Retail Analysis: Shoppers Stop

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RETAIL ANALYSIS : Shoppers Stop

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Retail Analysis of Shoppers Stop

Transcript of Retail Analysis: Shoppers Stop

Page 1: Retail Analysis: Shoppers Stop

RETAIL ANALYSIS : Shoppers Stop

Page 2: Retail Analysis: Shoppers Stop

INDEXIndia : Retail Industry Overview 2011

Shoppers Stop: An Overview

History

Store Formats

Strategic Alliance

Type Of Retail Outlets

Location

Approach

Segmentation, Targeting & Positioning

Merchandising Strategy

Financial Analysis

Loyalty Program

SWOT Analysis

Competitor Analysis

Impact Of 2008 Recession

International Affiliations & Acquisitions

Page 3: Retail Analysis: Shoppers Stop

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% YOY

INDIA : RETAIL INDUSTRY OVERVIEW 2011

Source: India Retail Report 2011

Page 4: Retail Analysis: Shoppers Stop

HEADQUATERS Eureka Towers,9th Floor, B Wing, Mindspace, Link Road,Mumbai, Maharashtra-400064

INDUSTRY RetailTYPE Public CompanySTATUS OperatingCOMPANY SIZE 8000 employeesNUMBERS OF STORES 492011 REVENUES Rs. 439.2 crore NET PROFIT Rs. 11.7 croreTOTAL RETAIL AREA 3.93 million sq. ft.FOUNDED 1991

SHOPPERS STOP: AN OVERVIEW

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

Page 5: Retail Analysis: Shoppers Stop

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 Chairman / Chair Person B S Nagesh Vice Chairman

Govind Shrikhande Managing Director Ravi C Raheja Director

Deepak Ghaisas Director Gulu L Mirchandani Director

Neel C Raheja Director Nitin Sanghavi Director

Shahzaad S Dalal Director Nirvik Singh Director

SHOPPERS STOP: AN OVERVIEW

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

Page 6: Retail Analysis: Shoppers Stop

Retail Mix/Year 1991 1992 1993 1994 1995 1996

Location

Began the modern

retail revolution in

India with the launch of Men’s

ready-to-wear store

at Andheri(Mumbai)

First step towards

pan-India presence.

Launched its second store in

Bengaluru

Consumer service

Launched an exclusive loyalty program titled

“The First Citizen’s Club”

Merchandise assortment

Offering expanded to

include suiting,

boyswear and ladies

merchandise

Added Casuals, Kidswear and Non-apparel section(Jewellary,

Fragnances, Cosmetics and Watches) making

Shoppers Stop India’s first ever departmental store

Launched “STOP” the first in-house label

Communication Mix

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

HISTORY OF SHOPPERS STOP

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

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HISTORY OF SHOPPERS STOP

Retail Mix/Year 1997 1998 1999 2000 2001 2002

Location

Opened third store in

Hydrabad

Retail revolution took roots in North

India with the launch of stores in Ansal Plaza(Delhi) and

Jaipur (4th & 5th store)

Opened stores at Chennai and

Chembur (Mumbai )(6th & 7th store)

Opened stores in Pune and Bandra (8th and 9th store)

Opened store in Kandivli (Mumbai)

(10th store)

Consumer service

Launched a co- branded credit

card for its loyalty members in

association with HSBC

Communication Mix

Launched Prikrama, a festival to

celebrate Indian tradition and

culture

New Formats

Acquired Crossword-India’s leading retail

book chain

AccomplishmentsShoppers Stop

incorporated as a body corporate

Sole retailer to be awarded the Intercontinental

Group of Department Stores (IGDS) membership

Implemented JDA Retail ERP. First

retailer to adopt ERP

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

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HISTORY OF SHOPPERS STOP

Retail Mix/Year 2003 2004 2005 2006 2007

Location

Stepped into East with the launch of store in Kolkata.

