Shoppers Stop bets on beauty retail to revive growth, improve profit

Shoppers Stop, the country’s oldest department store chain, is looking to grow its beauty business as consumers increasingly count on tried-and-tested retail formats for their needs. While beauty as a category has grown strongly online, in offline stores, it is retailers such as Shoppers Stop that have an edge, sector experts said.

The K Raheja Corp-promoted company has standalone beauty stores as well as shop-in-shops and beauty counters within its department stores, promoting local as well as international brands. It exclusively retails some of the world’s top beauty products, including Estee Lauder, MAC, Clinique and Bobby Brown in India, with the segment accounting for 16 per cent of overall sales.

Rajiv Suri, CEO of Shoppers Stop, told Business Standard, the plan was to take the beauty business to 20 per cent of overall sales in the future as pace of growth of the segment remains high. Current rate of growth of Shoppers Stop’s beauty business is around 10-12 per cent, the fastest among all its categories, Suri said. “It is a business that shows enormous potential. We are going to increase the focus on glam stations, makeovers and education in beauty,” he said to counter online beauty retailers such as Nykaa who’ve pushed aggressively in the space.

 

Shoppers Stop also proposes to upgrade its standalone beauty stores, whose number is above 100, increase assortment at these outlets as well as improve service levels. The focus on the beauty business comes at a time when the company is looking to revive overall growth and improve profitability.

For the nine months ended December 2019, Shoppers Stop reported a marginal drop in top line (1.9 per cent over the year-ago period) to touch Rs 2,690 crore though profitability improved. From a Rs 9 crore loss in the nine months ended December 2018, the company posted Rs 67 crore in profit after tax, its financial numbers for the period show. Profit before interest depreciation and tax (PBIDT), which is operating profit, for the period under review grew 66 per cent year-on-year to touch nearly Rs 207 crore.  

  

While the apparels and accessories segments contribute 65 per cent and 19 per cent, respectively, to overall sales at Shoppers Stop, this revenue mix could change, said analysts, in the future with the beauty business growing steadily.

On an overall basis, the company is likely to add around 15 stores this year and next year, respectively, in the beauty segment to improve reach. It is also looking at more international tie-ups in the beauty space as competition from e-tailers grows. Besides MAC, Clinique, Estee Lauder and Bobby Brown, Shoppers Stop also retails brands such as Burberry, Versace, Givenchy and Marc Jacobs in the beauty space.

The company is also pushing omni-channel retail, using its website to provide a window to its beauty products apart from giving customers the option to buy online. “Beauty requires engagement where products have to be tried to understand efficacy,” Suri said. “Our strategy as far as online retail goes is to give customers a single window where they can see all our products. We also have the option to buy online. However, if consumers wish to buy offline, they can do so with the help from the store locator option on our website,” he added.