Shoppers Stop

RETAIL ANALYSIS : Shoppers Stop

Milan Patel

SHOPPERS STOP: AN OVERVIEW

HEADQUATERS INDUSTRY TYPE STATUS COMPANY SIZE NUMBERS OF STORES 2011 REVENUES NET PROFIT TOTAL RETAIL AREA FOUNDED

Eureka Towers,9th Floor, B Wing, Mindspace, Link Road, Mumbai, Maharashtra-400064 Retail Public Company Operating 8000 employees 49 Rs. 439.2 crore Rs. 11.7 crore 3.93 million sq. ft. 1991

Source: http://corporate.shoppersstop.com/

INTERNATIONAL AFFILIATIONS
Shoppers Stop is the only retailer from India to become a member of the prestigious Intercontinental Group of Departmental Stores (IGDS). The IGDS consists of 29 experienced retailers from all over the world, which include 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.

SHOPPERS STOP: AN OVERVIEW

About 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 estate development and hotels in the country. Shoppers Stop Ltd along with its Subsidiary Company Hypercity Retail (India) Ltd and Joint Venture Companies Timezone Entertainment Pvt. Ltd and Nuance Group (India) Pvt. Ltd. operates more than 3.93 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 Govind Shrikhande Deepak Ghaisas Neel C Raheja Shahzaad S Dalal Chairman / Chair Person Managing Director Director Director Director B S Nagesh Ravi C Raheja Gulu L Mirchandani Nitin Sanghavi Nirvik Singh Vice Chairman Director Director Director Director

Source: http://corporate.shoppersstop.com/

HISTORY OF SHOPPERS STOP

Retail Mix/Year 1991 Began the modern retail revolution in India with the launch of Mens ready-to-wear store at Andheri(Mumbai) 1992 1993 1994 1995 First step towards pan-India presence. Launched its second store in Bengaluru 1996

Location

Consumer service

Merchandise assortment

Offering expanded to include suiting, boyswear and ladies merchandise

Launched an exclusive loyalty program titled The First Citizens Club Added Casuals, Kidswear Launched and Non-apparel STOP the first section(Jewellary, in-house label Fragnances, Cosmetics and Watches) making Shoppers Stop Indias first ever departmental store Began its journey of exciting marketing promotions and in-store excitement with the first of its kind Festival of Britain, celebrated in association with the commercial department of British Consulate

Communication Mix

Source: http://corporate.shoppersstop.com/

HISTORY OF SHOPPERS STOP

Retail Mix/Year 1997 1998 Opened third store in Hydrabad 1999 2000 2001 2002 Retail revolution took Opened stores at Opened stores in Opened store in roots in North Chennai and Chembur Pune and Bandra Kandivli (Mumbai) th th th 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)

Location

Launched a cobranded credit card for its loyalty members in association with HSBC Launched Prikrama, a Communication festival to Mix celebrate Indian tradition and culture Consumer service New Formats Shoppers Stop Sole retailer to Implemented JDA Accomplishments incorporated as a be awarded the Retail ERP. First body corporate Intercontinental retailer to adopt ERP Group of Department Stores (IGDS) membership
Source: http://corporate.shoppersstop.com/

Acquired CrosswordIndias leading retail book chain

HISTORY OF SHOPPERS STOP

Retail Mix/Year 2003 2004 Stepped into East with the Opened stores in launch of store in Kolkata. Malad (Mumbai), Also opened stores in Kolkata and Mulund(Mumbai) and Gurgaon Bangalore th th th th th th (11 , 12 & 13 ) (14 , 15 &16 ) 2005 2006 Opened stores in Pune, Opened stores Juhu (Mumbai), in Mumbai and st Bangalore and Lucknow (21 th th nd Ghaziabad (17 ,18 , and 22 ) th th 19 and 20 ) 2007

Location

Merchandise assortment Brand positioning changed from Feel the experience to Shopping. And beyond

Created movie merchandise history with unveiling of the Om Shanti Om collection Celebrated the launch with Sharukh Khan, Deepika Padukone and Arjun Rampal modelling the cloths at a fashion show. HomeStop- Home need Launched Signed a 50:50 JV with the specialist store launched Mothercare in Nuance Group for Airport 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 Indias IPO oversubscribed Declared Gold Shield Award for 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 ICAI