Also opened stores in Mulund(Mumbai) and Gurgaon

(11th, 12th & 13th )

Opened stores in Malad (Mumbai),

Kolkata and Bangalore

(14th, 15th &16th)

Opened stores in Pune, Juhu (Mumbai), Bangalore and

Ghaziabad (17th ,18th, 19th and 20th )

Opened stores in Mumbai and Lucknow (21st

and 22nd )

Merchandise assortment

Created movie merchandise history with unveiling of the

Om Shanti Om collection

Communication Mix

Brand positioning changed from “Feel the experience to Shopping.

And beyond”

Celebrated the launch with Sharukh Khan, Deepika

Padukone and Arjun Rampal modelling the cloths at a

fashion show.

New Formats

HomeStop- Home need specialist store launched

in Bengaluru .Launched MAC.

Crossword became a wholly owned subsidiary

Launched Mothercare in India and F&B

outlets Brio and Desi Caf.

Bought 45% of Timezone India

Signed a 50:50 JV with the Nuance Group for Airport

RetailingSigned an MOU with Home

Retail Group of UK to enter into a franchise arrangement for the

Agro formats of catalogue & internet retailing

Acquired 19% stake in Hypercity Retail (India) Ltd.

AccomplishmentsVoted as India’s

most favored retail destination of the

year by Images Retail Reward

IPO oversubscribed overall by 17.25 times.

Declared “Retailer of the Year” at Images Fashion Forum

‘Gold Shield’ Award for excellence in Financial

reporting for year 2006 in the category of “Manufacturing and

trading Enterprises” by ICAI

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

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HISTORY OF SHOPPERS STOPRetail Mix/Year 2008 2009 2010 2011

Location

Expanded footprints to new cities like Bhopal, Amritsar and

Aurangabad. Also added stores in existing

cities like Bengaluru, Mumbai and Hydrabad taking store tally

to 36 stores across 15 cities

Expanded to 49 stores across 22 cities

Merchandise assortment

Pioneered mascot licensing in the

categories through exclusive tie-up for

certain products with Vodaphone for their

product brand mascot Zoozoo

Communication Mix

Shoppers stop repositioned and

reinvented as a “Bridge to luxury” brand with

unveiling of the new logo and tagline, “START SOMETHING NEW”

New Formats

Increased stake in Hypercity Retail (India) Limited to 51%

AccomplishmentsAwarded 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

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

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Shoppers Stop Ltd. Consolidated with SSL

SS Department Stores Business68% Sales Contribution

Subsidiary Companies 30% Sales Contribution

JV Companies 2 2% Sales Contribution

•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: 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

SSL Stake51%

• 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 Stake100%

• No of stores: 84 • Own Stores : 43 • GFA: 2.52 lacs sq ft.

SSL Stake50%

•No of stores: 1 •GFA: 0.2 lacs sq ft

• No of stores:14 •GFA: 0.97 lacs sq ft.

SSL Stake45%

Note : Above figures as of 30TH September 2011. GFA: Gross Floor Area

Well diversified portfolio to capture the consumer’s wallet share

SHOPPERS STOP FORMATS

Source: Shoppers Stop Annual Report 2010-11

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• 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.

STRATEGIC ALLIANCE

Source: Shoppers Stop Annual Report 2010-11

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TYPE OF RETAIL OUTLETS

Shoppers Stop Ltd.

Departmental Store-Shopper’s Stop- 43 Specialty Retailing-93

Home Products

Retailing- HomeStop

(8)

Beauty, Cosmetics Retailing- MAC, Estee Lauder Clinique

(35)

Crossword Boo

k store(43

)

Parenting Products- Mothercare(7)

Hypermart- HyperCity -10

Source: Shoppers Stop Annual Report 2010-11

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LOCATION

As on 30th Sep 2011

CitySS

Dept. CrosswordHome Stop

Mother care

MAC/Estee/

Clinique Hypercity TotalAmritsar 1 1 1 1 4

Bangalore 5 9 2 1 4 2 23Chennai 2 1 1 2 6

Delhi 5 2 1 1 9 18Gurgaon 1 1

Hyderabad 4 5 1 2 1 13Jaipur 2 1 3

Kolkatta 3 2 5Lucknow 1 1 1 3Mumbai 8 19 2 2 11 3 45

Noida 1 1 2Pune 3 1 1 2 7

Ghaziabad 1 1Siliguri 1 1

Durgapur 1 1Bhopal 1 2 1 4

Ludhiana 1 1 2Aurangabad 1 1 2

Indore 1 1 2Vijayawada 1 1 1 3

Total 43 43 8 7 35 10 146

More than 3.93 million sq. ft. area, across 20 cities

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

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NUMBER OF STORES

1 2 3 5 7 9 10 13 16 20 22 27 31 35 431991 1995 1998 1999 2000 2001 2002 2003 2004 2005 2006 2008 2009 2010 2011

