATING EFFICIENCY GMROI (Gross Margin Return on Inventory) The reduction in inventory per sq. ft. has resulted in 8 5.5 6.03 improved gross margin return on inventoryGMROI (Rs. Inventory) 6 3.62 3.29 9.6% investment (GMROI) for the company, which 2.75 4 increased to 6.03% in FY10 (from 2.75% in FY06). 2 The company has also benefited from the 0 continued use of the concessionaire model helping 2006-07 2007-08 2008-09 2009-10 2010-11 it to reduce employees on its payroll. Year Consequently, SSL’s gross margin return on labour GMROF (GMROL) has increased from 1032609/employee in (Gross Margin Return on Floor space) FY06 to 1719600/employee in FY10. GMROF (Rs. per unit of 2735 2771 4% 2608 retail space) 3000 2520 2471 2500 In last two years GMROF, GMROI, and GMROL all 2000 three are slightly down because of the addition of 2006-07 2007-08 2008-09 2009-10 2010-11 new store space. But on a comparable like-to- Year like, all three have shown a very positive trend. In year of recession (2008) there was a decline in GMROL (Gross Margin Return on Labor) GMROF because of reduced purchase by the customer. However the new positioning of bridge to 2,000,000 1,649,991 1,719,600 luxury in year 2008 increased the average cash perGMROL (Rs. per employee) 1,800,000 1,600,000 4.2% customer and therefore, increased the average 1,198,593 1,270,014 1,400,000 1,032,609 1,200,000 GMROF 1,000,000 800,000 600,000 400,000 200,000 0 2006-07 2007-08 2008-09 2009-10 2010-11 Year Source: Shoppers Stop Annual Report 2010-11, Shoppers Stop Earnings Call
  41. 41. SWOT ANALYSIS Strengths Weakness• 4 warehouses, covering more than • Pressure of increasing leasing3,50,000 sq. ft covering more than rentals of Malls.4,00,000 SKU’s working 24*7 • Slowing expansion due to• 2 million Loyalty Card holders, First dependence on real estate developerCitizen, largest in any format. for completing projects during• Endeavor to make Shopping slowdown.Experience the differentiator. SWOT Opportunities Threat• Preferred partner for international • Economic slowdown affecting thebrands in various categories due to purchasing power of targetdiversified presence. consumer.• Expansion in different formats and • Rivalry amongst the establishedvaried locations across India. players and threat of new entrants as well.
  42. 42. COMPETITOR ANALYSIS WORKING CAPITAL CYCLE 250 200 Figures in Days 150 100 50 0 -50 2008 2009 2010 Shoppers Stop -15.37 -32.47 -31.68 Pantaloon 43.51 62.88 85.12 Trent Westside 108.97 126 166.59 Negative capital of SSL shows that the company is able to pay its creditors in advanceSource: Shoppers Stop Annul report ,
  43. 43. COMPETITOR ANALYSIS CASH FLOW FROM OPERATIONS 200 100 Figures in Rs. Crores 0 -100 -200 -300 -400 -500 -600 2008 2009 2010 Shoppers Stop 11.2 80.99 97.77 Pantaloon -512.7 -278.94 -288.62 Trent Westside 32.75 -56.73 -7.7 Net Cash Flows from operating activities (indirect method); annual consolidatedSource: Shoppers Stop Annul report,
  44. 44. COMPETITOR ANALYSIS NET SALES 12000 10000 Figures in Rs. Crores 8000 6000 4000 2000 0 Shoppers Stop Lifestyle Pantaloon Trent Westside 2007-08 1190 810 5840 755 2008-09 1383 960 7669 850 2009-10 1547 1286 9787 1120 NOTE: Pantaloons retail follows a July-June yearSource: Shoppers Stop Annul report ,
  45. 45. IMPACT OF 2008 RECESSION Then SSL was badly hit by global recession in 2008-09 when the buyer sentiment dipped, and, it posted losses of Rs 65 crores. Consumers downgraded purchases, which affected SSL’s profits more than its rivals’ who catered mostly to comparatively lower-income groups. The operating costs of SSL fell from Rs 400 per sq. ft. in 2008 to Rs 100 per sq. ft. in 2010-11. The company has since reworked the business model. It has control over its working capital expenses and is low on debt. Till 2008 2009 Onwards the buy-out model of sourcing the consignment model of sourcing SSL earlier worked on the buy-out model In 2009, SSL introduced the consignment of sourcing — merchandise was bought model, where vendors manage from brand owners at factory price and inventory, while SSL picks up only those SSL solely managed the inventory. This items that sell in the store. Nearly 80 per meant that it was stuck with unwanted cent of the revenues now come from the stock and incurred huge inventory costs consignment model. when sales fell — also a big reason behind recession taking such a toll on SSLSource:
  46. 46. HyperCITY: AN OVERVIEW ADDRESS Hypercity Retail (India) Ltd. Paradigm, A-Wing, 1st Floor, Mindspace, Malad Link Road, Malad (West), Mumbai 400064. INDUSTRY Retail SSL Stake 51% STATUS Operating NUMBERS OF STORES 10 SALES FOR 6 MONTHS Rs. 369 cr (as of Sep 2011) SALES FOR FULL YEAR Rs 597 cr (as of March 2011) GFA 10.64 Lakh sq. ft. OWNED In 2006Source: Shoppers Stop Investors Presentation