Communication Mix

New Formats

Accomplishments

Source: http://corporate.shoppersstop.com/

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 Aurangabad. Also added stores in existing cities like Bengaluru, Mumbai and Hydrabad taking store tally to 36 stores across 15 cities

Location

Merchandise assortment

Pioneered mascot licensing in the categories through exclusive tie-up for certain products with Vodaphone for their product brand mascot Zoozoo Shoppers stop repositioned and reinvented as a Bridge to luxury brand with unveiling of the new logo and tagline, START SOMETHING NEW Increased stake in Hypercity Retail (India) Limited to 51% Awarded the Emerging market retailer of the Year at the World Retail congress in April 2008 Recognized as Most Respected Company in Retail Sector by Business World

Communication Mix

New Formats Accomplishments

Source: http://corporate.shoppersstop.com/

SHOPPERS STOP FORMATS

Shoppers Stop Ltd.
SS Department Stores Business 68% Sales Contribution

Consolidated with SSL

Subsidiary Companies 30% Sales Contribution
SSL Stake 51%

JV Companies 2 2% Sales Contribution

SSL Stake 50%
No of stores: 1 GFA: 0.2 lacs sq ft SSL Stake 45% No of stores:14 GFA: 0.97 lacs sq ft.

No of stores: 43 (incld. 2 duty paid airport stores) GFA: 24.58 lacs sq ft. Sales for 6 months as of Sep,2011 : Rs 920 Cr Sales for full year as of March, 2011 : Rs 1676 Cr

No of stores: 10 GFA: 10.64 lacs sq ft. Sales for 6 months as of Sep 2011 : Rs. 369 Cr Sales for full year as of March 2011 : Rs 597 Cr SSL Stake 100% No of stores: 84 Own Stores : 43 GFA: 2.52 lacs sq ft.

No of stores: 8 GFA: 1.37 lacs sq ft.

No of stores: 35 GFA: 0.14 lacs sq ft.

No of stores: 7 GFA: 0.35 lacs sq ft.

08 09 : 8.0 lacs visitors 10 11 : 35 lacs visitors

Well diversified portfolio to capture the consumers wallet share

Source: Shoppers Stop Annual Report 2010-11
Note : Above figures as of 30TH September 2011. GFA: Gross Floor Area

STRATEGIC ALLIANCE
Shopper's 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. Shopper's 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. Shopper's Stop Ltd.'s entry into airport retailing is marked by a joint venture with The Nuance Group AG of Switzerland, the world's leading airport retailer. Shopper's 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

TYPE OF RETAIL OUTLETS

Shoppers Stop Ltd.

Departmental StoreShoppers Stop- 43

Specialty Retailing-93

Hypermart- HyperCity -10

Home Products RetailingHomeStop (8)

Beauty, Cosmetics RetailingMAC, Estee Lauder Clinique (35)

Crossword Book store(43 )

Parenting ProductsMothercare(7)

Source: Shoppers Stop Annual Report 2010-11

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 2011

Source: http://corporate.shoppersstop.com/investors/presentation-analyst.aspx

NUMBER OF STORES
46 44 42 40 38 36 34 32 30 28 26 24 22 20 18 16 14 12 10 8 6 4 2 0

17

13 13 10 3 10 9 7 6 2 2 3 7 2000 4 2 3 9 2001 5 2 3 10 2002 2 1 2 4 13 2003 3 4 16 2004 5 20 2005 6 22 2006 27 2008 31 2009 35 2010 43 2011 2 4 2 4 10 11 12 13 3 4 3 4 8 7 Sum of West Sum of East Sum of South Sum of North

1 1 1991

1 1 2 1995

1 1 1 3 1998

1 1 3 5 1999

Source: Shoppers Stop Annual Reports, http://corporate.shoppersstop.com/

North
6 5 4 3 2 1 0 Delhi Delhi Gurgaon Haryana Amritsar Punjab Jaipur Rajasthan Ghaziabad Lucknow UP Noida 6 5 4 3 2 1 0 Hydrabad AP

South

Bangalore Karnataka

Chennai Tamil Nadu

West
12 10 8 6 4 2 0 Indore Pune Aurangabad Mumbai 3.5 3 2.5 2

East

1.5 Bhopal
Jaipur 1 0.5 0 Durgapur Maharashtra MP Rajasthan Kolkata West Bengal Siliguri

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, http://corporate.shoppersstop.com/

Store Division: City Wise

12 10 18 16 14 12 10

Store Division: Zone Wise

17

8 6
4 2 0

11

10

8 6 4 2 0 East North South West 5

Store Division: State Wise

16 14 12 10 8 6 4 14

5
1

5
2 1 2 3 1

2
0

Shoppers Stops main market is North and West. Also in West it is mainly focused in one state and mainly Mumbai city. Also it has more number of stores in metros as compared to non-metros.

