Shoppers Stop accelerates its omni-channel strategy

In February 2020, retail company Shoppers Stop got 2 percent of its sales from 'omni channel'. After the pandemic set in, the omni-channel contribution rose to 6 percent of sales in fiscal year (FY) 2021.

In the quarter ended June 2021, omni channel contributed 18 percent of Shoppers Stop's sales, according to its top management.

"We have made considerable investments in UI/UX, analytics, and personalisation, which are our key focus areas," said Venugopal Nair, CEO and Managing Director of Shoppers Stop, in an earnings call on July 30.

"These developments will lead to smoother discovery, seamless checkout, segregated category focus, clear brand highlights, and a lot more," he added.

The company reported a loss of Rs 104.9 crore in the first quarter of FY 2022 on a top line of Rs 269.5 crore. While the revenue was around 67 percent higher on a year-on-year basis, it dropped more than 60 percent sequentially because of lockdowns in Maharashtra and Kerala apart from COVID-19 restrictions in other parts of the country.

The company's stores operated for 28 percent of eligible days in the first quarter. It has 244 stores in 47 cities, and generated around Rs 44 crore of revenue from e-commerce in Q1-FY 2022. Nair said 75 percent of that e-commerce business originates on its website and apps.

In this context, Shoppers Stop's omni-channel push is helping the company grow business. "As the physical stores were shut, we engaged our customers through our omni-channel business," Nair told analysts in the earnings call. "We continued to benefit our customers, and our business benefited in that process in the shift to omni-channel."

It invested Rs 10 crore towards omni channel in the first quarter, and made two key appointments in management. Sreekanth Chetlur joined Shoppers Stop as Chief Ecommerce Officer in July and will also over see its omni-channel operations, while Sandeep Narain is Chief Retail Officer of the company.

Narain's previous retail stint was in Kuala Lumpur, Malaysia, while Chetlur was Head of Digital at PT Matahari in Jakarta, Indonesia. Before that, Chetlur headed omni channel at Landmark Group after stints with Limeroad.com and Yebhi.com. "They are extremely talented individuals with a proven track record," Nair told analysts.

With omni channel, Shoppers Stop gives customers the option of shopping and engaging with its brands online, and the experience of trying the apparel or beauty products in a physical store. "The whole opportunity to engage with us through our stores and online gives us an added edge in terms of our ability to service our customers," Nair said.

While a lot of the business will happen in its stores, Nair said the orders and intent typically originate on its website or through an app. And vice-versa: customers can try the products in stores and purchase it online. Transactions like these will account for up to 25 percent of Shoppers Stop sales by FY 2024, he added.

“Rising sales from the omni channel and beauty are quite encouraging, with an improving share and target to significantly ramp up its reach and product portfolio,” said Aliasgar Shakir, Research Analyst at Motilal Oswal in a report dated July 30.

“But a higher presence in malls, declining footfalls, and regular closures of non-performing stores raise concerns over store profitability,” Shakir added.

While the company is looking to steadily build over 20 stores and increase its presence in emerging cities, it has to be prepared for lockdowns. So, the omni-channel growth will be vital in coming quarters.

Shoppers Stop is backing the strategy with project Jarvis, a data lake and analytics project, to maximise its understanding of customer behaviour, and preferences. "It (will) enable us to personalise the offers for them, with products as per their preferences," Nair said.