The K Raheja-owned Shoppers Stop is going full throttle ahead after its deal with Future Retail and Amazon last year. The company is looking at adding more beauty stores and increasing the share of private lables and multi-channel sales to boost growth. Govind Shrikhande, its managing director, tells Raghavendra Kamath in a interview. Edited excerpts:
Can you share the update on the deal with Amazon?
We received Rs 1.79 billion from Amazon, and allotted it a 5 per cent stake in the company (Shoppers Stop). Second, our catalogue is live on Amazon, and by June, our full catalogue will be on the Amazon portal. We are currently growing the 100 per cent month-on- month. We are growing 130 per cent on the shoppersstop.com website. Amazon’s experience centres will come in our stores by the second half of next financial year.
What is the progress on your omnichannel operations?
From this quarter, 15 of our stores have started supplying products as part of omnichannel. For ‘click and collect’, trials are happening in Mumbai, and by the second quarter of 2018-19, it will be operational across our stores.
During the results announcement, you said the sell-offs will completely change the balance sheet for FY18-19. Can you elaborate?
The Hypercity deal is done, and 95 per cent of the money has come in. We have also got Future Retail shares. We have completed the share purchase agreement for Time Zone (a leading chain of Family Entertainment Centre). Our debt has come down from Rs 5.36 billion in September 2017 to Rs 2.37 billion in December 2017. It will come down to Rs 400 million by Q4. The company will be debt-free by next financial year. Our interest cost will come down 60-70 per cent in the next three years.
You said the company would transform after the Hypercity sell-off.
On the operations front, we will open five department stores in 2018-19 and open three to four stores thereafter. We opened 12 speciality beauty stores this quarter and will open 12 to 15 speciality beauty stores next year. The number of such stores will go up from 97 to 140 in the next three years. The like for like growth in this segment is 18 to 20 per cent, while in the core business, it is -1.4 per cent. The share of omnichannel will go up from 1.4 per cent now to 10 per cent over the next three years. The share of private brands is 8.9 per cent, the lowest share as we are doing some correction. It will be 12 per cent share in the next year.
How is the end of the season sale (EOSS) panning out?
EOSS is slow. After the GST, in 37 per cent of the category, taxes dropped 10 per cent. The MRP also dropped. When the MRP drops, sales realisation also drops. If volumes don’t pick up, sales growth will be low. Now, because of the excise duty going up, the prices of imported products will go up from 10 to 20 per cent.