To Study the Marketing Mix of SHOPPER STOP a Summer Training Project Submitted in the Partial Fulfillment of the Requirement

To Study the Marketing Mix of SHOPPER STOP A Summer Training Project Submitted in the partial fulfillment of the requirement for the award of the Degree of Master of Business Administration 2012-2014

Submitted By: Under the Guidance of: Vineet Sharma Mr. Yashwant Kumar

BHARATI VIDYAPEETH UNIVERSITY, School of Distance Education, Academic Study Center – BVIMR, New Delhi An ISO 9001:2000 Certified Institute “A” Grade Accreditation by NAAC

Student Undertaking

This is to certify that I have completed the Summer Training Project titled The Marketing Mix of SHOPPER STOP under the guidance of Mr. Yashwant Kumar in the partial fulfillment of the requirement for the award of Executive Master of business administration of Bharati Vidyapeeth University, Pune. This is an original piece of work & I have not submitted it earlier elsewhere.

VINEET SHARMA

Preface

IT is designed in such a way that student can grasp maximum knowledge and can get practical exposure to the corporate world in minimum possible time. Business schools of today realize the importance of practical knowledge over the theoretical base. The research report is necessary as it provides an opportunity to the researcher in understanding the industry with special emphasis on the development of skills in analyzing and interpreting practical problems through the application of management theories and techniques. It is a new platform of learning through practical experience.

Acknowledgement

When we are trying hard to get down to preparing a project like project on research methodology after a tiring day at college at this time we need all the encouragement we can get. This encouragement is more effective than other that are given at another situation. It is very difficult to prepare a project almost when we are new for this experience. Without any help or guide it is not easy to achieve given target.

First and foremost, I express my deep sense of gratitude to Mr. Yashwant Kumar, His helping nature and his enthusiasm has been source of constant inspiration...

I am also very thankful to all the faculty members, the whole college staff for providing me with necessary facilities and support, essential for bringing out this work in a short time.

VINEET SHARMA

To Study the Marketing Mix of Shoppers Stop

Table of Contents

Chapter 1: Introduction (7-20)

1. about the Company 2. Environmental Scanning 3. Porters five forces model of competition –Michael Porter

Chapter 2: Research Methodology (21-26) 1. Statement of the Problem 2. Objectives & Scope of Study 3. Managerial usefulness of study 4. Type of Research and research Design 5. Data Collection Methods 6. Limitations of Study

Chapter 3: Conceptual Discussion (27-36) 1. Review of Literature 2. Current Issues 3. History and Development of Company and Industry 4. New Development of Company and Industry

Chapter 4: Data Analysis (37-50) 1. Methods and techniques of data analysis 2. Primary Data Analysis 3. Secondary Data Analysis

Chapter 5: Findings and Recommendations (51-53)

Chapter 6: Conclusions and Suggestions (54-56)

Bibliography (57)

Chapter 1

Introduction

1.About the Company Incorporated as a private limited company on June 16, 1997, we beacme a deemed public limited company on December 8, 1997. Pursuant to an amendment to the Companies Act in the year 2000, our Company was converted from a deemed public company to a full fledged public company with effect from October 6, 2003.Prior to incorporation two of our existing stores at Mumbai and Bangalore were run by a division of Ivory Properties & Hotels Limited (IPHL) under the brand named Shoppers' Stop. Soon after our incorporation, IPHL executed a conducting agreement with us dated November 3, 1997 giving us a right to participate in running the departmental stores which included the right to use (i) the Mumbai Shopper's Stop property (ii) the Bangalore Shoppers' Stop property (iii) the agreements and arrangements with various parties relating to purchases, sales, franchises and co-sponsorship (iv) the brands developed (v) the diverse modes of rendering services to the customers (vi) the data bank of Shopper's Stop, the membership of the First citizen's Club etc; (vii) the software, various systems and training programmes (viii)books and cassettes providing knowledge for retail trade, (ix) the business sport systems and (x) the names of the stores and logos of the stores.

