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Case let:

Ask the company top brass what ‘almost there’ means. The answer: a premier Indian retail company which has come to be known as a specialty chain of apparel and accessories. With 52 product categories beneath one roof, Shoppers’ Stop has a line-up of 350 brands. Set up and headed by former Corona employee, B. S. Nagesh, Shoppers’ Stop is India’s answer to Selfridges and Printemps. As it proudly announces, ‘We do not sell, we help you buy.’ Back in 1991, there was the problem of what to retail. Should it be a super-market or a departmental store? Even an electronics store was considered. Lastly, common sense and understanding won out. The safest bet, for the all-male team was to retail men’s wear. They knew the male psyche and felt that they had discerning taste in men’s clothing. The concept would be that of a lifestyle store in a luxurious space that would make for a great shopping experience. The first Shoppers’ Stop store took shape in Andheri, Mumbai, in October 1991, with an investment of nearly Rs. 20 lakh. The original concept which formed the basis of a successful marketing campaign for seven years is here to stay. And the outcome is an annual turnover of Rs. 160 crores and five stores, nine years later.

Everything went right from the starting, except for one strange happening. More than 60 per cent of the customers who walked into Shoppers’ Stop in Mumbai were women. This gave mount to ideas. Soon, the store set up its women’s section. Later, it expanded to comprise children’s wear and then, household accessories. The second store in Bangalore came in 1995. The store at Hyderabad followed in 1998 with the largest area of 60,000 sq. ft. The New Delhi and Jaipur stores were inaugurated in the year 1999. All this while, the product range kept increasing to suit customer requirements. The most recent experiment was home furnishings. Secure in the knowledge that organized retailing in global brands was still in its infancy in India, Shoppers’ Stop laid the ground rules which the competition followed. The biggest benefit for Shoppers’ Stop is that it knows how the Indian consumer thinks and feels while shopping. Yes, feeling – for in India, shopping remains an outing. And how does it compare itself to foreign stores? While it is not modeled on any one foreign retailer, the ‘basic construct’ is taken from the experience of a number of successfully managed retail companies. This has leveraged expertise for a critical component such as technology from all over the world, going as far as hiring expatriates from Littlewoods and using state-of-the-art ERP models. Shoppers’ Stop went a step further by even integrating its financial system with the ERP model.

Expertise was imported wherever it felt that expertise accessible in-house was inadequate. However the store felt there was one acute problem. The shortage of most significant resource of them all was trained humans.

As Indian business institutes didn’t have professional courses in retail management, people were hired from different walks of life and the training program was internalized. By 1994, the senior executives at Shoppers’ Stop were taking lectures at management institutes in Mumbai. The Narsee Monjee Institute of Management Studies (NMIMS) even restructured its course to comprise retail management as a subject.

Getting the company access to the newest global retail trends and exchange of information with business greats was an exclusive membership to the Intercontinental Group of Department Stores (IGDS). It permits membership by invitation to one company from a country and Shoppers’ Stop rubs shoulders with 29 of the hottest names in retailing – Selfridges from the UK, C.K. Tang from Singapore, Lamcy Plaza from Dubai and the like. With logistics I in place, the accent moved to the customer. Shoppers’ Stop conducted surveys with ORG-MARG and Indian Market Research Bureau (IMRB) and undertook in-house wardrobe audits. The studies confirmed what it already knew. The Indian customer is still evolving and is much different from, say, a European customer, who knows exactly what he wants to purchase, walks up to a shelf, picks up the merchandise, pays and walks out. In India, customers like to touch and feel the merchandise, and scout for options. As well, the majority of Indian shoppers still prefer to pay in cash. Therefore, transactions should be in cash as against plastic money employed the world over. Additionally, the Indian customer likes being served – whether it is food, or else. The company’s customer profile comprises people who want the same salesperson each time they came to the store to walk them via the shop floors and assist in the purchase. Others came with families, kids and maids in tow and expected to be correctly attended to. Still others wanted someone to carry the bags. Therefore, the shops have self-help counters, with an assistant at hand for queries or help. The in-house wardrobe audit also helped with another facet of the business. This enabled Shoppers’ Stop to work out which brands to stock, based on customer preferences. However, the USP of Shoppers’ Stop lies in judiciously selected global brands, displayed alongside an in-house range of affordable designer wear. The line-up comprises Levi’s, Louis Philippe, Allen Solly, Walt Disney, Ray Ban and Reebok, besides in-house labels STOP and I. Brand selection is the same across the five locations, although the product mix might be somewhat city-based to accommodate cuts and styles in women’s wear, as well as allowing for seasonal variations (winter in Delhi, for instance, is a case in point). Stocking of brands is mainly based on popular demand – recently, Provogue, MTV Style and Benetton have been added. In-house labels are available at competitive prices and target the value-for-money customer and make up around 12 per cent of Shoppers’ Stop’s business. Sometimes in-house brands plug the price gap in certain product categories. To cash in on this, the company has big plans for its in-house brands: from re-branding to repositioning, to homing in on product categories where existing brands are not strong. Competition among brands is not an issue, as being a trading house, all brands get equal emphasis. The in-house brand shopper is one who places immense trust in the company and the quality of its goods and returns for repeat buys. And the company reposed its faith in regular customers by including them in a concept called the First Citizen’s Club (FCC). With 60,000 odd members, FCC customers account for 10 per cent of entries and for 34 per cent of the turnover. This was the sheer appeal of experience which kept pulling such people back. Not one to let such an opportunity pass, the company ran a successful ad campaign (which talks regarding just this factor) in print for more than eight years. The theme is still the same. In 1999, a TV spot, which liked the shopping experience to the slowing down of one’s internal clock and the beauty of the whole experience, was aired. More recently, ads that spell out the store’s benefits (in a highly oblique way) are being aired.

The campaign is mainly based on entries entered in the Visitors’ Book. None of the ads has a visual or text – or any heavy handedly direct reference to the store or the merchandise. The ads only show shoppers having the time of their lives in calm and serene locales, or elements which make shopping at the store a pleasure – quite the perfect getaway for a cosmopolitan shopper aged between 25 and 45. The brief to the agency, Contract, ensured that brand recall came in terms of the shopping experience, not the product. And it has worked wonders. The Value-addition at each store also comes in the form of special care with car parks, power backup, customer paging, alteration service and gift-wrapping. To top it all, cafes and coffee bars make sure that the customer does not step out of the store. In Hyderabad, it has even created a Food Court. Although the food counter was not planned, it came about as there was extra space of 67,000 sq. ft. Carrying the perfect experience to the shop floor is an attempt to stack goods in vast open spaces efficiently.

Every store has a generic structure, although regional customer variances are accounted for. Each store is on lease, and this is clearly Shoppers’ Stop’s most expensive resource proposition – renting huge spaces in prime properties across metros, so far totaling 210,000 sq. ft of retail space. Getting that space was simple enough for Shoppers’ Stop, as its promoter is the Mumbai-based Raheja Group, which also owns 62 per cent of the share capital.

problems:

problem 1: What are the significant factors that have led to the success of Shoppers’ Stop?

problem 2: Draw the typical profile(s) of Shoppers’ Stop customer segments.

problem 3: How are Indian customers visiting Shoppers’ stop any different from customers of developed western countries?

problem 4: How must Shoppers’ Stop develop its demand forecasts?

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M9429

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