Director – Operations | 10 Jan 2004
“We are a house of brands. When you come to Shoppers’ Stop, we want to offer you as much variety as possible. Our in-house brands have not been enhanced. The consumer will see brands within the store as compared to just one brand.”
Sanjay Badhe joined Shoppers’ Stop in August ‘02 as Customer Care Associate & Director – Operations. A Master in Business Administration, Benedictine University/ DePaul University (Chicago), Badhe has worked with Raymond, Al Futtaim Watches & Jewellery and MARG Marketing Group amongst others.
At Shoppers’ Stop, he is responsible for all aspects of the brand which include sales and marketing, expansion, and growth. In a candid chat with Jasmeen Dugal on his recent trip to New Delhi, Sanjay Badhe, Director – Operations, Shoppers’ Stop reveals Shoppers’ Stop’s aggressive expansion plans, why he would like the store to be referred to as ‘a house of brands,’ and much more.
Q. Let’s begin with your expansion plans.
We’ve got nine stores. Last year, we added another four stores. And we have plans of adding another three this financial year, which takes us to sixteen. There are another five or six planned for the next financial year. So eventually, in two years we should be at twenty-five-odd stores.
Q. Where are these stores coming up?
One is scheduled for Bangalore, another will be a 54,000 sq ft store at a new mall in Malad, Mumbai and the third will be in Kolkata. That will be our second store in Kolkata. The Mumbai store will be a little different because we have called in a design company from the UK to tie in with us. Apart from these three, there will be another store in Juhu, Mumbai early next financial year.
We’ve also signed up properties in the North and in the southern zone. The focus will be on the North, especially in the Capital region.
Q. So your focus is basically on the metros?
We are focusing on the metros till next year and then we shall start focusing on the other markets. Our study shows that the other markets have not grown as much as we would have expected. Our planners, unlike in the west, did not plan for commercial property when they did town planning. There is no provision for a 50,000 sq. ft. shopping complex or for a car park area. Organized retailing requires vast space.
The other thing we would have to look for is good locations. In retail, location is everything. If the location is right, then we will move into that market. In non-metro markets, locations aren’t where we want them. However, we were the first to move into mini-metros like Pune or Jaipur.
Q. What is the percentage of organized retail in the Indian retail market?
We have 420-430,000 sq. ft. of retail space. In terms of sales, we hit over Rs. 400-cr in the year that ended. Everyone seems to be growing. But of course, organized retail would include a lot of company stores, food retailing, etc.
We commissioned ORG-MARG to conduct an exhaustive study, and based on this, we’ve developed a methodology which tells us about the size of the market. We have four or five different estimates. And now that we’ve opened a number of stores, we know which estimate will make sense and how the market will behave. So if you look at Kolkata, Kolkata shops in our mall seem to behave quite like our store in Delhi; so we can draw out a comparison chart. This is becoming more of a science than an art.
Q. Do B-class cities mean lower purchasing power?
No! When we looked at SEC A1, A2, B and C, we found that SEC B & C are now shopping more. Obviously there is a shift. In Chandigarh there is a large proportion of SEC A & B; in fact, out of proportion for a city of that size and population.
Q. Coming back to your expansion plans, do you conduct any dipstick survey before launching a new store?
Yes, the studies commissioned to ORG-MARG check within the catchment what are people doing, what do they want, how much are their wardrobes and how much of a wardrobe we have.
Q. How important is it for an organization such as yours to be ‘people-independent?’
I believe that good learning must be converted into replicable processes so that mistakes are not repeated. This helps organisations to become people-independent — a must for growing organisations. The whole technology drive in Shoppers’ Stop has emerged from this belief.
Q. How important is visual merchandising?
Visual merchandising is very important because you are actually communicating to the customer. We have plans of integrating our visual merchandising with our advertising, as well as with our direct marketing. Because all these are methods with which you are talking to the consumer. So while visual merchandising is what we see inside the shop, there has to be a certain integrity and unity in all forms of communication, to enhance the Shoppers’ Stop feel.
Standards are improving. Earlier on, I suspect that it wasn’t thought of as being important in Indian retail, but its critical to maintain a certain standard. We have what we call the ‘White Glove Checklist,’ which is a check done every morning on how the store looks.
Q. Coming to the product line, Shoppers’ Stop has three in-house collections that vie for attention. What are their attributes?