This agreement was terminated and a fresh Conducting Agreement was executed with IPHL dated March 31, 2000.IPHL signed a Deed of Assignment dated March 31, 2000 with us for transferring the ownership of certain trademarks, trade names, goodwill and brand names in our favour known as SHOPPER' STOP (label), STUDIO KRT (label), STOP (label with color schemes)STOP(device), STOP(label), FIRSTCITIZENS'CLUB, BLUESBIZAAR, BLUES BIZARRE, BLUESBIZAR (word & label) BLUES BIZAAR (word & complete label) i(in-house brand), i(in-house brand), B (in-house brand).

Out of the various trademarks under which we presently market our in-house products only six are registered in our name. Three of the trademarks we presently market some of our in- house products are registered in the name of our Promoter, Ivory Properties and Hotels Pvt. Ltd. and applications are yet to be made to register them in the name of our Company. For the rest, applications for the registration of these trademarks in the name of our Company have been submitted to the relevant trademark authorities and are still pending with them.

We initially acquired 790 equity shares of Rs 100 each in UTL from some of the existing shareholders and increased our stake in the company to 1265 Equity Shares (25.3% of the equity capital) on March 23, 1999 at a purchase price of Rs.100 per share. UTL was a trading company, and was one of our suppliers for garments and accessories. We enhanced our stake in UTL to 100% in February 2000.

UTL has discontinued its trading operations from January 2003. UTL handles our distribution and logistic function since February 2000 and now operates through four distribution centers located in Mumbai, Bangalore, New Delhi and Kolkata.

Shoppers' Stop Services (India) Ltd was incorporated as our wholly owned subsidiary in March 2000 to provide shared services and consultation, in accounting and logistics operations. Currently, this subsidiary has limited operations.

Shoppers' Stop.Com (India) Ltd was incorporated in February 2000 as our wholly owned subsidiary to provide on-line shopping facilities to our customers. As this venture did not yield desired results, its operations were discontinued in February 2001.

Profound Readers' Choice Trading (India) Ltd was incorporated in November 1999 as our subsidiary and acquired `Crossword', a chain of books and music stores, from India Book House Ltd (IBHL) under trademark and style of Crossword, as a going concern by way of slump sale on March 31, 2000. The Crossword Division from IBHL was acquired at a purchase consideration of Rs.137.5 mn for the whole of the acquired business undertaking. The Deeds of Assignment between IBHL and Profound Readers' Choice Trading (India) Ltd were signed on March 31, 2000 & July 5, 2000 for assignment of trademarks of Crossword.

Profound Readers' Choice Trading (India) Ltd changed its name to Crossword Bookstores Ltd (Crossword) and has ICICI Trusteeship Services Ltd a/c ICICI Emerging Sectors Fund as it's equity investor holding 49% of its equity, and is governed by a separate shareholders' agreement.

Types and ownership pattern

Shareholding pattern - Shoppers Stop Ltd.

Holder's Name No of Shares % Share Holding

Promoters 56029674 67.83%

ForeignInstitutions 7972734 9.65%

NBanksMutualFunds 7878962 9.54%

OtherCompanies 5307176 6.42%

GeneralPublic 5294519 6.41%

ForeignNRI 78061 0.09%

Others 41408 0.05%

Organisational Structure

B.S.Nagesh

Customer Care Associate & Vice Chairman – Shoppers Stop Limited

Mr. B. S. Nagesh has been with Shoppers Stop Ltd since its inception in 1991. As Vice Chairman of Shoppers Stop Ltd, Mr. B.S. Nagesh continues to play the role of strategic advisor to the management of Shoppers Stop Ltd. Recognised as the pioneer of the retail boom in India, Mr. Nagesh was voted by Business India as one of the top 50 managers in India who will influence the Indian business scenario in the 21st century.

Mr.Govind Shrikhande

Customer Care Associate & Managing Director – Shoppers Stop Limited Mr. Govind Shrikhande has been with Shoppers Stop Ltd since April 2001. Mr. Shrikhande has now taken over the responsibility as The Managing Director of Shoppers Stop Ltd.

Mr. Salil Nair Customer Care Associate & Chief Operating Officer

Mr. Salil Nair had joined Shoppers Stop Ltd in 1994 in Retail Operations. Prior to that he had experience with Companies like Glaxo India Ltd and Carona Ltd in South India before moving to Mumbai.On the Academic front Mr. Salil Nair completed his post graduation in Physics from Meerut University.

