Shopper’s Stop is set to leverage high on its recent tie-up with Amazon. The company is eyeing big to reach to around 22,000 pin codes that Amazon already has. It is also looking to have significant leap in its number of 4mn consumers walking in stores and similar number of online consumer to around 500 mn consumers that Amazon already has. Since last year, the company has been investing heavily on its omni-channel set up and ready to reap its benefits from this month end. Thus, talking about the sales in ongoing festive season, real view of inflation in the current times and stores expansion, Govind Shrikhande, MD, Shoppers Stop spoke to Indianretailer.com
How is been the sale during ongoing festive season and has online sales contributed?
Since Durga Pujan we are seeing very good traction and especially Kerala is contributing well. Now we are ready for Diwali with merchandise, advertising and communication. During Diwali major categories like men’s and women’s clothing, accessories like watches and home products does well.
Online sales haven’t caused much impact on the sales in this season. Mainly the online sale is driven by electronics and mobiles and in fashion it is more of discounted old season stock. In contrast to this we have exclusive range with good offers. Online is growing because it has good reach across big metros to remote towns.
How would you leverage on your commercial tie-up with Amazon which happened last month?
We are leveraging Amazon’s reach to across 22,000 pin codes along with strengthening our omni-channel presence. Amazon will supply all our categories of products. It has 400 mn widely connected consumer base through internet which flocks to the site for around 500 mn times which means large number of consumers visit the website for two to three times a month. Similarly in our stores every month around 4 mn consumers walk-in and the same number of consumers visit our eCommerce portal every month. Hence with this partnership our consumer base of 4 mn online consumers will go upto 500 mn which will inversely offer us much wider and farther exposure in metros to remote towns pan India. In exchange of this Amazon will get our strong catalogue of products under the deal. We are going to reap the benefits of this deal from December end or in Q4.
Under the agreement both the companies will combine its marketing strength like our First Citizen consumer and Amazon’s Prime consumer data. Also Amazon will showcase it’s certain products which are not accessible to the Indian consumers in the Amazon Experience Centre to offer touch and feel to the consumer after three months. Therefore, with these tie-ups both the companies omni-channel strength will grow and we can work better with Amazon.
And what is the investment part of the deal?
Under the investment part of the deal Amazon’s US based category III investment arm is going to buy five percent stake in Shoppers Stop for Rs 180cr. Following the deal Amazon is confident that retail industry is going to be much bigger in India along with omni-channel which is the future of the industry and set to grow big.
Over the last one year I don’t see noticeable growth from your own eCommerce portal why is it?
In Q1 we saw 70 percent growth online. Last year I had discussed with you that by September or October end this year our omni-channel investment cycle will be completed and after that we will see the growth. Thus, we should see the benefits in Q3 and full form growth from eCommerce in Q4. Our target is to have 15 percent sales to come from online and this is the reason we are working towards strengthening our online and omni-channel presence so that whenever customer wants to shop we are available for them through mobile, tablets, TV and offline stores.
We have invested around Rs 60cr in omni-channel setup. Going forward our strong focus will be on omni-channel integration because we see that consumer is exploring online and offline channels. Global chain receives 10 percent of their sales from online globally compared to India which is 3 percent only and it is going to grow 6- 10 percent by 2020. But, 94 percent of the overall sale still comes from brick and mortar stores. Many consumers do go online check the products and buy it from offline stores, so the digital influence will grow to around 25-40 percent further.
Tell us about your offline stores expansion plan?
Presently we have 81 stores across the country and this year we are opening 4 more stores and in the next three years we will have around 100 stores. Each store will be spread across of 35,000-40,000 sqft with the investment of Rs 8-9 cr.
In the stores we want to grow the share of our private brands. We believe last year we had a good turnover through our private brands. This year the share of private brands should grow to 15 to 16 from the current 12 percent. Also, we do have exclusive celebrity brands like Reason, Wrong and Love Machine and Nush which are coming in.
However RBI is forecasting inflation growth going forward with stagnating GDP growth, how do you see the ground reality?
So far in our hyper market format we haven’t increased price since last three to four quarters. Frankly I am also confused about inflation, what actually inflation is in the current scenario and is it growing? In general the demand growth is hampered due to demonetization and GST in the month of July and August. It will take another one quarter to mitigate the impact and growth will recuperate from Q3.
What is your current CAGR?
Our CAGR is of 15-16 percent with opening new stores and with no opening of stores the like-to-like growth should be of 8-10 percent. The eCommerce should contribute more 2-3 percent more.