0

2

46

810

1214

16

1820

2224

2628

30

3234

3638

4042

4446

1 1 13 3 3 3 4 4 5 6

10 11 12 13

1 11 2 2 2

2 34

4

44

78

1

12

4 5

6

7

910

10

13

13

17

12

22

33

3

5 Sum of WestSum of EastSum of SouthSum of North

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

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Delhi Gurgaon Amritsar Jaipur Ghaziabad Lucknow NoidaDelhi Haryana Punjab Rajasthan UP

0

1

2

3

4

5

6

North

Hydrabad Bangalore ChennaiAP Karnataka Tamil Nadu

0

1

2

3

4

5

6

South

Aur

anga

bad

Mum

bai

Pune

Bhop

al

Indo

re

Jaip

ur

Maharashtra MP Rajasthan

02468

1012

West

Durgapur Kolkata SiliguriWest Bengal

0

0.5

1

1.5

2

2.5

3

3.5

East

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/

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Amritsa

r

Aurangab

ad

Banga

lore

Bhopal

Chennai

Delhi

Durgapur

Ghaziab

ad

Gurgaon

Hydrabad

IndoreJai

pur

Kolkata

Luck

now

Mumbai

NoidaPune

Siligu

ri0

2

4

6

8

10

12

East North South West0

2

4

6

8

10

12

14

16

18

5

1110

17

APDelh

i

Haryan

a

Karnata

ka

Mah

arash

tra MP

Punjab

Rajasth

an

Tamil N

adu UP

Wes

t Ben

gal

0

2

4

6

8

10

12

14

16

45

1

5

14

21

21

3

5

Shoppers Stop’s 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.

Store Division: City Wise Store Division: Zone Wise

Store Division: State Wise

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

Page 17: Retail Analysis: Shoppers Stop

TYPE OF APPROACH

METRO AND TIER 1CITIES

SSL will open nearly 80 per cent of the new stores in the

top 24 cities.

75 per cent of the total sales of SSL comes from metros and Tier-1 cities.

SSL aims to stick to the top 10 cities

including Pune,

Bangalore, Hyderabad and metro

cities.

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VISION

To be a Global

Retailer in India and Maintain

No.1 position in the Indian Market in the Department

Store Category.

Page 19: Retail Analysis: Shoppers Stop

Bridge to Luxury

Premium

Contemporary

Popular

Mass

2005

2009

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

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

Page 20: Retail Analysis: Shoppers Stop

SEGMENTING

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

The majority of them being families and young couples

With a monthly household income above Rs. 20000 and an annual spend of Rs.15000

Shoppers’

Stop’s 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.

Source: Shoppers Stop Investors Presentation

Page 21: Retail Analysis: Shoppers Stop

TARGETING

They started in 1991 as a Men’s 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 Shopper’s stop India’s first Departmental store.

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

Page 22: Retail Analysis: Shoppers Stop

POSITIONING

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

From the 'Ultimate Shopping Experience' in 1992

'Feel the experience while you shop' in 1993,• '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.

PRICINGShopper’s stop follows premium pricing strategy that is offering high quality products at high price.

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

Page 23: Retail Analysis: Shoppers Stop

RETAIL STRATEGY

On an average stores 30000 pieces of different products.Merchandise sourced from 250 exporters in Delhi, Mumbai, BangaloreCentralized buying for all products except cosmetics and perfumes to avoid sales taxCarries 63 days of stock.