During the last 17 years of his tenure with Shoppers stop he made significant contributions in the fields of Retail Operations, Buying and Merchandising and Store Design before being elevated to the position of Chief operating Officer.

He is responsible for transforming the Buying & Merchandising department into a Strategic one which has helped the organization considerable growth.

He has also been instrumental in creating a foundation of a Strong Value System within the organization. It is under his leadership that his team has gone beyond all imaginable levels of service creating moments of magic for customers. It is his constant Endeavour to be “Nothing But the Best”. He is also very actively involved in the “Think Green” campaign adopted by Shoppers Stop as a Corporate Social initiative.

This Company Profile will assists individual investors, managers and companies in evaluating opportunities, trends, market innovations, and selecting appropriate information solutions in order to make effective decisions. The report has been made after extensive research using the data available from reliable publications, trade associations and the companies‟ sources.The report elaborates on the company‟s business structure and operations, products and services. The report include strategic analysis that

13 intends to aid investors to find better prospects with the company and gain an insight into the corporate policies.

Production Layout

Recent Efforts Have Some Reconsidering Wal-Mart

Wal-Mart often inspires fervent opinions. Critics question its labor practices, and effect on local businesses. Proponents praise its low, low prices and the availability of affordable food and other staples. Recent studies suggest it might be time for critics to look at Wal-Mart in a more positive light. These days, the world's largest retailer works with local farmers to supply cheaper, more affordable food. And its sheer size allows it to drive positive changes in other areas, from energy to transportation.

Since Johnson stepped into his new role at JCPenney a number of well-documented events took place:

 JCPenney failed to communicate and then restructured its over-complex three-tier pricing strategy, and instead it reverted to a two-tier strategy (which seems to allow lots of exceptions for old Clearance practices)  JCPenney started an extensive format regeneration/remodeled its stores to create more of a specialty experience with a “store-within-a-store” (SWAS) model (roll-out started August 1st) with JCPenney partnering with brands including Loblaw‟s of Canada fame, apparel brand, Joe Fresh for one of the first SWAS installations

SWOT Analysis

1. It has strong domestic presence with 50+ stores in India 2. Shoppers stop has become highest benchmark for retail industry 3. Loyal customer base with more than 750,000 first citizen members 4.Increasing footfalls and conversion rates 5. Management team is strongly established as well Strength as skilled labor force

1. It has lesser promotional strategies on both ATL and BTL level compared to global leaders 2. It always follows low risk strategy in business or Weakness entering into new segment

1. Big opportunity to enter into new geographies nationally 2.Foreign players see it as preferred partner for making investment in India 4.It could enter into Hypercity -high retail value Opportunity category

1. Due to global slowdown consumers‟ purchase power has reduced for top high value brands 2.Increasing brand awareness among consumers Threats across all socio-economic classes

1.2.Environmental Scanning

TECHNOLOGICAL ENVIRONMENT

Focused on leveraging investment and upgrading and revamping existing technology. Deploying Warehouse Automation application along with the multi-purpose handheld devices to enhance efficiency in supply chain. Deployed Microsoft Technologies for reliable communication platform. Setting up a Disaster Recovery Plan for critical application systems.\

MARKETING ENVIRONMENT SOCIO-CULTURAL ENVIRONMENT

Changed from being a chain of retail stores to emerging as a fashion & lifestyle destination for the growing affluent middle class of India.

COMPETITIVE ENVIRONMENT

Has identified and decided to invest in next generation data warehousing and business intelligence solutions.

ECONOMIC ENVIRONMENT

Growth in the economy at 9% and hike in the salaries by 15%, consumption of goods increases. Increase in the consumer spending habit increases the number of consumers visiting the stores. Increase in the profit margins of the stores.

LEGAL ENVIRONMENT It is the set of rules and regulations to be abiding by law stimulating and surrounding the business is known as legal environment.

