Mumbai: Shoppers’ Stop Ltd, India’s second-largest listed retailer, plans to enter the luxury retail segment through a chain of luxury-product stores called Verdi, according to two sources close to the development.
The stores could house up to 40 international luxury brands and will open in 2008, the sources said. A spokesperson for the company did not return calls and the company did not respond to an email query.
Shoppers’ Stop, which has departmental stores, bookstores and hypermarket chains, could make an initial investment of Rs100 crore to set up stores of 1.2-1.5 lakh sq. ft in Mumbai, Delhi and Bangalore, said the sources, adding that Vittorio Radice, former chief executive officer of UK department chain Selfridges and a director on the Shoppers’ Stop board till last year, is tipped to take over as the director and CEO.
India is home to more than 83,000 people whose net worth is more than a million dollars (Rs460 crore then), according to a 2006 study by Merrill Lynch and Capgemini; the country’s luxury market is estimated to be growing at 20% a year. International luxury retailers, including Louis Vuitton Moet Henessey, Chanel, Bulgari, Valentino and Fendi, have set up shop in India. But current laws do not allow foreign retailers to operate multibrand retail stores in India.
The lack of infrastructure, particularly quality real estate, is the biggest obstacle for luxury retailers, which are currently housed almost exclusively in five-star hotels. “Finding luxury retail space has been the only constraint,” Tikka Shatrujit Singh, Louis Vuitton’s India spokesperson recently said. “It has prohibited us from opening more stores.”
Shoppers’ Stop is among several players that are developing luxury malls to counter this lack of space. DLF Ltd is set to open a luxury mall, branded Emporio, in New Delhi. This is planned as a 300,000 sq. ft mall that will be home to a host of luxury brands such as Tiffanys and Salvatore Ferragamo and several high-end Indian designers. Pantaloon Retail India Ltd, India’s largest listed retailer, is also considering converting Crossroads, a Mumbai mall it recently acquired, into a luxury mall.
“One of the positives with Shoppers’ Stop is that it is the pioneer in the Indian retail and understands the market well enough. It is already present in the mass market and premium segment and is upgrading into the next level— luxury segment,” said Pratichee Kapoor, senior consultant at Technopak , a management consulting firm.
Shoppers’ Stop, which is a part of the K. Raheja Group, started off as a departmental store chain in 1991. It has since grown into a company that has a chain of 20 Shoppers’ Stop stores, the Crossword chain of bookstores, and Hypercity, a stand-alone hypermarket. The company is also the Indian partner for several foreign brands, including premium make-up line, MAC, and British maternity store chain, Mothercare, and is also bidding for airport retailing contracts along with its joint venture partner, the Nuance Group AG. The company has already won a contract to operate retail stores in the new Bangalore international airport, expected to open by 2009.
Shoppers’ Stop’s stock closed at Rs629.95, up 1.35%, on BSE on Monday. It earned a net revenue of Rs590 crore in the nine months ended 31 December, up from Rs436 crore a year ago. It registered a net profit of Rs28.4 crore for the same period, compared with Rs20 crore in the nine months to 31 December 2005.