Source: Shoppers Stop Annual Reports, http://corporate.shoppersstop.com/

TYPE OF APPROACH

SSL aims to stick to the top 10 cities including Pune, Bangalore, Hyderabad and metro cities.

75 per cent of the total sales of SSL comes from metros and Tier1 cities.

METRO AND TIER 1CITIES

VISION

To be a Global Retailer in India and Maintain No.1 position in the Indian Market in the Department Store Category.

TRANSITIONED THE SHOPPERS STOP BRAND FROM PREMIUM TO BRIDGE-TO-LUXURY

Luxury Bridge to Luxury Premium

2005

2009

Contemporary Popular Mass

Source: http://corporate.shoppersstop.com/investors/presentation-analyst.aspx

SEGMENTING
Fall between the age group of 16 years to 35 years,

The majority of them being families and young couples

Shoppers Stops core customers represent a strong SEC A skew

A large number of Non - Resident Indians visit the shop for ethnic clothes in the international environment they are accustomed to.

With a monthly household income above Rs. 20000 and an annual spend of Rs.15000
Source: Shoppers Stop Investors Presentation

TARGETING

They started in 1991 as a Mens ready to wear store

Offering expanded to suiting's, boys and ladies merchandise in 1992

1993- Added casuals, kidswear, jewellery, fragrances, cosmetics and watches making Shoppers stop Indias first Departmental store.

Source: http://corporate.shoppersstop.com/

POSITIONING

'Feel the experience while you shop' in 1993,

From the 'Ultimate Shopping Experience' in 1992
'Shopping. And beyond.' in 2005,

From enjoying the international shopping experience to shopping for emotional fulfillments for example, buying a diamond ring for your loved one to express your love or flaunting your status.

This changed to 'Start Something New' in 2008 as a part of the Brand's Makeover strategy, but still connecting to the current mindset of customers to constantly upgrade and experiment.

The evolution of the brand Shoppers Stop began when the baseline of the brand logo changed with ever-rising customer aspirations.

PRICING
Shoppers stop follows premium pricing strategy that is offering high quality products at high price.
Source: http://corporate.shoppersstop.com/

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

REVENUE MIX Category Wise Sales (%)

Category Wise Sales(%)
Apparels Non-Apparels

38.80%

39.60%

40.50%

41.20%

61.20%

60.40%

59.50%

58.80%

Non-Apparel Category includes Cosmetics, Personal Accessories, Jewellery, Leather goods, Home Ware, Electronics, Books and Music. These are all lifestyle products which have high aspiration value. 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
2004-2005

2010-2011

35%

41%
Apparels Non-Apparels 65%

Apparels 59% Non-Apparels

Source: Shoppers Stop investors presentation

REVENUE MIX Division Wise Sales (%)

2004-2005 2010-2011

35.0%

38.0%

Mens Ladies Children Non-Apparel

31.0% 41.3%

Mens Ladies Children 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

MERCHANDISE MIX Private Label & Private Brand

Private Label Sales mix %
21% 20% 19% 18% 17% 16% 2007-08 2008-09 2009-10 2010-11 Private Lable Sales mix % 20.1% 19.9% 18.1% 17.5%
3.31% Decrease

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 Stops 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 Stops 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, 2010 2. http://www.fashionunited.in, News: Shoppers Stop to go easy on private labels, Tuesday, 21 September 2010 3. Live Mint, Shoppers Stop braces for expansion challenge, January 11,2011

RANGE OF MERCHANDISE

The stores offer a complete range of apparel and lifestyle accessories for the entire family. From apparel brands like Provogue, Color Plus, Arrow, Levis, Scullers, Zodiac to cosmetic brands like Lakme, Chambor, Le Teint Ricci etc., Shoppers Stop caters to every lifestyle need. Shoppers' Stop retails its own line of clothing namely Stop, Life , Kashish, Vettorio Fratini and DIY. The merchandise at Shoppers Stop is sold at a quality and price assurance backed by its guarantee stamp on every bill. Their motto: We are responsible for the goods we sell.

