'We will be more fashionable'

Q&A: B S Nagesh

Shoppers Stop has moved unobtrusively to expand its network to 24 stores in 12 cities and establish itself as the largest chain of departmental stores in India. Seventeen years after setting up its first outlet in Mumbai, it is undergoing a makeover. B S Nagesh, who bears a somewhat curious designation of customer care associate and managing director, and who has been with the store since inception, spoke to Byravee Iyer and Govindkrishna Seshan about the store and the industry. Excerpts:

What triggered the makeover?

Every six to 12 months, we do a brand track study and a brand iconography study to understand the brand's standing in consumers' minds. About two and a half years ago, after a study, we realised that the fashion quotient of our customers was going up. While our core group of shoppers "" aged between 25 and 45 "" was still happy and well connected to the brand, we found that there is an 18- to 25-year-old shopper who didn't connect with us as much.

We then asked ourselves what the scenario would be 15 years down the line. We realised that Shoppers Stop has to cater to the 18- to 45-year-old and become more fashionable. For that we have to get more fashionable brands, not just domestic ones, but international brands as well.

In fact, we had already started experimenting with our Juhu store in Mumbai, introducing brands such as Chanel, Calvin Klein, Tommy Hilfiger and FCUK. So one, there was something happening on the ground, second, there was a lot of research happening, and third, we held several discussions and deliberations on the merchandise. As of now, we have 24 stores, and we are looking at opening 17 more stores.

How has consumer behaviour changed given the big retail explosion?

Nowhere in the world has retail fallen into the consumers' lap like it has in India. Retail's journey everywhere else has happened over 30-40 years. Things happened one-by-one, so first consumers got used to department stores, then shopping centres, hypermarkets, and supermarkets.

In India, however, everything has come together. The Indian consumer has faced youthfulness, becoming rich, having aspirations, and the availability of so many choices at the same time. The Indian consumer is really having a ball. Ten years ago, we had only two brands of biscuits.

Today, you have a hundred varieties of biscuits. Back then, one didn't know what a wine was and today there are 30-40 varieties of wine selling. Importantly, this is just the beginning. What you are seeing now is not even 5 per cent of what you're going to see.

Have consumers become more demanding?

As you get choice, consumers understand their rights. And more competition means more choice. Consumers have started exercising their rights. Earlier, if you gave them something shoddy, they would forget about it. Today, you find them coming back, demanding as to why something is of bad quality. They make complaints, write mails to you, and even pick up the phone and call you.

Also, there are two kinds of customers emerging. One, is the customer who thinks, "I know what I want and I will ask for it." So if this customer sees an associate behind him trying to help him, that's not good service. The other customer, however, believes, "I'm here, you better serve me well." Then there is a third set, who don't care much eitherways.

But the first two are emerging strong. In terms of age, it is the 25- to 35-year-olds that are becoming more demanding. The 35- to 45-year-olds are more likely to pardon you. For us, 65 per cent of our business comes from First Citizens. Out of our 20 million customers, it is these 1 million club members who matter the most.

Where is Indian retail going?

Currently, Indian retail is like a 15-year-old with a lot of ambition who has passed out of 10th standard and doesn't want to listen to his parents, believing that everything he is doing is right. By 2011, the child will turn 18 and realise that in a few years he will be an adult and hence has to become responsible. That's when we will see reality, where some will do well, and some won't.

I would say, right now retail is more in the air than on the ground. By 2014-2015, you will see the men and the boys getting separated. Then, sky is the limit. Now, it is a potent combination where everything is new "" the consumer, the merchandise and the property.

Is India maturing as a retail hotspot?

It's a little early. Let's give it 3-5 years time. For retail to reach maturity, in terms of modern retail share, it has to reach 20 per cent. That said, Indian small shop retail is a very mature market. For years, they have been able to serve the consumer well, take orders on the phone, provide home delivery services, and give credit services without records, which is what everyone in the world is doing now. These small shops have been a very mature lot and it's not going to be easy for any global big guys to come and beat them.

How are private labels faring?

Currently, private labels make up 20 per cent of our business. We have one brand in each of the niches. We refer to them as exclusive brands. We are going to attempt to push this number to 25 per cent. No where in the world will you see so much opportunity for exclusive brands as you see in India.

Because the world's brands have not been able to come into the country and the domestic brands are not big enough to make such an impact, the opportunity for exclusive brands is very high in India.

You have managed to acquire prominent positions in many malls. Can you give us an idea about your mall strategy?

The reason we were able to get prominent is because we were first to start. But also, the fact is we are able to serve the consumers well. It is the credentials of our customer relations that help us get better locations.

In a stand-alone format, you cannot get increased infrastructure, whereas in a mall, you can utilise 100 per cent of the mall, even though you may be just 30 per cent of the mall. For instance, in our Andheri store we have only 85 car parks, while in a mall, there are 1,000 parking spaces available, of which our customers alone may occupy about 300.

Still, out strategy remains a mixed one, depending on where we want to be. Sometimes we may want to be in a destination where no mall will come up. For instance, for our Juhu store in Mumbai, had we waited for a mall to come, we would have never opened a store.

How was the experience with the Om Shanti Om line of clothing? Would you do more of such things in the future?

Om Shanti Om was a fantastic experience. It was a big win-win for us. The fact that the film was the biggest blockbuster of last year justified our association with it. We had predicted that we would sell about 5-6 crore of Om Shanti Om merchandise, and that is exactly how much we sold. About doing more of such things, I don't want to say no, but we are going to be very selective.