Retail chain Shoppers Stop is increasing the share of its private labels, holding consumer events and correcting merchandise mix at Crossword book stores to improve its top line and margins.
Net losses at the company widened to Rs 11 crore in the first quarter of the current financial year from Rs 1.5 crore in the corresponding quarter of last financial year. On a standalone basis, its profit dropped 96 per cent due to increase in costs.
After a gap of eight-10 quarters, the share of private labels at Shoppers Stop has gone up by 70 basis points in the June quarter on a yearly basis, and the company wants to take it to about 19 per cent over the next three years, said its managing director Govind Shrikhande in a conference call with analysts on Wednesday. While national brands give margins of 25 to 35 per cent in apparel to retailers, private labels fetch margins of 40-55 per cent to retailers.
Earlier, the company was consciously not growing the share of private labels to maintain its positioning of ‘bridge to luxury’, but Shrikhande, in the last interaction with Business Standard, defended that increase in private brands will not affect the positioning given that the share is well below 20 per cent and its brands are still in the same positioning.
Shoppers launched sales campaign around its brand Haute Curry in the last quarter and the company has seen 65 per cent growth in the sales, Shrikhande said, adding that the company plans to launch campaigns in its brands Life, I Jeans and Stop in coming quarters. “We will improve merchandise assortment and advertise about these brands to communicate to our shoppers,” he said.
However, the company has reduced the prices of its private brands by 5 per cent to get better traction from buyers.
In June, the retailer held a makeover marathon in Pune and two other cities, wherein shoppers can trial products at its stores and held events around watches, menswear and womenswear.
“There was no discounting in products. Customers get makeover and buy products on a long term basis. We will activate in new stores rather than waiting for 6 to 9 months for them to ramp up,” Shrikhande said.
Though Shoppers Stop department stores did a like to like growth of just 1 per cent, the company is expecting better growth in the coming quarters due to consumer activations, festive period in Q3 and so on, he said.
The company’s loss making hypermarket chain Hypercity has moved out of retailing of mobile phones directly and gave to to Essar group’s The Mobile Store and increased the share of fashion by 100 basis points.
Hypercity is also in the process of downsizing the sizes of its stores in Ludhiana, Amritsar, to around 45000 sq ft from 70,000 and 100,000 sq ft respectively, said its chief executive Mark Ashman.
In Crossword stores, the company has added toys which is growing at a rate of 40 per cent and corrected categories such as movies and music whose growth is dropping.