INTERNATIONAL BRANDS
Improved 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 LABELS
SHOPPERS 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

BRAND PORTFOLIO
APPARELS Arrow Louis Phillipie Park Avenue Parx Van Heusen Zodiac Stop Caliber Blackberries Scullers Givo Orly Lee Levice Pepe Killer Lee Cooper Wrangler Spykar Life Allen Solly Provouge Wills Jewellery Facet Carbon Sparkles Tanishq FQ Swaroski Gili Oyzsterbay Sarvoski Estelle Shoes Lee Cooper Red Tape Picasso Stop Life Music Planet M Music World Home Dcor Yamini Four Seasons Viva Welspun Borosil Corning Ware Pedrini Pyren Hair Styling Habbibs Books Crossword Fragrances Christian Dior Ysl Davidoff Joop Diesel Lancaster Nicos Jil Sander Calvin Klein Boucheron Police J'del Pozo Myrurgia Etienne Aiger Xm Sunglasses Ray Ban Watches Casio Esprit Fossil Titan

PHYSICAL CHARACTERISTICS OF THE STORE

Shoppers Stop

First Floor

Second Floor

Third Floor

Personal Care

Accessories

Womens Wear

Mens Wear

Reason for such layout: Men are usually serious buyers and also mostly accompanied by a lady. So womens section is kept before mens, 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

INTERNATIONAL AFFILIATIONS & ACQUISITIONS

International Affiliations

Shoppers Stop is the only retailer from India to become a member of the prestigious Intercontinental Group of Departmental Stores (IGDS). The IGDS consists of 29 experienced retailers from all over the world, which include 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.

Acquisitions

The Organisation, in the year 2000, along with ICICI ventures also acquired the reputed bookstore, Crossword, which offers the widest range of books along with CD-ROM, music, stationery and toys. Services like Dial-a-book, Fax-abook and Email-a-book enable customers to shop from their homes. Crossword currently has 18 Stores.

STORE SPACE RAMP-UP

Total Gross Floor Area (in '000s)
2500 Total Gross Floor Area 2,047 2000 1500 1000 500 0 FY05 FY06 FY07 FY08 Year FY09 FY10 FY11 752 950 1,171 1,822 1,602 11.7% Increase 2,287

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

CUSTOMER ENTRY
35
Customer Entry (in Mn.) 30 25 20 15 10 5 0 2006-07 2007-08 2008-09 Year 2009-10 2010-11 19.9 24.9 22.8 23.3

30.9
32% Increase

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--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,Shopper's Stop Earnings Call 2009,2011

CONVERSION RATIO
29% 28% Conversion Ratio(%) 27% 26% 25% 25% 24% 27% 28% 27% 3% Decrease

24%
23% 22% 2006-07 2007-08 2008-09 Year 2009-10

2010-11

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

SALES
SALES (LIKE-TO-LIKE GROWTH %) (DEPARTMENTAL STORES) 25 21 Sales(like-to-like growth %)

SALES PER SQUARE FEET (in Rs.)

Sales per square feet(in Rs.) 8800 8600 8400 8218 7973 7955 8671 8518 7%

20
15 10 5 1 0 2006-07 2007-08 2008-09 Year 2009-10 4 14

17

8200
8000 7800 7600

7400
2006-07 2007-08 2008-09 2009-10 2010-11 Year

2010-11

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

AVERAGE SELLING PRICE (ASP)

ASP (Like-to-Like) Departmental Stores
1000

Average Selling Price (Rs.)

950

913 856 821 759 704

900
850 800 750 700 650 600 2006-07 2007-08 2008-09

6.6% Increase

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

TRANSACTION SIZE
Transaction size (Rs.) Departmental Store
2500 Transaction Size (Rs.) 2000 1562 1500 1000 1713 1843 2029 2207

9% Increase

500
0

2006-07

2007-08

2008-09 Year

2009-10

2010-11

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

LOYALTY PROGRAM

The First Citizen Shoppers Stops 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

LOYALTY PROGRAM
First Citizen Members (in '000)
2500 2017 2000 1500 1000 500 0 FY08 FY09 FY10 FY11 1013 1277 1611 25%

Despite a 25% increase in First Citizen members over last year, their contribution to total sales has reduced by 2%. This means that the company need to relook at the efficiency of its loyalty program.

