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Shoppers Stop posted record quarterly sales in the December quarter, with revenue surpassing pre-covid levels. In an interview, Venu Nair, managing director and chief executive, spoke about the department store operator’s plan to add more direct-to-consumer brands, views on the beauty retail market and consumer demand. Edited excerpts:

What are your long-term views on beauty retail in India, given you also launched the SS Beauty format last year?

I think the beauty segment is in its infancy in terms of growth. If you look at the per capita consumption of beauty, we are still at a fraction of what even the semi-developed markets in the world are. So, the headroom for growth is very, very strong. We have been one of the first players of beauty through our department stores and also through the standalone beauty stores that we established for Mac, Bobby Brown, Estee Lauder, Clinique, Jo Malone, and Too Faced, more recently. We are augmenting that and keeping pace with the changing customer needs.

The reason we went into a standalone beauty environment is because while the customer was happy to shop at department stores or standalone brand stores, they’re also looking to shop in multi-brand beauty-specific stores. We are also venturing into our own distribution, because what that does is it helps us bring in exclusive brands into the country. We’ve now got eight L’Oreal brands which will be exclusive to us; we’ve got Clarins which will be exclusive to us. We are launching a brand called Earthy, again exclusive to Shoppers Stop. And there are a few more which are in the pipeline. This gives us the opportunity for exclusivity in terms of distribution and also ensures their supply pan-India.

Any growth projection for the beauty business?

We expect that beauty as a category will grow at a pace ahead of the business. Going forward, in terms of expansion (for beauty)—we are looking at opening 10 to 15 beauty stores every year. I think the opportunity is to do much more than that, but we’re being conservative at this point.

The quarter saw some softness in demand in November plus a delayed winter. Did that impact sales?

We saw softness for about two weeks post-Diwali. As we got into November, what helped bring customers back into our stores and online was actually the beauty category because we had Singles Day and then the Black Friday sales. We had record sales for the beauty category specifically during that period. Once they come in, obviously, they shop for other categories as well. We benefited from that, post the slight softness that we saw after Diwali, and then the onset of winter, which happened by December and then the end-of-season sales.

Overall, while we did see softness, things went back to being pretty much stable.

You announced a tie-up with Goat Labs to bring their D2C apparel brands into your stores. Will you look at more such tie-ups?

Absolutely. What we have done is to tie-up on an exclusive basis with Goat Labs that is incubating a lot of new brands. What we’ve agreed to with them is that all of their D2C brands—whenever and whichever of them are going physical—they will be present in Shoppers Stop on an exclusive basis. There are four brands that we launched in Shoppers Stop —Mixed success, but very encouraged with what we are seeing and that is something which we will continue to do as we go forward. In fact, we are experimenting with an American custom clothing brand. Again, it is a D2C brand, we are piloting it in one of our stores and based on the success, we will roll it out across other stores as well.

Going ahead, how would you sum up the overall consumer sentiment?

I think what we’re seeing is as the markets are now settling down post covid, demand continues to be strong and in the medium to long term, the fundamentals are very strong. What we do see is a level of premiumization that has happened and customers trading up to brands that are well known. To give an example, if I were to look at the last quarter, of the top 20 brands that we had, 19 of the top 20 brands had strong double-digit growth ahead of the curve, which is a clear indication that customers are trading up and going for brands that they love.

At an organizational level, what are the top areas of focus for you now?

We have had a strategy in place now for over two years and we are focusing on that, the execution of the strategy and we are pleased with the results that we are seeing. We are a house of brands and within the house of brands, we are specifically focusing on the beauty category, we’re focusing on our own private brands, and on transforming ourselves to being an omni-channel retailer.

And even as we do that, also expanding the physical stores. These are the areas that we are focusing on and each of these have done well in the quarter. So, if I just elaborate a little bit on the quarter itself, the overall sales in the quarter were up 20%; the Ebitda grew by 27% and our PBT grew by 44%. Finally on expansion, we opened six department stores and five beauty doors during the quarter.

ABOUT THE AUTHOR

Suneera Tandon

Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
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