Retail major Shoppers' Stop Ltd has just launched its virtual store – shoppersstop.com. The website, apart from selling the usual wares -- apparel, books, gift articles, toys -- will also hawk flowers and furniture, not stocked by the company's brick and mortar chain due space constraints.
The virtual store will be a boon for people who want to send gifts to their loved ones living and within and without the city. Expecting sizeable business from this segment, Shoppers' Stop is tying up with support service providers to over come the myriad complexities involved in logistics and back-end operations.
Says the company's general manager – information systems, Anish Shah, "We have made arrangements for logistics, payment gateways and call centres for goods ordered over the website." However, virtual store transactions will be initially restricted to the cities where the company has its brick & mortar outlets. Interestingly, the `virtual store' -- a Net-enabled computer -- will be there in every Shoppers' Stop store, enabling a shopper to order on the web, specifying the place of delivery after seeing the goods in the physical store.
Shoppers' Stop, the first retail chain in India to invest on an ERP package, is again investing heavily on software. This time around, the company is buying a software package called Arthur Planning, and a data warehousing solution from JDA, USA from which it bought the ERP package. "Arthur Planning is useful in measuring the stock position at the store shelf level and for auto replenishment of the shelves," Mr Shah explains.
That aside, the software package helps in studying sales patterns and identifying slow moving items and the reasons thereof. According to Mr. B.S. Nagesh, managing director and chief executive officer, Shoppers' Stop, the chain enjoys a comfortable stock turnover ratio of six times. The company's six stores and three warehouses are networked with the corporate office at Mumbai.
Apart from the virtual shop, Shoppers' Stop is to open its second store in Mumbai and Hyderabad next month. "This is to increase our catchment area," reasons Mr Nagesh. Though stores of this kind are termed as destination stores, in reality people are not willing to travel beyond five kilometres to shop, he adds.
After registering a turnover of Rs 160 crore for the year 1999-2000, Mr Nagesh is targeting sales of Rs 270 crore and a net profit of Rs 16.2 crore in the current fiscal, on an equity capital of Rs 24 crore. The company had privately raised Rs 60 crore from financial institutions and venture capitalists. As per the plans on the drawing board, Shoppers' Stop plans to have around 23 stores by the end of 2004, with major cities having multiple retail outlets.
Recently, the company opened its 50,000-sq.ft store in Chennai. Set up at an outlay of Rs 10 crore, Mr Nagesh expects the Chennai store -- the company's sixth outlet -- to break even in 18-24 months time. "We expect to clock Rs 30 crore sales in the first year of operations," he remarks.
One of the unique features of the Chennai store is the housing of Crosswords, the bookstore, and Music World, the music store belonging to the RPG group. The company has entered into a revenue sharing agreement with Music World for the purpose. It may be recalled that the Rahejas acquired 51 per cent equity stake in Crossword store some time back. According to Mr Nagesh, this format will be implemented in all future stores. In Mumbai, Shoppers' Stop has tied up with Planet M (of the Times of India Group) for music retailing.
Responding to the query of why he is not looking at contract management of stores on a profit sharing basis (similar to the practice in the hotel industry), thereby saving heavy outlays and achieving faster brand growth, Mr Nagesh replies, "We are still on the learning curve with lot of things still to be mastered."
The company's experiment with the franchisee model through its Blues Bizaar retail chain was not successful. "We were not able to devote sufficient management time in managing the chain," says Mr Nagesh. Of the three Blues Bizaar stores -- two franchisee and one own-shop -- opened in Mumbai, two have downed their shutters and the remaining one is in the process closing the operations.