We have three in-house brands – STOP, LIFE and KASHISH. And we’ve now positioned them very distinctly.
STOP is a fairly large brand; it is one of the first brands for men, women and kids. You’ll now find most brands moving from men’s to women’s wear, but this is the first brand for men, women and children. There’s some amount of work that’s been done last year in terms of how it is presented in the store so you’ll find that the fixtures and the look is all different.
I’d like to state here that we are a house of brands. When you come to Shoppers’ Stop, we want to offer you as much variety as possible. Our in-house brands have not been particularly enhanced. The consumer will see brands within the store as compared to just one brand. LIFE has been repositioned – it’s more younger. And KASHISH is completely Indian wear.
Q. How do you train your staff for customer management?
We have a ‘Customer Satisfaction Index’ (CSI) and an ‘Employee Satisfaction Index’ (ESI), which is done by CSMM Walker, an American company that has done this with us for the last three years. Infact, the World Organization of Market Research invited us to present a paper on the connection between ESI & CSI. Even for them, it was interesting because nobody has made the connection.
It sounds very simple that if you have happy employees, you have happy customers, but we have shown how that will happen. One of the things that ESI showed us was that employee satisfaction depends largely on their supervisors. So we started looking at supervisor quality and product knowledge with a fairly extensive training of the supervisor. And we found that as supervisor skills improved, they have resulted in higher satisfaction levels. And this had a direct impact on the customer loyalty within the store.
So we then set up a different level called the PUCCA – we’ve got an outsider agency coming in and setting up a product knowledge and training package for us. Additionally, we set up a campaign called Jo Jeeta Wohi Sikandar; at various levels, people get recognized. Product knowledge is one area; customer handling is another, etc.
Q. In the retailing business, supply chain management and logistics is a critical success factor. How do you manage your logistics network and supply chain management system?
There is no-one in India that offers logistics, so we had to develop our own logistics department. We have linked every office in the country via leased lines and V-SATs.
Q. What are the major cost elements and typical margins earned in this business?
Property cost is the highest; this is followed by working capital costs, employee costs, marketing costs and energy cost. Globally, retailers run their business on a margin of between 1-3%. This is not a high margins business. It is a volume driven business. The business is of managing cash flows and building assets. We normally break even at the operational level in 18-24 months and the pay back of initial investment is 4-5 years.
Q. Whom do you see as direct competition?
Direct competition is from other departmental stores if it is in the same catchment area. We define the catchment area as one in the radius of 5-7 kms, which would be about half an hour driving time.
Q. Tell us about your brand-building exercises. Is there anything on the cards?
We have a scheme called ‘The Wardrobe Exchange,’ wherein people come in with their old clothes and exchange it for clothes bought at Shoppers’ Stop for a discount. Last year, we got 56,000 items and gave it away to a charitable concern we’ve tied up with. We have big plans for the scheme this year, which will kickstart on 16 January.
Q. What are Shoppers Stop's plans for ‘E-tailing?’
E-commerce will pick up in the country only after three to five years. Shoppers’ Stop has launched its own website where we offer E-Commerce.
Q. Is there any ad campaign in place?
Yes, we launched an ad campaign ‘If it’s on your mind, it’s on our shelves’ last October. It was created by Rajiv Sabni from Contract. The idea of doing all your shopping under one roof was inspired by the fact that there are over 250 brands at the store. ‘If its on your mind its on our shelves’ is an attempt to capture the way a shopper's mind works. It's all about their brief encounters with products on a shelf.
Shopping in a department store is a completely different experience from shopping for groceries. You don't think too much about rice or beans or bread. But the minute you consider buying any lifestyle product, you tend to relate it back to your life. Where it fits in, why you want to buy it and who you want to buy it for. In effect, as you think of one thing, it more often than not leads to another. Which, as a proposition and as a tone and style, seemed to fit Shoppers' Stop's brand identity perfectly. The creative has different people from different walks of life.
Press, radio and outdoor were the media vehicles used for the campaign with the press campaign targeting the nine cities in which the stores are located. The outdoor and radio creative were used to bolster the main press campaign. A radio interactive program which involved a radio jockey asking shoppers “What’s on your mind?” got an overwhelming response.
Q. What is your average footfall?
Last year we had 12 million walk through our store!
Q. And what is your expected turnover this fiscal?
We plan to end at Rs. 400-crores this financial year. We have a five-year plan in place which we’re working towards and that’s why we have our expansion plans.