First Citizen Contribution to Total Sales %

76% 74% 72% 70% 68% 66% 64% 62% 60% FY08
Source: Shoppers Stop Annual Report 2010-11

75% 72% 73% 2%

65%

FY09

FY10

FY11

CUSTOMER SATISFICATION INDEX (CSI)

CSI
85 80 75 70 65 60 55 50 Jan/06 Aug/06 Nov/07 Feb/09 Apr/10 63 60 63 81 80

Customer satisfaction index is calculated based on the following parameters: Merchandising Range and Quality Store Environment Staff Transaction Efficiency Loyalty Programme Schemes Promotions Customer experience in Shoppers Stop wrt the competitor stores
Source: Shoppers Stop Annual Report 2010-11

There was a significant increase in customer satisfaction from year 2007 to year 2009, although there is a small decrease in customer satisfaction in year 2010 from year 2009. This may be due to increased choices offered to the customers by other stores and hence increasing expectations of the customer

PRODUCTIVITY/OPERATING EFFICIENCY
GMROI (Gross Margin Return on Inventory)
GMROI (Rs. Inventory) 8 6 4 2.75 3.62 3.29 5.5 6.03

9.6%

2
0

2006-07

2007-08

2008-09
Year

2009-10

2010-11

GMROF (Rs. per unit of retail space)

GMROF (Gross Margin Return on Floor space)

3000 2500 2000 2006-07 2007-08 2008-09 2009-10 2010-11 Year 2520 2735 2471 2608 2771

The reduction in inventory per sq. ft. has resulted in improved gross margin return on inventory investment (GMROI) for the company, which increased to 6.03% in FY10 (from 2.75% in FY06). The company has also benefited from the continued use of the concessionaire model helping it to reduce employees on its payroll. Consequently, SSLs gross margin return on labour (GMROL) has increased from 1032609/employee in FY06 to 1719600/employee in FY10. In last two years GMROF, GMROI, and GMROL all three are slightly down because of the addition of new store space. But on a comparable like-to-like, all three have shown a very positive trend. In year of recession (2008) there was a decline in GMROF because of reduced purchase by the customer. However the new positioning of bridge to luxury in year 2008 increased the average cash per customer and therefore, increased the average GMROF

4%

GMROL (Gross Margin Return on Labor)

2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1,649,991 1,198,593 1,032,609 1,270,014 1,719,600

GMROL (Rs. per employee)

4.2%

2006-07

2007-08

2008-09 Year

2009-10

2010-11

Source: Shoppers Stop Annual Report 2010-11, Shoppers Stop Earnings Call

SWOT ANALYSIS
Strengths
4 warehouses, covering more than 3,50,000 sq. ft covering more than 4,00,000 SKUs working 24*7 2 million Loyalty Card holders, First Citizen, largest in any format. Endeavor to make Shopping Experience the differentiator.
SWOT

Weakness
Pressure of increasing leasing rentals of Malls. Slowing expansion due to dependence on real estate developer for completing projects during slowdown.

Opportunities
Preferred partner for international brands in various categories due to diversified presence. Expansion in different formats and varied locations across India.

Threat
Economic slowdown affecting the purchasing power of target consumer. Rivalry amongst the established players and threat of new entrants as well.

COMPETITOR ANALYSIS
WORKING CAPITAL CYCLE
250 200 Figures in Days 150

100
50 0 -50 Shoppers Stop Pantaloon Trent Westside 2008 -15.37 43.51 108.97 2009 -32.47 62.88 126 2010 -31.68 85.12 166.59

Negative capital of SSL shows that the company is able to pay its creditors in advance

Source: Shoppers Stop Annul report , http://www.indiaretailing.com/

COMPETITOR ANALYSIS
CASH FLOW FROM OPERATIONS
200 100 Figures in Rs. Crores 0 -100 -200 -300 -400 -500 -600 Shoppers Stop Pantaloon Trent Westside 2008 11.2 -512.7 32.75 2009 80.99 -278.94 -56.73 2010 97.77 -288.62 -7.7