Source: Shoppers Stop Investors presentation

Page 24: Retail Analysis: Shoppers Stop

59%

41%

2010-2011

ApparelsNon-Apparels

Diversified portfolio

2007-08 2008-09 2009-10 2010-11

61.20% 60.40% 59.50% 58.80%

38.80% 39.60% 40.50% 41.20%

Category Wise Sales(%)

Apparels Non-Apparels

REVENUE MIXCategory Wise Sales (%)

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.

65%

35%

2004-2005

ApparelsNon-Apparels

Source: Shoppers Stop investors presentation

Page 25: Retail Analysis: Shoppers Stop

REVENUE MIXDivision Wise Sales (%)

Non Apparels consist of Home, Leather, Watches, Jewellery, Electronics and Personal accessoriesChildren 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.

31.0%

18.9%8.7%

41.3% MensLadiesChildrenNon-Apparel

2010-2011

38.0%

20.0%

7.0%

35.0%MensLadiesChildrenNon-Apparel

2004-2005

Source: Shoppers Stop investors presentation

Page 26: Retail Analysis: Shoppers Stop

MERCHANDISE MIXPrivate Label & Private Brand

2007-08 2008-09 2009-10 2010-1116%

16.5%17%

17.5%18%

18.5%19%

19.5%20%

20.5% 20.1% 19.9%

18.1%17.5%

Private Label Sales mix %

Private Lable Sales mix %

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%.

3.31% Decrease

Source: 1. Shoppers Stop Limited Quarterly Results Conference Call, February 01, 20102. http://www.fashionunited.in, News: Shoppers Stop to go easy on private labels, Tuesday, 21 September 20103. Live Mint, Shoppers Stop braces for expansion challenge, January 11,2011

Page 27: Retail Analysis: Shoppers Stop

• 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

Improved Product Mix and Brands Profile to Attract “Aspirational” Customers

INTERNATIONAL BRANDS

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

Page 28: Retail Analysis: Shoppers Stop

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 WorldHome Décor 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

Page 29: Retail Analysis: Shoppers Stop

Shoppers Stop

First Floor

Personal

CareAccessories

Second Floor

Women’s Wear

Third Floor

Men’s Wear

PHYSICAL CHARACTERISTICS OF THE STORE

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

Page 30: Retail Analysis: Shoppers Stop

•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.

International

Affiliations

•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-a-book and Email-a-book enable customers to shop from their homes. Crossword currently has 18 Stores.

Acquisitions

INTERNATIONAL AFFILIATIONS & ACQUISITIONS

Page 31: Retail Analysis: Shoppers Stop

STORE SPACE RAMP-UP

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.

11.7%Increase

FY05 FY06 FY07 FY08 FY09 FY10 FY110

500

1000

1500

2000

2500

752950

1171

16021822

20472287

Total Gross Floor Area (in '000s)

Year

Tota

l Gro

ss F

loor

Are

a

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

Page 32: Retail Analysis: Shoppers Stop

CUSTOMER ENTRY

2006-07 2007-08 2008-09 2009-10 2010-110

5

10

15

20

25

30

35

19.9

24.922.8 23.3

30.9

Year

Cust

omer

Ent

ry (i

n M

n.)

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%.

32%Increase

Source: Shoppers Stop Annual Report 2010-11,Shopper's Stop Earnings Call – 2009,2011

Page 33: Retail Analysis: Shoppers Stop

CONVERSION RATIO

2006-07 2007-08 2008-09 2009-10 2010-1121%

22%

23%

24%

25%

26%

27%

28%

29%

27%

25%

28%

27%

24%

Year

Conv

ersi

on R

atio(

%)

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 customerentry 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.

3%Decrease

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

Page 34: Retail Analysis: Shoppers Stop

SALES

2006-07 2007-08 2008-09 2009-10 2010-117400

7600

7800

8000

8200

8400

8600

8800

7973

8671

8218

7955

8518

SALES PER SQUARE FEET (in Rs.)

Year

Sale

s pe

r sq

uare

feet

(in R

s.)

2006-07 2007-08 2008-09 2009-10 2010-110

5

10

15

20

25

21

14

1

4

17

Year

Sale

s(lik

e-to

-lik

e gr

owth

%)

Gross sales both at chain level and for like-to-like stores showed an improvementas 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.

