The omniscient retailer

Shoppers Stops Rs 60 crore plan for going omni-channel is coming together from October

Net profit for one of the oldest retail players in the country, Shoppers Stop, between fiscal 2011 and 2015, slid by nearly 46 per cent even as gross retail sales increased by 82 per cent. The numbers were no surprise, however, to anyone who has been following Indias retail story profits for several brick and mortar retail stores have tumbled under the onslaught of e-tailers and; in its annual report, Shoppers Stop clearly stated the two big reasons for the drop are scarce real estate and e-tailers price wars. In response, it is going omni-channel. Come October, it will take the first step by going live on Snapdeal, following a tie-up between the two, a few weeks back.

I am getting a certain number of customers because of the limitations of being present physically in more than 50 cities. With the non availability of space, we may not be able to go beyond the cities any time soon. What better way than to tie in with a marketplace which already has a large reach, says Govind Shrikhande, the K Raheja group-promoted retailers managing director. The process beginning fiscal 2015 is expected to cost the retailer Rs 60 crore, which although less than 2 per cent of its gross retail sales in 2014-15, is nearly 50 per cent of the sum of its net profits in the last three years.

For the consumer, an omni-channel brand or retailer means the freedom to purchase anywhere online or offline and get it delivered at her convenience, any time and again, anywhere. And for Shoppers Stop, it provides an opportunity to know their customers better than ever before.

The partnership route
The retailer says that its omni-channel status will help bring in close to 10 per cent of total sales from online channels. So far its online store has brought in one per cent of its sales. How will it make the leap? To begin with it is beefing up its enterprise software and systems. The second goal to become multi-platform will be scored in the upcoming festive season, the first step being its live counter on Snapdeal. Shrikhande says that today consumers who know the brand find their way to their site. But with Snapdeal, it gets access to a gamut of users who may never have shopped with it earlier. The tie-up is expected to bring in more custom not just from metros and small towns where Shoppers Stop is not present, but also from cities where it has stores. For example, in a metro like Mumbai, where there are no less than 11 flagship stores, there is not a single one in south Mumbai. Going online will give it access to such areas too.

Shrikhande says that the assortment of merchandise on Snapdeal will reflect that on Shoppers own site and that 60 per cent of products on sale will be different from the sites existing products. Orders will be routed through Shoppers, which will pay Snapdeal a commission on every sale. Marketing will be jointly undertaken and depending on the customers location, home-deliveries will either be handled by Shoppers or Snapdeal. Eventually buyers will have the option of picking up their online purchases from Shoppers stores in their city. Across the world,online shopping is plagued by issues such as the cost of delivery and inconvenient delivery times and, as a result, the click-and-collect mode that Shoppers plans to put in place is gaining ground. In India, Amazon is one of the larger online retailers to offer it.

But the Snapdeal partnership does not address the challenge of online price wars. That is where the rest of the steps planned for going omni-channel figure.

Fixing internal systems
In the chains backrooms, a new platform and software called Hybris from enterprise software provider, SAP, is being implemented. We will launch our refurbished portal and our new app, as a result of Hybris between Diwali and Christmas, says Shrikhande. By May-June 2016, the retailer says it will be able to connect its physical stores with its online site, enabling click-and-collect and click-and-reserve options, apart from the familiar click-and-deliver one. And with the help of additional software installations and system upgrades, by July-August in the same year, the retailer plans to start the next phase of its omni-channel plan.

The improved backend systems will lift the fog from connections between offline and online (or smartphone) consumers. I know my customers who shop in my stores, and my online store knows the e-shoppers. But what I am unable to do is pinpoint the common consumers and their shopping patterns. By 2016-17, I would even be able to pool information not just from my stores but also social media to know my customer better, says Shrikhande.

Shoppers Stop has so far mostly focused on its base of 3.7 million loyalty-programme holders (count doubled since 2011) who contributed 72 per cent to the gross retail sales in 2014-15. But with new systems in place, Shoppers will be able to mine a wider range of customer data and use it to soften the blow from price wars that e-commerce giantsindulge in. It will also be able to provide customized service as the new systems will allow it to track order histories and turnaround times accurately to keep a tight leash on customer experiences. Clearly the way Indians shop is changing as is the world of brick-and-mortar retail stores.