1.3 Porters five forces model of competition –Michael Porter

New Market Entrants, eg:

 entry ease/barriers  geographical factors  incumbents resistance  new entrant strategy  routes to market

Supplier Power, eg: Competitive Rivalry, Buyer Power, eg: eg:

 brand reputation  number and size of firms  buyer choice  industry size and trends  buyers size/number  geographical coverage  fixed v variable cost bases  change cost/frequency  product/service level quality  product/service ranges  product/service importance  differentiation, strategy  relationships with customers  volumes, JIT scheduling

 bidding processes/capabilities

Product and Technology Development, eg:

 alternatives price/quality  market distribution changes  fashion and trends  legislative effects

Michael Porter's famous Five Forces of Competitive Position model provides a simple perspective for assessing and analysing the competitive strength and position of a corporation or business organization. A free Five Forces diagram in MSWord is available here. (Porter's Five Forces diagram pdf here.)

American Michael Porter was born in 1947. After initially graduating in aeronautical engineering, Porter achieved an economics doctorate at Harvard, where he was subsequently awarded university professorship, a position he continues to fulfil at Harvard Business School. His research group is based at the Harvard Business School, and separately he co-founded with Mark Kramer the Foundation Strategy Group, 'a mission-driven social enterprise, dedicated to advancing the practice of philanthropy and corporate social investment, through consulting to foundations and corporations'. A prime example of someone operating at a self-actualization level if ever there was one.

After his earlier work on corporate strategy Porter extended the application of his ideas and theories to international economies and the competitive positioning of nations, as featured in his later books. In fact in 1985 Porter was appointed to President Ronald Reagan's Commission on Industrial Competitiveness, which marked the widening of his perspective to national economies. By the 1990's Porter had established a reputation as a strategy guru on the international speaking circuit second only to Tom Peters, and was among the world's highest earning academics.

PORTERS FIVE FORCE MODEL

Porter‟s Five force model includes 4 forces: * Potential Entrants(Threat Of Mobility) * Buyers(Buyer Power) * Substitutes(Threat Of Substitutes) * Suppliers(Supplier Power) * Industry Rivalry

Porter's five forces is a framework for the industry analysis and business strategy development developed by Michael E. Porter . It draws upon Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Three of Porter's five forces refer to competition from external sources. The remainders are internal threats. It is useful to use Porter's five forces in conjunction with SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats). Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally, requires a business unit to re-assess the marketplace given the overall change in industry information. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competencies, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models, have been able to make a return in excess of the industry average.

Chapter – 2

Research Methodology

2.1 Statement of the Problem:

To study the marketing mix of ShoppersStop

Category Definition

A product is seen as an item that satisfies what a consumer demands. It is a tangible good or an intangible service.Tangible products are those that have an independent physical existence. Typical examples of mass-produced, tangible objects are the motor car and the disposable razor. A less obvious but ubiquitous mass-produced service is a computer operating system.

Every product is subject to a life-cycle including a growth phase followed by a maturity phase

Product and finally an eventual period of decline as sales falls. Marketers must do careful research on how long the life cycle of the product they are marketing is likely to be and focus their attention on different challenges that arise as the product move.

The marketer must also consider the product mix. Marketers can expand the current product mix by increasing a certain product line's depth or by increasing the number of product lines. Marketers should consider how to position the product, how to exploit the brand, how to exploit the company's resources and how to configure the product mix so that each product complements the other. The marketer must also consider product development strategies.[3]

The amount a customer pays for the product. The price is very important as it determines the company's profit and hence, survival. Adjusting the price has a profound impact on the marketing strategy, and depending on the price elasticity of the product, often it will affect the demand and sales as well. The marketer should set a price that complements the other elements of the [3]

Price marketing mix.

When setting a price, the marketer must be aware of the customer perceived value for the product. Three basic pricing strategies are: market skimming pricing, market penetration pricing and neutral pricing. The 'reference value' (where the consumer refers to the prices of competing products) and the 'differential value' (the consumer's view of this product's attributes

versus the attributes of other products) must be taken into account.[3]

All of the methods of communication that a marketer may use to provide information to different parties about the product. Promotion comprises elements such as: advertising, public relations, sales organisation and sales promotion.[3]

Advertising covers any communication that is paid for, from cinema commercials, radio and

Promotion Internet advertisements through print media and billboards. Public relations is where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events. Word-of-mouth is any apparently informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word of mouth momentum. Sales staff often plays an important role in word of mouth and public relations (see 'product' above)

2.2 Objectives and Scope of Study

 To study the marketing mix of Shoppers Stop

The objective study of marketing is on suppliers side promoting sales and market the products. Both short term and long term market, hence the 4ps as per Philip Kotlers. Corporate decision on roi on products developed and from economics study to reach a level of equilibrium at which quantity of product that can be sold at what cost. For product differentiation and company decision to produce, and investment decision, hence the objective study is on technical feasibility and economic viability of the product and the unit.

