Shoppers Stop: Holding Its Own
Shoppers Stop faces competition both online and offline. In physical retailers, Central and Lifestyle are two key competitors.
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It’s a company in which the visiting card refers to everyone as a customer care associate, whether it’s the MD or the shop floor manager. That just goes to show how important customer focus is to the 25-year-old retail chain, Shoppers Stop, a part of the real estate group, K. Raheja Corp.
Almost certainly, it’s this focus on the customer that directed the respondents of the BWBusinessworld’s Most Respected Companies survey to nominate the
Rs 3,458-crore chain at the top of the retail industry for the past five years.
According to the survey by market research firm IMRB International, Shoppers Stop has been rated more than 4 on 5 for all stakeholders (customers, partners, employees) which is considered a high score and difficult to maintain, especially amidst the intense retail competition. Praveen Nijhara, vice-president at IMRB, says “Shoppers Stop has managed to maintain a positive and consistent trend across their stakeholders which is a reflection of being a customer centric organisation.”
Late to the Party
It was when online shopping became a customer preference that Shoppers Stop decided to keep pace with this trend. “We had thought the eTail revolution in India would take some time due to connectivity issues and the customer’s need to touch and feel the products,” says the company’s MD Govind Shrikhande. However, the infusion of billion dollar funding in the past two years has given eTailers like Snapdeal, Flipkart, PayTM, Amazon, Jabong the wherewithal to change consumer behaviour by giving heavy discounts, pushing them to buy online. “We underestimated the aggressiveness of e-commerce players and are late to the party,” he adds.
Last year, a team of 10 associates from Shoppers Stop visited major retail giants in developed markets, including John Lewis, Marks & Spencer and Estee Lauder in the UK, and Nordstrom in the US and studied their business models and use of technology to form the digital roadmap for Shoppers Stop.
They realised there was a four-pronged strategy needed for a complete omni-channel capability: a better website, seamless customer tracking and their orders, and keeping a tab on inventory across channels for both physical stores and online channels. To achieve this, Shoppers Stop will invest Rs 60 crore in the next three years to become an omni-channel player. The company has already built a better website by investing Rs 20 crore in HYBRIS — an e-commerce platform from SAP. “We earlier had Magento — the technology software for websites by eBay — but it wasn’t working well so we changed it,” says Shrikhande. The subsequent Rs 20 crore will be used to implement Red Praire — the warehouse management system to track inventory on online and offline channels.
Shoppers Stop’s focus next year will be to launch its mobile app and increase online traffic at its Snapdeal store and website. “We believe we can be the key omni-channel player in India by January 2017 and take competition head on. We are working to use our physical stores as an asset and utilise them well by giving choices to the customer to navigate between the two channels as per their convenience,” he says.
However, during the implementation phase, the team realised integrating technology and the business model was a challenge. In June 2015, they hired Sachin Oswal, who was co-founder and COO at etailer Infibeam, to take decisions ahead of the market. Apart from him, last year Shoppers Stop brought in UK-based alcoholic beverage company Diageo’s former MD Abanti Sankaranarayanan in June 2014 to implement learnings across sectors. Gareth Thomas, former director at John Lewis, also joined the board to implement international best practices in the company. These strategic changes to the board will help the company implement its consumer and digital strategies.
“In India, no one has been able to crack the omni-channel strategy so if they are able to pull off the strategy well, Shoppers Stop can be a strong brand in the time to come, especially because they already have a strong distribution network and higher margins on private labels,” says Abneesh Roy, associate director at Edelweiss Capital.
Until the technology is put in place, the company is betting big on its tie up with Snapdeal to get access to the online shoppers. “These pure play sites have market access, which is almost 30 per cent more than the physical retailers. Our Snapdeal association ensures we are well-entrenched online,” says Shrikhande.
For now, one per cent of company’s sale comes from their own Website. The target is to take online sales to 10 per cent. The company plans to open six to eight physical stores in the next financial year. It is looking at a 15 per cent top line growth.
Shoppers Stop faces competition both online and offline. In physical retailers, Central and Lifestyle are two key competitors. Foreign lifestyle brands such as Zara, H&M and GAP having recently entered the Indian market pose a challenge to the company too, though in the young fast fashion category. Apart from that all the online eTailers Snapdeal, Jabong, Flipkart are giving stiff competition to physical retailers too. It would be interesting to see how this 25-year-old brand will hold its own against several young adversaries.
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(This story was published in BW | Businessworld Issue Dated 11-01-2016)