  47. 47. HyperCITY: AN OVERVIEW About HyperCITY Hypercity Retail (India) Ltd. is part of the K. Raheja Corp. Group, a leader in the Indian retail sector HyperCITY provides a truly international shopping experience, where customers can shop in comfort in a large, modern, & exciting environment. It offers a wide and contemporary range of innovative products, sourced from both local and international markets. The product range covers: Foods, Homeware, Home Entertainment, Hi-Tech, Appliances, Furniture, Sports, Toys & Fashion. KEY TEAM- HyperCITY Mr. Mark Ashman Chief Executive Officer Veneeth Business Head - Purushotaman Technology Ashutosh Chakradeo Head - Buying & Simon Hooper Chief of Operations Merchandising Aparna Ranadive Business Head - HRSource: Shoppers Stop Investors Presentation
  48. 48. VISION To be an integral part of customer lives, by offering them a high quality shopping experience through great products at ever better prices. Tagline: “Big store. Big savings.”Source: Shoppers Stop Investors Presentation
  49. 49. HyperCITY: AN OVERVIEW Total Retail space 10.7 lacs sq. ft. with 10 stores operating in 7 cities (No data available on the 2 stores opened recently in the month of Dec’11) Number of Stores 18 15 12 9 7 3 1 1 2007 2008 2009 2010 2011 2012E 2013E 2014E Cluster based growth strategy, with Core and Mid sized stores ►Core size to be in 75–85 K sq. ft. to drive assortment, differentiation and profitability ►Mid size format of 50-55 K sq. ft. for penetrationSource: Shoppers Stop Investors Presentation
  50. 50. HyperCITY: AN OVERVIEW A strong own brand portfolio Business Model Food General Fashion Merchandise Private label 21% Branded 79% Department Mix % Key Driver Food & Groceries 58-62% Footfall driver General Merchandise 30-34 % Value & Margin driver [Home, Furniture, CDIT] Apparels & Jewellery 7-9% Fashion, Value & Margin DriverSource: Shoppers Stop Investors Presentation
  51. 51. HyperCITY: POSITIONING & PRODUCT STRATEGYLarge Footfalls attracted Due to the Widest Product Offering by HyperCity in IndiaPositioning Product Offering Target customers: 18-45 years with Income -20,000+ & Discerning, Urban, Upscale with High Disposable Income Other In-store attractions – Café, Laundry, Wine, Saloon, SPA Widest product range on offer in a hypermarket in India, 50K SKUs Awarded the “100 Must Visit Retail Destinations for year 2007-08 around the world” International Award for “ Corporate Achievement to Recognize Quality & Excellence”–April 2010. Average footfalls per month: 1.3 Mn, indicating strong customer pull
  52. 52. HyperCITY: BACK END OPERATIONS Best in Class Back End Operations to Support Vibrant Front End Supply Chain and Systems Back end operations and IT Best Practices and Policy  Operates multi channel  Reliable Inventory –  Majority of product written supply chain for various Merchandize Management off on completion of 12 product categories System months  Imports account for 20 % of  Dynamic Auto-replenishment  Quarterly cycle , enabling General Merchandise system, enabling consistent reliable inventory and high availability of stocks Shrinkage monitoring  All DC operations on Wireless mobile devices  E-Payment for 98%  Performance Linked Reward transactions Scheme & ESOP  Furniture and CDIT products are home delivered With support from best in class partnersSource: Shoppers Stop Investors Presentation
  53. 53. HyperCITY: STORE STRATEGY Among apparels and HyperCity has 62 per accessories, HyperCity cent of its sales revenue ’s stocks are mainly coming from food and private label products grocery and 8 per cent & also introduced from apparels some brands like Gini and Jony, Puma and Lotto in HyperCity. At present, HyperCity stores are 80,000 to 120,000 sq. ft. in size and the new ones will be between 50,000 and 70,000 sq. ft. This will save on the rentals.Source: Shoppers Stop Investors Presentation
  54. 54. COMPANY INFORMATION As a place and space for people who seek information, knowledge or just the pleasure of readingEstablished on 15th October 19922000: Shoppers Stop acquired Crossword2005: Crossword became wholly owned subsidiary of CrosswordCrossword, with Eighty three stores, across Ahmedabad, Aurangabad, Amritsar,Bhopal, Bengalooru, Chennai, Delhi, Durgapur, Hyderabad, Indore, Jaipur, Kolkata,Kota, Lucknow, Mumbai, Nagpur, Nasik, Navi Mumbai, Pune, Thane, Udaipur,Vadodara, Vapi & Vijaywada spread across the gross floor area of nearly 2.52 lacs sq ft
  55. 55. STORE OPERATIONS• Works on Franchisee model• Primarily by Self Service• Customers can browse all they want without making a purchase• Help is available when needed.• Crossword strives to serve all age groups.• Payment through cash and credit card presented at billing counter.• No Credit Sales
  56. 56. CATEGORIES & ASSORTMENT Books Kids DVDs StationeryFiction Toys Movies DiariesNon-Fiction Board Games Music NotebooksManagement Card Games Games PensComputer Comics PencilsAutobiographies Books Table ItemsMagazinesHealthHobbies
  57. 57. Thank You