Net Cash Flows from operating activities (indirect method); annual consolidated

Source: Shoppers Stop Annul report, http://www.indiaretailing.com/

COMPETITOR ANALYSIS
NET SALES
12000 10000 Figures in Rs. Crores 8000 6000 4000 2000 0 2007-08 Shoppers Stop 1190 1383 Lifestyle 810 960 Pantaloon 5840 7669 Trent Westside 755 850

2008-09
2009-10

1547

1286

9787

1120

NOTE: Pantaloons retail follows a July-June year

Source: Shoppers Stop Annul report , http://www.indiaretailing.com/

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 SSLs 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 consignment model of sourcing

In 2009, SSL introduced the consignment model, where vendors manage inventory, while SSL picks up only those items that sell in the store. Nearly 80 per cent of the revenues now come from the consignment model.

the buy-out model of sourcing

SSL earlier worked on the buy-out model of sourcing merchandise was bought from brand owners at factory price and SSL solely managed the inventory. This meant that it was stuck with unwanted stock and incurred huge inventory costs when sales fell also a big reason behind recession taking such a toll on SSL
Source: http://www.indiaretailing.com/

HyperCITY: AN OVERVIEW

ADDRESS

INDUSTRY SSL Stake STATUS NUMBERS OF STORES SALES FOR 6 MONTHS (as of Sep 2011) SALES FOR FULL YEAR (as of March 2011) GFA OWNED In
Source: Shoppers Stop Investors Presentation

Hypercity Retail (India) Ltd. Paradigm, A-Wing, 1st Floor, Mindspace, Malad Link Road, Malad (West), Mumbai 400064. Retail 51% Operating 10 Rs. 369 cr

Rs 597 cr
10.64 Lakh sq. ft. 2006

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 Purushotaman Simon Hooper

Business Head Technology Chief of Operations

Ashutosh Chakradeo Head - Buying &

Merchandising

Aparna Ranadive

Business Head - HR

Source: Shoppers Stop Investors Presentation

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

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 Dec11)

Number of Stores
18 15 12 9 7 3 1 2007 1 2008 2009 2010 2011 2012E 2013E 2014E

Cluster based growth strategy, with Core and Mid sized stores Core size to be in 7585 K sq. ft. to drive assortment, differentiation and profitability Mid size format of 50-55 K sq. ft. for penetration
Source: Shoppers Stop Investors Presentation

HyperCITY: AN OVERVIEW
Business Model

A strong own brand portfolio

Food
Private label 21%

General Merchandise

Fashion

Branded 79%

Department Food & Groceries General Merchandise [Home, Furniture, CDIT] Apparels & Jewellery

Mix % 58-62% 30-34 % 7-9%

Key Driver Footfall driver Value & Margin driver Fashion, Value & Margin Driver

Source: Shoppers Stop Investors Presentation

HyperCITY: POSITIONING & PRODUCT STRATEGY

Large Footfalls attracted Due to the Widest Product Offering by HyperCity in India Positioning
Target customers: 18-45 years with Income -20,000+ & Discerning, Urban, Upscale with High Disposable Income Other In-store attractions Caf, 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

Product Offering

International Award for Corporate Achievement to Recognize Quality & ExcellenceApril 2010.

Average footfalls per month: 1.3 Mn, indicating strong customer pull

HyperCITY: BACK END OPERATIONS

Best in Class Back End Operations to Support Vibrant Front End Supply Chain and Systems
Operates multi channel supply chain for various product categories Imports account for 20 % of General Merchandise All DC operations on Wireless mobile devices Furniture and CDIT products are home delivered

Back end operations and IT

Reliable Inventory Merchandize Management System Dynamic Auto-replenishment system, enabling consistent high availability of stocks E-Payment for 98% transactions

Best Practices and Policy

Majority of product written off on completion of 12 months Quarterly cycle , enabling reliable inventory and Shrinkage monitoring Performance Linked Reward Scheme & ESOP

With support from best in class partners

Source: Shoppers Stop Investors Presentation

HyperCITY: STORE STRATEGY

Among apparels and accessories, HyperCitys stocks are mainly private label products & also introduced some brands like Gini and Jony, Puma and Lotto in HyperCity.