SALES (LIKE-TO-LIKE GROWTH %) (DEPARTMENTAL STORES)

7%

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

Page 35: Retail Analysis: Shoppers Stop

AVERAGE SELLING PRICE (ASP)

2006-07 2007-08 2008-09 2009-10 2010-11600

650

700

750

800

850

900

950

1000

704

759

821856

913

ASP (Like-to-Like)Departmental Stores

Year

Ave

rage

Sel

ling

Pric

e (R

s.)

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

6.6%Increase

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

Page 36: Retail Analysis: Shoppers Stop

TRANSACTION SIZE

2006-07 2007-08 2008-09 2009-10 2010-110

500

1000

1500

2000

2500

15621713

18432029

2207

Transaction size (Rs.)Departmental Store

Year

Tran

sacti

on S

ize

(Rs.

)

Transaction Size= Total Sales/Number of cash memosTransaction 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.

9%Increase

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

Page 37: Retail Analysis: Shoppers Stop

LOYALTY PROGRAM

• The First CitizenShoppers’ 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

Page 38: Retail Analysis: Shoppers Stop

LOYALTY PROGRAM

FY08 FY09 FY10 FY110

500

1000

1500

2000

2500

10131277

1611

2017

First Citizen Members (in '000)

FY08 FY09 FY10 FY1160%

62%

64%

66%

68%

70%

72%

74%

76%

65%

72%

75%

73%

First Citizen Contribution to Total Sales %

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.

25%

2%

Source: Shoppers Stop Annual Report 2010-11

Page 39: Retail Analysis: Shoppers Stop

CUSTOMER SATISFICATION INDEX (CSI)

Jan-06 Aug-06 Nov-07 Feb-09 Apr-1050

55

60

65

70

75

80

85

6063 63

81 80

CSI

Customer satisfaction index is calculated based on the following parameters:Merchandising Range and QualityStore EnvironmentStaffTransaction EfficiencyLoyalty ProgrammeSchemesPromotionsCustomer experience in Shoppers Stop wrt the competitor stores

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

Source: Shoppers Stop Annual Report 2010-11

Page 40: Retail Analysis: Shoppers Stop

PRODUCTIVITY/OPERATING EFFICIENCY

2006-07 2007-08 2008-09 2009-10 2010-1101234567

2.753.62 3.29

5.56.03

GMROI (Gross Margin Return on Inventory)

Year

GM

ROI (

Rs. I

nven

tory

)

2006-07 2007-08 2008-09 2009-10 2010-112300

2500

27002520

2735

24712608

2771

GMROF(Gross Margin Return on Floor space)

Year

GM

ROF

(Rs.

per

uni

t of

reta

il sp

ace)

2006-07 2007-08 2008-09 2009-10 2010-110

200,000400,000600,000800,000

1,000,0001,200,0001,400,0001,600,0001,800,0002,000,000

1,032,6091,198,593 1,270,014

1,649,991 1,719,600

GMROL(Gross Margin Return on Labor)

Year

GM

ROL

(Rs.

per

em

ploy

ee)

9.6%

4%

4.2%

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, SSL’s gross margin return on labour (GMROL) has increased from 1032609/employee inFY06 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

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

Page 41: Retail Analysis: Shoppers Stop

SWOT ANALYSIS

SWOT

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

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

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

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

Page 42: Retail Analysis: Shoppers Stop

COMPETITOR ANALYSIS

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

-25

25

75

125

175

225

WORKING CAPITAL CYCLE

Figu

res

in D

ays

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/

Page 43: Retail Analysis: Shoppers Stop

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

-550

-450

-350

-250

-150

-50

50

150

CASH FLOW FROM OPERATIONSFi

gure

s in

Rs.

Cro

res

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

COMPETITOR ANALYSIS

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

Page 44: Retail Analysis: Shoppers Stop

NOTE: Pantaloons retail follows a July-June year

Shoppers Stop Lifestyle Pantaloon Trent Westside

2007-08 1190 810 5840 755

2008-09 1383 960 7669 850

2009-10 1547 1286 9787 1120

1000

3000

5000

7000

9000

11000

NET SALES

Figu

res

in R

s. C

rore

s

COMPETITOR ANALYSIS

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

Page 45: Retail Analysis: Shoppers Stop

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.