Scope of Study

The scope of study is within the Delhi/NCR Region.

2.3 Managerial usefulness of study

This Project will help the manager to decide on marketing study.

This Project will help the manager to fill the gaps for the company.

2.4 Types of Research and Research Design

Types of Research

1. Descriptive numerical data gathered through tests, surveys, observations, interviews variables are not manipulated but are measured as they occur subgroups may be compared on some measure two or more variables of a group may be correlate does not attempt to identify cause of differences or relationships, just if they exist.

2. Experimental at least one variable is manipulated and its effects are measured subjects randomly assigned to experimental treatment and control groups who are treated thesame except for the treatment variable ‐determines cause and effect (when intact groups are used it's called quasi‐experimental).

3. Ex post facto/Causal comparative (What was the possible cause?) identifies an effect that has already occurred and attempts to infer cause a treatment variable (alleged cause) is identified (but not manipulated) and effects are measured groups exposed to the treatment variable are compared to gro ups who are not identification of cause can be called into question because group s were not randomly assigned and other extraneous variables were not controlled.

4. Historical (What was the situation?) description of past events,problems, issues, facts data gathered from written or oral descriptions of past events, artifacts, etc.‐ describes what was in an attempt to reconstruct the past involves much interpretati on of events and its influence on the present.

5. Ethnographic in‐depth analytical description of educational systems, processes, and phenomena w ithin a specific context based on detailed observations and interviews detailed exa mination of a single group, individual, situation, or site is called a case study.

Research designs are classified into two categories: exploratory and descriptive .

1. Exploratory Research: is most commonly unstructured, informal research that is undertaken to gain background information about the general nature of the research problem. Exploratory research is systematic and flexible and allows the researcher to investigate whatever sources he or she desires. Such research may consist of going to the library and reading published secondary data; of asking questions, salespersons acquaintances for their opinions about a company, its products and services, and prices; or of simply observing everyday company practices. 2. Descriptive Research: which provides answers to questions such as who, what, where, where and how, as they are related to the research problem. Who- may be defined as a firms (competitors) customers. What- defined as brands, brands, sizes that are being purchased. Where- places where customers are purchasing products. Why- we cannot conclusively answer the question of why using descriptive research.

2.5 Data Collection Methods The data is collected from the Delhi/NCR region.

2.6 Limitations of the Study The Data was collected from the Delhi/NCR Region, this study was finished in Delhi/NCR region and the information given will further have an impact in North India.

Chapter – 3

Conceptual Discussion

3.1 Review of Literature

The marketing mix management paradigm has dominated marketing thought, research and practice since it was introduced almost 40 years ago. Today, this paradigm is beginning to lose its position. New approaches have been emerging in marketing research. The globalization of business and the evolving recognition of the importance of customer retention and market economies and of customer relationship economics, among other trends, reinforce the change in mainstream marketing. Relationship building and management, or what has been labeled relationship marketing, is one leading new approach to marketing which eventually has entered the marketing literature. A paradigm shift is clearly under way. In services marketing, especially in Europe and Australia but to some extent also in North America, and in industrial marketing, especially in Europe, this paradigm shift has already taken place. Books published on services marketing and on industrial marketing as well as major research reports published are based on the relationship marketing paradigm. A major shift in the perception of the fundamentals of marketing is taking place. The shift is so dramatic that it can, no doubt, be described as a paradigm shift. Marketing researchers have been passionately convinced about the paradigmatic nature of marketing mix management and the Four Ps model. To challenge marketing mix management as the basic foundation for all marketing thinking has been as heretical as it was for Copernicus to proclaim that the earth moved The purpose of this report is to discuss the nature and consequences of the dominating marketing paradigm of today, marketing mix management of the managerial school and how evolving trends in business and modern research into, for example, industrial marketing, services marketing and customer relationship economics demand a relationship- oriented approach to marketing. Relationship building and management are found to be an underlying facet in the research into these areas. Relationship marketing is suggested as one new marketing paradigm, and a number of consequences for marketing and management of a relationship-type marketing strategy is discussed based on the notion of a marketing strategy continuum. Finally, the possibility of building a general theory of marketing based on the relationship approach is examined. A further discussion of the nature of the relationship marketing paradigm is, however, beyond the scope of this report.