HyperCity has 62 per cent of its sales revenue coming from food and grocery and 8 per cent from apparels

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

COMPANY INFORMATION

As a place and space for people who seek information, knowledge or just the pleasure of reading
Established on 15th October 1992 2000: Shoppers Stop acquired Crossword 2005: Crossword became wholly owned subsidiary of Crossword

Crossword, 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

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

CATEGORIES & ASSORTMENT

Books
Fiction Non-Fiction Management Computer Autobiographies Magazines Health Hobbies

Kids
Toys Board Games Card Games Comics Books

DVDs
Movies Music Games

Stationery
Diaries Notebooks Pens Pencils Table Items

 Shoppers' Stop Limited is a chain of Retail stores in India owned by K. Raheja Corp. Group - The Company houses a host of many international & domestic brands across various categories such as apparel, accessories, cosmetics, home & kitchenware as also its own private brands. SS started in 1991 with its first store in Andheri, Mumbai.

With a Gross Retail Turnover of Rs. 8996 million, Shopper's Stop has become the highest benchmark for the Indian Retail Industry.

MARKETINGENVIRONMENT ENVIRONMENT MARKETING

SOCIO-CULTURAL ENVIRONMENT Changed from being a chain of retail stores to emerging as a fashion & lifestyle destination for the growing affluent middle class of India. COMPETITIVE ENVIRONMENT Has identified and decided to invest in next generation data warehousing and business intelligence solutions.

TECHNOLOGICAL ENVIRONMENT
Focused on leveraging investment and upgrading and revamping existing technology. Deploying Warehouse Automation application along with the multi-purpose handheld devices to enhance efficiency in supply chain. Deployed Microsoft Technologies for reliable communication platform. Setting up a Disaster Recovery Plan for critical application systems.

ECONOMIC ENVIRONMENT Growth in the economy at 9% and hike in the salaries by 15%, consumption of goods increases. Increase in the consumer spending habit increases the number of consumers visiting the stores. Increase in the profit margins of the stores.

MARKETING MIX

PRODUCT
Identified the need for and created a suite of brands that reflect Styles, International Class and Fashion Private Brands have been introduced and developed after a careful analysis of Customer Requirement.

PROMOTIONAL
Communication Strategy-Reaching out to the customers in their own style and language E.g.- The first Shoppers Stop store in Lucknow was named Tehzeeb. Festive Promotion Campaign PARIKRAMA Customers getting opportunity to interact with local artisans. Organizes major Promotional Events from time to time e.g. Fly to Santa Land, Gear up for the school and Salwar Kameez Dupatta Exchange etc. Organizes Local Festivals like Durga Puja in Kolkata, Onam in South and Dhanteras in North.

DISTRIBUTION
Shoppers Stop Ltd. exudes Class, Comfort, Convenience where ever it is located. Shoppers Stop Ltd. not only concentrates on the location of the stores but also emphasizes on the ambience and service excellence. Shoppers Stop is Indian largest chain of Super Stores with an aggregate acquired area of 11 lakh sq. feet.

DISTRIBUTION NETWORK OF SS

PRICING
Shoppers Stop follows Premium Pricing Strategy that includes selling of High Quality Products at a High Price.

MARKET SEGMENTATION
Division of the total market relatively homogeneous groups. into smaller,

The company is dealing with Consumer Products - goods or services purchased by an ultimate consumer for personal use.

DEMOGRAPHIC SEGMENTATION
Dividing consumer groups according to characteristics such as sex, age, income, occupation, household size and education etc.
SHOPPERS STOP have segmented their respective markets in terms of Age and Sex (e.g. Clothing for Men, Women and Kids) Segmenting patterns. by Income and Expenditure

PSYCHOGRAPHIC SEGMENTATION
Divides a population into groups that have similar psychological characteristics, values, and lifestyles.
SHOPPERS STOP targets high standard living customers.

TARGETING
Market Specialization The Shoppers Stop concentrates on serving many needs of a particular customer group and in this way the Shopper Stop aims to gain a strong reputation in serving their customers, who belong to the middle and upper class.

POSITIONING
Shopper Stop positions itself as a Global premium Retailer outlet. Shoppers Stop is positioned as a family store delivering a complete shopping experience.

INTEGRATED MARKETING COMMUNICATION

IMC refers to a co-coordinated communications program that is customer-focused and internally consistent The different IMC elements are Advertising Sales promotion Direct marketing Public Relation Point of Purchase Publicity Special Events Packaging

ADVERTISING
PRINT ADVERTISMENTS MEDIA ADVERTISMENTS OUTDOOR ADS

Shoppers Stop

PRINT ADVERTISMENTS

OUTDOOR HOARDING

SALES PROMOTION
GIFT VOUCHERS VARIOUS FESTIVE OFFERS CONTEST POP MATERIAL

GIFT VOUCHERS

Shoppers Stop offer Gift Vouchers of denomination ranging from Rs 250 to Rs 5000.