IMPACT OF 2008 RECESSION

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

the buy-out model of sourcing

Till 2008

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 consignment model of sourcing

2009 Onwards

Source: http://www.indiaretailing.com/

Page 46: Retail Analysis: Shoppers Stop
Page 47: Retail Analysis: Shoppers Stop

ADDRESS Hypercity Retail (India) Ltd.Paradigm, A-Wing, 1st Floor, Mindspace,Malad Link Road, Malad (West), Mumbai 400064.

INDUSTRY RetailSSL Stake 51%STATUS OperatingNUMBERS OF STORES 10SALES FOR 6 MONTHS(as of Sep 2011)

Rs. 369 cr

SALES FOR FULL YEAR (as of March 2011)

Rs 597 cr

GFA 10.64 Lakh sq. ft.OWNED In 2006

HyperCITY: AN OVERVIEW

Source: Shoppers Stop Investors Presentation

Page 48: Retail Analysis: Shoppers Stop

About HyperCITYHypercity Retail (India) Ltd. is part of the K. Raheja Corp. Group, a leader inthe 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

Business Head - Technology

Ashutosh Chakradeo Head - Buying & Merchandising

Simon Hooper Chief of Operations

Aparna Ranadive Business Head - HR

HyperCITY: AN OVERVIEW

Source: Shoppers Stop Investors Presentation

Page 49: Retail Analysis: Shoppers Stop

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

Page 50: Retail Analysis: Shoppers Stop

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)

2007 2008 2009 2010 2011 2012E 2013E 2014E

1 1

3

7

9

12

15

18

Number of Stores

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 penetration

HyperCITY: AN OVERVIEW

Source: Shoppers Stop Investors Presentation

Page 51: Retail Analysis: Shoppers Stop

Department Mix % Key Driver

Food & Groceries 58-62% Footfall driver

General Merchandise[Home, Furniture, CDIT]

30-34 % Value & Margin driver

Apparels & Jewellery 7-9% Fashion, Value & Margin Driver

Food General Merchandise

Fashion

A strong own brand portfolio

HyperCITY: AN OVERVIEW

Branded79%

Private label21%

Business Model

Source: Shoppers Stop Investors Presentation

Page 52: Retail Analysis: Shoppers Stop

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.

Positioning Product Offering

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

Large Footfalls attracted Due to the Widest Product Offering by HyperCity in India

HyperCITY: POSITIONING & PRODUCT STRATEGY

Page 53: Retail Analysis: Shoppers Stop

Supply Chain and Systems Back end operations and IT Best Practices and Policy

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

Reliable Inventory –Merchandize Management System

Dynamic Auto-replenishment system, enabling consistent high availability of stocks

E-Payment for 98% transactions

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

HyperCITY: BACK END OPERATIONS

Best in Class Back End Operations to Support Vibrant Front End

Source: Shoppers Stop Investors Presentation

Page 54: Retail Analysis: Shoppers Stop

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

Among apparels and accessories, HyperCity’s stocks are mainly private label products & also introduced 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.

HyperCITY: STORE STRATEGY

Source: Shoppers Stop Investors Presentation

Page 55: Retail Analysis: Shoppers Stop
Page 56: Retail Analysis: Shoppers Stop

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

COMPANY INFORMATION

Page 57: Retail Analysis: Shoppers Stop

• 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

STORE OPERATIONS

Page 58: Retail Analysis: Shoppers Stop

FictionNon-FictionManagementComputerAutobiographiesMagazinesHealthHobbies

Books Kids DVDs Stationery

ToysBoard GamesCard GamesComicsBooks

MoviesMusicGames

DiariesNotebooksPensPencilsTable Items

CATEGORIES & ASSORTMENT

Page 59: Retail Analysis: Shoppers Stop
Page 60: Retail Analysis: Shoppers Stop
Page 61: Retail Analysis: Shoppers Stop

Thank You