Marketing mix and the four Ps

Marketing, the way most textbooks treat it today, was introduced around 1960. The concept of the marketing mix and the Four Ps of marketing – product, price, place and promotion – entered the marketing textbooks at that time. Quickly they also became treated as the unchallenged basic model of marketing, so totally overpowering previous models and approaches, such as, for example, the organic functionalist approach advocated by Alderson as well as other systems-oriented approaches and parameter theory developed by the Copenhagen School in Europe that these are hardly remembered, even with a footnote, in most textbooks of today. Earlier approaches, such as the commodity functional geography-related regional and institutional schools have suffered a similar fate. Only a few models from these approaches have survived. The American Marketing Association, in its most recent definition, states that “marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchange and satisfy individual and organizational objectives” Eventually the Four Ps of the marketing mix became an indisputable paradigm in academic research, the validity of which was taken for granted For most marketing researchers in large parts of the academic world it seems to remain the marketing truth even today. Kent refers to the Four Ps of the marketing mix as “the holy quadruple … of the marketing faith … written in tablets of stone” .For an academic researcher looking for tenure and promotion, to question it has been to stick out his or her neck too far. Prospective authors of textbooks, who suggest another organization than the Four Ps solution for their books, are quickly corrected by most publishers. As a result, empirical studies of what the key marketing variables are, and how they are perceived and used by marketing managers, have been neglected. Moreover, structure has been vastly favoured over process considerations.

References

1. The marketing mix management paradigm with its most central model, the Four Ps model, is frequently treated as if it always has existed and as if there have not been any other approaches to marketing. In a chapter named “Quo vadis, marketing?”[2] of an anthology, we [ 334 ] Christian Grönroos Keynote paper: From marketing mix to relationship marketing – towards a paradigm shift in marketing Management Decision 35/4 [1997] 322–339 have discussed the background of the marketing mix and other theoretical approaches to marketing which existed at the time when the marketing mix was introduced. Sheth et al.[3] provide an extensive overview of the evolution of marketing thought. However, as they only observe the development in North America (out of well over 500 publications in their very elaborate reference list, only six are published outside North America, and five of these are written by Americans), some important contributions are missing.

3.2 Current Issues

AB Money raises target price of Shoppers Stop to Rs 436 Aditya Birla Money has retained their "Neutral" rating to Shoppers Stop (SSL) with a revised fair value of Rs 436.7 per share. The company is the quality play on organised retail story of India and post aggressive capex phase in last 2 yrs, business is ready to reap benefits with likely healthy growth in profitability over FY13E-FY15E.Brokerage house Aditya Birla Money has retained their "Neutral" rating on Shoppers Stop (SSL) and raised fair value of the company to Rs 436.7 per share from Rs 418 earlier. The research firm belives that Shopper's Stop is a quality play on organised retail story of India and post aggressive capex phase in last 2 years, business is ready to reap benefits with likely healthy growth in profitability over financial year 2013-2015 (FY13E-FY15E) period.

"Shoppers Stop (SSL), consumer sentiments is much better as compared to that of six months ago and we believe, going forward, it is likely to improve further, led by govt effort to drive the growth of Indian economy. Going forward, we expect SSS to be in the range of 7-8 percent. In addition, full ramp-up of stores opened during FY12-FY13 period will aid in healthy topline growth coupled with margin expansion during FY14E- FY16E period. We expect EBITDA margin to gradually expand to 5.7 percent and 6.2 percent in FY14E and FY15E respectively from 5.2 percent in FY13, said the AB Money note."