FESTIVE OFFERS

CONTEST
Shoppers Stop has announced a 101-day Shopping Bonanza to pull in customers into the stores. Lucky draw winners of the contest will get to see one of the seven wonders of the world and two lucky couples who get the grand prize will be treated to a round-trip which will cover all the seven wonders of the world.

POINT OF PURCHASE

PUBLICITY & PR
BRAND AMBASSADOR SPECIAL EVENTS PUBLIC AFFAIRS ACTIVITIES

BRAND AMBASSADOR
Gorgeous and famous Kareena kapoor is brand ambassador of Shoppers Stop.

PUBLICITY & SPECIAL EVENTS

Desi boyz fashion Shaw

Break Ke Baad

Chance Pe Dance

 The leading Premium Fashion and Lifestyle destination Shoppers Stop and the most awaited movie , Desi Boyz had come together to unveil the unique look of the movie through a Fashion show. With this association Shoppers Stop will retail the limited edition clothes and merchandise inspired from the film at their stores across India. E.g., Break Ke Baad, Chance Pe Dance The dazzling show witnessed the leading pair Akshay Kumar-Chitrangada Sen along with John Abrahem -Deepika Padukone showcasing their respective looks from the film and shows some of the signature movie dance steps.

PUBLIC RELATIONS
Shoppers Stop entered into agreement with CRY to retail eco-friendly paper bags designed by underprivileged children. The part proceeds from the sale of the bags were donated to project supported by CRY. The Wardrobe Exchange saw tremendous response with 80,000 old garments collected from customers, which were donated to projects of Concern India Foundation.

DIRECT MARKETING
The name "First Citizen" reflects their commitment to offering their customers the ultimate shopping experience As a First Citizen, customers shopping experience becomes even more enjoyable with: Reward Points for every time you shop at Shoppers Stop. Exclusive benefits & privileges Exclusive offers ever so often Updates on what you can look forward to shop for at Shoppers Stop Exclusive cash counters at Shoppers Stop so you can spend more time shopping than waiting in a line

PACKAGING
The previous packets of Shoppers Stop had the previous logo while the new packets which are being widely distributed have the company symbol on it.

The company has also brought out collectible shopping bags for selective distribution with different themes and launched the first in the series based on the theme 'Fashion through Ages'.

WHAT IS DAGMAR MODEL ?

D= DEFINING

Unaware

A=ADVERTISING
G=GOAL M=MEASURED

Aware

Comprehension & Image Attitude

A=ADVERTISING
Action

R=RESULT

DAGMAR MODEL
Promotional campaign: It must have an objective. And objective that is measurable Objective should contains The Idea Well-Defined Target Audience Creative Strategy Media Strategy Fixed time period

PROMOTIONAL CAMPAIGN
Buy & Fly to the Seven Wonders of the world. THE IDEA: 'Buy and fly to the 7 wonders'. Spend a specified amount and you could win a trip to the 7 wonders of the world. Besides the mega prize, customers could win many other prizes like Gili gold coins, Gift Vouchers, VIP bags, Espirit watches etc. CAMPAIGN OBJECTIVES: To differentiate the promotion from all other promotions in the market at that time. Shopper's Stop had to become the preferred shopping destination for the festive season.

TARGET AUDIENCE: Males and Females,Age-1544yrs, High ownership of cars and consumer durables. Evolved Indian who is open to new experiences. CREATIVE STRATEGY: Bringing alive the international experience by communicating that Shopper's Stop is their Passport for seeing the Seven Wonders of the World. MEDIA STRATEGY: Taking the strategy of 'enveloping the consumer' with communication on TV, Press, Hoardings and Radio. Also Point of sale and Direct marketing & PR to complete the 360 degree effect. EVIDENCE OF RESULTS: Record breaking sales ever in the history of Shopper's Stop for any festive season. Revived Customer Entry, Increase in Cash

DOWN UNDER FEST- A PROMOTIONAL CAMPAIGN

An association with Tourism Australia has prompted Shoppers Stop to launch Down Under Fest a promotional campaign to increase the purchases during the festive season.

Thank You