Shoppers Stop revives plan to grow online reach
After two failed bids in four years, firm ties up with Hybris Software, plans Rs60 cr spend to makefirm omni-channel
Mumbai: After two failed attempts at going digital in the past four years, Shoppers Stop Ltd, India’s oldest department store chain, is starting afresh, with a new partner and strategy to become a retailer in both the online and brick-and-mortar spaces in three years.
“In three years, we expect online sales to account for 10% of our overall sales,” said Govind Shrikhande, managing director, Shoppers Stop. Currently, online retail accounts for just 1% of its revenue.
In the past, the company tied up with Canada’s Novator Systems Ltd, which went bust two years ago. It then partnered with eBay Inc.’s Magento. But with Magento not delivering to the firm’s expectations, the retailer is now tying up with Hybris Software, a SAP company.
“It has taken us a year of research to finalize and tie up with Hybris,” said Shrikhande, who has planned a ₹ 60 crore investment over the next three years to take the firm omni-channel.
Omni-channel is an approach to sales that seeks to provide a seamless shopping experience, whether the customer is shopping online from a desktop or mobile device, at a kiosk or in a brick-and-mortar store.
Shoppers Stop follows Future Group, parent of listed retail companies Future Retail Ltd, Future Lifestyle Fashions Ltd and Future Consumer Enterprise Ltd, which announced a tie-up with Hybris Software for an omni-channel retail entry last September.
The Future Group, which runs chains such as Big Bazaar, Central, Planet Sports and Ezone, expects its revenue to increase by over 30% once omni-channel comes into play by March 2016, as same-store sales and sales from e-commerce increase, Kishore Biyani, group chief executive officer, said.
Impacted by e-tailers such as Flipkart, Amazon and Snapdeal, which are flush with money and luring consumers online with deals and discounts, brick-and-mortar retailers are accelerating their plans to have a larger digital presence.
In February, Shoppers Stop had shared plans to retail its private label brands through marketplaces Snapdeal and Amazon. This could be reviewed in two years’ time, said Shrikhande.
Increasingly, retailers believe they will have an edge over online retailers once they provide a uniform shopping experience across channels—mobiles, tablets, computers, kiosks and physical stores, as the physical stores will give them an added advantage.
“Digital currently influences 21%, or ₹ 60,000 crore, of the over ₹ 2.8 trillion of in-store organized retail sales in India. The mobile influence factor is as high as 18%, with smartphones being the device of choice for accessing information while on the go or in-store,” said a June report by Deloitte Touche Tohmatsu India Pvt. Ltd.
Globally, brick-and-mortar retailers that have opted to offer omni-channel services, such as UK-based John Lewis Plc and US-based fashion specialty retailer Nordstrom Inc., get over 30% and 20% of their revenue from online sales, respectively, said Shrikhande.
Currently, most brick-and-mortar retailers have a presence across channels. However, the online site often operates in a silo or even competes with the physical store.
“Customers want a coherent shopping experience along their path to purchase,” Rohit Bhatiani, director, Deloitte, said in the report.
Towards this end, on Thursday, Croma, the Infiniti Retail Ltd-controlled electronic products retail chain from the Tata Group, said it is reworking its strategy to integrate its online presence with physical stores.
This marks a shift from its earlier strategy. In 2012, Infiniti Retail had launched cromaretail.com as a separate entity to compete with Croma stores and online retailers such as Flipkart. The deals available on cromaretail.com were not offered by the physical stores, causing the firm to lose a lot of walk-ins as consumers expect to be treated similarly across channels of sales.
Shoppers Stop’s investments in digital will also enable the firm to take a single view of the inventory across multiple platforms and a single view of the consumer, irrespective of the channel, Shrikhande said.
Shoppers Stop plans to launch its mobile app by Diwali. Over the next year, the retailer will also equip close to 50% of its sales associates across 75 stores with tablets. Consumers with credit or debit cards can also opt to skip queues for payment and pay for their purchases at mobile point-of-sale machines.
Overall, the company has planned a capex of ₹ 360 crore, including the digital initiatives. ₹ 300 crore will be used to open 18 new Shoppers Stop stores, on renovations and on other subsidiary formats such as HyperCity and Bobbi Brown.
Shoppers Stop’s consolidated full-year net profit for 2014-15 stood at ₹ 42.4 crore on a revenue of ₹ 4,742.14 crore.
On Friday, shares of Shoppers Stop rose 0.66% to ₹ 387.85 on BSE, while the benchmark Sensex gained 0.53% to 28,092.79 points.
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