Mumbai, Jan 29 (PTI) Retail chain Shoppers Stop today reported a 11.4 per cent decline in standalone net profit at Rs 17.09 crore for the third quarter ended December 31, 2012. The company had posted standalone net profit of Rs 19.29 crore in the corresponding quarter last fiscal. Its gross retail turnover grew 20 per cent at Rs 685.3 crores for the quarter against Rs 569.8 crore year-ago. "This year, the festive season and marriage season came together in the third quarter which gave a boost to overall growth. "The steady flow of footfalls has kept the registers ringing and delivered double-digit same- store-sales of 12.5 per cent," company\'s Customer Care Associate and Managing Director Govind Shrikhande said in a statement. During the quarter SSL added one new Shoppers Stop store at Bengaluru, one Crossword store at Mumbai, and three M.A.C Stores at Gurgaon, Hyderabad and Mumbai and one Clinique store at Gurgaon.

3.3 History and Development of Company and Industry

Shoppers Stop Ltd is a professionally managed and systems driven organisation promoted by the K Raheja Corp Group (Chandru L Raheja Group), one of the leading

31 players in the country in the business of real estate development and hotels.

Pioneer of modern retail in India, Shoppers Stop Ltd has been instrumental in bringing about retail revolution in India. Since it opened it‟s doors, the chain has become the highest benchmark for the Indian retail industry. Since its inception in 1991, Shoppers

Stop Ltd has introduced various retail formats in India. Apart from the flagship business of department stores, there are also specialty stores for books, home decor and maternity care & infant care.

Symbolizing the era of global recognition for Indian retailers, Shoppers Stop Ltd is the only Indian retailer to be shortlisted in the Retail Advertising Award category for its in- store marketing at the retail industry‟s globally recognized event- World Retail

Congress. Shoppers Stop had been named the „Emerging Market Retailer of the Year‟ at the prestigious World Retail Awards, which took place on 10th April '08, in Barcelona.

The World Retail Congress is the most influential and highest profile gathering of the retail industry across all retail segments across the globe.

Shoppers Stop is India‟s largest retail chain of large format department stores with 51 stores in 22 cities across the country occupying an aggregate area of over 2.7 million square feet with an offering of more than 400 finest international and national brands.

India‟s premier fashion and lifestyle destination, Shoppers Stop currently has stores in

Ahmedabad, Aurangabad, Amritsar, Bangalore (6 stores), Bhopal, Chennai (3 stores),

Delhi (5 stores), Durgapur, Gurgaon (2 stores), Ghaziabad, Hyderabad (4 stores),

Indore, Jaipur (2 stores), Kolkata (3 stores), Latur, Lucknow, Mumbai (9 stores), Mysore,

Noida, Pune (4 stores), Siliguri and Vijayawada. Shoppers Stop is also the only Indian member of the Inter Continental Group of

Department Stores (IGDS) along with 29 other experienced retailers from all over the world. This has helped the company gain insight into the new and emerging practices

32 followed internationally.

3.4 New Development of Company and Industry

Expansion and Development of Shoppers Stop.

Year 1991 – Opened the first store at Andheri, a suburb at Mumbai, selling only menswear. Year 1992 – Ladies wear was introduced. Year 1993 – Added children‟s and Non-apparel sections. Year 1994 – Loyalty Program titles First Citizen was launched. Year 1995 – Opened the second store in Bangalore. Year 1997 – Launched the co-branded credit card for the loyalty members in association with HSBC and Shoppers Stop incorporated as a body corporate. Year 1998 – Opened the third store in Hyderabad. Year 1999 – Opened the fourth and fifth stores in Jaipur and Delhi. Year 2000 – Opened the six and seventh stores in Chennai and Chembur -Mumbai. Year 2001 – Opened the eight and ninth stores in Pune and Bandra. Year 2002 – Company‟s initial Public Offering oversubscribed overall by 17.25 times. „Crossword‟ becomes a wholly owned subsidiary of the company. Year 2006 – Opened the twenty first store in Mumbai and twenty second in Lucknow. Year 2007 – Signed a 50:50 Joint Venture with the Nuance Group for Airport Retailing. Year 2008 – Shoppers Stop was awarded the „Emerging market retailer of the Year‟ at the World Retail congress in April 2008. Year 2009 – Pioneered mascot licensing in the categories through the exclusive tie-up for certain products with Vodafone for their popular brand mascot Zoozoo. Year 2010 – Expanding the stores in new cities and also adding stores in existing cities taking the store tally to 36 stores. Year 2011 – Shoppers Stop operations expanded to 49 stores in 22 cities. Year 2012 - Shoppers Stop operations expanded to 55 stores in 24 cities. Year 2013 - Shoppers Stop operations expanded to 65 stores in 28 cities. Year 2014 - Shoppers Stop operations expanded to 67 stores in 32 cities.

