The Cabinet decision to hike government salaries by 23.5 per cent is a major booster to India’s consumption story. The proposed Model Shops and Establishment Bill also offers an opportunity to extend timing and hence enhance economic activity and job creation.
Speaking to Bloomberg TV India , Shoppers Stop Managing Director Govind Shrikhande says the pay panel mandate will help bolster sales in cities.
After the sixth Pay Commission mandate, we had definitely seen a 10-15 per cent jump on the like-to-like growth during that point of time.
And this came during a good retail period. This kind of a 23 per cent jump in salaries impacting 1 crore-plus employees is very good news for the retail and consumption sectors. It should definitely boost consumption in the next two quarters.
The Cabinet also approved the Model Shops and Establishment Bill, which will allow shops to remain open 24 hours for 365 days a year. What opportunities do you see and how will you capitalise it?
This is fantastic news. So if the permission raj is going away, it would be good news for the retail sector because applying for different permissions in different States takes a lot of time and also ensures that people are protected at all points of time. Three States are already following the new model policy.
With the Centre approving the Bill, it paves way for all States to follow it, which will directly help consumption and employment generation.
I think allowing people flexibility of timing would actually help them take up part-time employment.
Do you have a timeline for implementing this model?
As of now, we haven’t thought about 24x7 stores because we typically operate inside malls. We have very few standalone stores.
So one has to discuss with the malls and look at the cost benefit part of it.
But at least, it gives the flexibility that if you believe certain opportunity exists in certain catchments, you can go ahead and try it.
What does the 7th Pay Commission mean for like-to-like growth in sales growth for departmental stores? In Q4, there was a decline in sales. We are at the end of Q1 right now. What’s your outlook going forward?
Last year, we clocked 8 per cent like-to-like growth. Our target for FY17 is similar.
We believe that with the kind of Pay Commission recommendation, it can get a slight boost for sure between Q2 and Q3.
You are looking to tap the fast-growing e-commerce segment. Can we get some details on that?
We have decided to invest in an omni-channel journeyBy July 2017, we will complete the omni-channel. We have already launched a completely revamped site and Android and iOS apps.
We believe that with the combination of the app, our loyalty programme and the stores we have, we are one of the few players in this country who have an omni-channel strategy.
What’s your outlook on margins for FY17?
We believe that if we are growing at 8 per cent, our profitability should grow faster than that because this year we are opening about six stores and also targeting to generate free cash flows.