Shoppers Stop plans four-fold strategy for growth: Venu Nair, MD & CEO

The retail industry in India is still in the initial growth phase, and I will give you a couple of stats to explain why I say that.

Today, roughly 29 per cent of India’s total retail is in the organised sector. Retail itself is massive in the country, It just shows the amount of growth that is yet to happen. The increase in the retail industry over the last few years is coming in two forms; one is the absolute growth in the GDP itself that is happening and the second part is the conversion from unorganised retail to organised retail. So, we believe that the next 10 to 15 years will see high single-digit to low double-digit growth year on year for the entire industry. Secondly, the future of retail is Omni. While we have seen high carriers from the online players, the absolute percentage of online as a part of the total retail is still small, which will continue to grow.

In summary, I think the way retail in India will continue to grow for an extended period based on the simple fact that there’s a huge size of the market which is yet to be tapped into and that growth will continue across all the chains with Tier II and Tier III being stronger than the Tier I in terms of growth numbers. Still, an absolute proportion of retail, obviously Metro and Tier I, is immense.

Our target is to open 10 to 12 new Shoppers Stop department stores every year, and apart from the SS Beauty stores, this year in the third quarter, we opened three stores, and in February we have four stores that are due to open and one more in March/April. So in net, we expect to have open between 8-10 stores in FY22. Our pipeline is robust for FY22, where we would expect to do at least 12 to 15 stores in FY23. Expansion is something which we are going very strong.

Regarding our investment into analytics and personalisation and the whole customer journey, especially online and offline, one of our key enablers is the loyalty program; we have the First Citizen loyalty program and over 8 million customers. It is one of the very few paid loyalty programs where the customer enrolled with us. Within the loyalty program or First Citizen, we have a First Citizen Black customer, an annual subscription that has been growing at almost 85 per cent quarter on quarter for the last four quarters now. We plan to use this data with our investment in data mining and analytics and improving customer experience. 

We agave a mix of national and international brands. Shoppers Stop, as a brand, is focused on the family, and it caters to the middle class of India. Our vision is to offer a house. Our private brands fill in a space where we provide a good product at attractive prices to our customers, and increasing the share of private brands in our entire business is a strategic pillar for us, and we are making good progress on that. 

See a few quarters back, it was around 11 per cent. We are currently in the last quarter we were at 14 per cent. Our ambition is to continue its momentum and get to about 20 to 25 per cent of our total mix in the next 3 years (from 2022).

The absolute percentage - while it’s important, what is more significant is the offering that we can give to a customer filling in a separate lifestyle that we do.

You rightly pointed out beauty is our second strategic pillar. Private brands, being the first one which we talked about. Our second strategic pillar is beauty. Today 17 per cent of our sales come from the Beauty segment. We are in the premium beauty space, and other brands we retail are in the premium segment, and we are the largest retailers in terms of physical retail in beauty. We are making rapid progress online as well; hence we are a serious player in the premium beauty place and the overall beauty environment.

Our plans for beauty are very aggressive, and we have, apart from our Shoppers Stop department stores where we have large beauty sections international brands. We have also just opened standalone beauty stores called SS Beauty. This is something we intend to double down on and multiply and open anywhere between 10 to 15 standalone beauty stores of SS Beauty every year. 10 to 15 is what we would take as a bare minimum every year and probably more as we expand depending on the right locations.

In the last quarter alone, we brought in 28 new brands. We’ve set our target for ourselves to have 90 brands for the full financial year, and we are well on track to achieve that.

Arcelia is our private beauty label, and that’s another area we’re doubling down on. We started with Bath and body, which we had launched in Q2 of last year. In Q3FY22, December, to be more precise, we launched our fragrances and this month, we will be launching our nail polishes.

Nail polishes will be followed by lips and then eyes and skin to complete the entire makeup portfolio by May of this year. So that’s the plan that we have for our own private brand Arcelia which is something that we will continue to grow anywhere between 200 to 250 options we would have on this as we go forward. Our own private brand apparel is well established, and Beauty is something we have growing at the moment.