Founded in October 1991 by K. Raheja Corp., the Shoppers Stop retail group operates a chain of 29 department stores and five hypermarkets under the brand name

HyperCITY in 12 cities across India. Listed on the Bombay Stock Exchange, the retail group also runs three stores under the Homestop brand and several stores catering for niche demand under brands such as Mothercare and Crossword. The organization has more than 5,000 employees.

In mid-2007, Shoppers Stop faced more than 25 of its servers reaching end-of-life, while management also wanted to reduce datacenter power, cooling and real estate requirements. The retail group was planning to consolidate its IT infrastructure from three sites to one co-located datacenter to lower costs and improve manageability.

“The consolidation program gave us an opportunity to refresh our infrastructure and we were aware of what virtualization could deliver after monitoring the technology for more than three years,” said Gopakumar Panicker, Senior Manager at Shoppers

Stop.

After conducting a thorough evaluation, Shoppers Stop concluded that VMware® provided the only “fully evolved” virtualization product suite in the market. “As we provide shared infrastructure services to multiple business units within Shoppers

Stop, we receive a large number of server provisioning requests,” said Panicker. “It was important we implemented an infrastructure that could allow us to meet these needs quickly and reliably. VMware fulfilled the brief exceptionally well.”

Shoppers Stop engaged VMware Partner Sunfire Technologies Pvt Ltd to install

VMware vSphere 4 and is running about 70 virtual machines on four host servers supported by a networked storage system. “Sunfire performed admirably, with their consultants demonstrating strong technical ability and a deep understanding of

VMware‟s products,” said Panicker. With the new infrastructure fully established,

Shoppers Stop now plans to extend virtualization to servers located on-site at stores and provide disaster recovery for critical applications.

Results

• Achieved a 16:1 server consolidation ratio

• Operating with a 100:2 server to administrator ratio

• Improved CPU utilization by 70% in virtualization cluster

• Reduced development times for new applications by 70%

• Lowered power and cooling costs by 50%

• Cut required rack space by 60%

Chapter – 4

Data Analysis

3.2 Methods and techniques of data analysis.

Performance Analysis of the Company

Shopper's Stop Ltd, a Raheja Group company, is one of the largest retailing companies in India. The company has more than 200 stores in 23 cities with total area of more than 4.9 mn. sq. ft. Around ~37 million people visited shopper stop‟s stores in FY12 with conversion ratio of ~23%. Shoppers Stop‟s around 2.5 mn loyal customers (first citizen members) contribute around 70% to the total sales of Shopper Stop. Apparels segment is the major contributor (around 62%) to the total sales of the company. The table given below explains the business model of the company.

10 YEAR X-RAY Analysis:

The valuation of Shopper‟s Stop Ltd has been done on a consolidated basis considering that its subsidiaries account for around 30% of its net sales on a consolidated basis.

The financial performance of the company has been average over the last five years. Though the company has grown its net sales at an impressive rate of ~26% over the last 5 years, but the company has been unable to create value for its share holders. The net sales growth was largely driven by the consistent increase in Shopper‟s Stop stores and acquisitions of „Hypercity‟, a retail chain. Retail industry is a high growth and very competitive industry in India. Therefore, to increase the sales growth, the company couldn‟t pass on the increased raw material cost and fixed cost (rising real estate, employee and electricity cost) to end customers. In addition, Hypercity and Crossword are loss making businesses of the company. As a result of that, the operating profit margin (OPM) and net profit margins (NPM) have been affected badly over the years. Therefore, EPS growth has been very erratic and inconsistent over the last five years.

However, the working capital has improved over the last couple of years, thus posted positive cash flow despite lower profits. Therefore, working capital and net working capital days have seen a declining trend over the few years. Also, the company has reduced its debt level over the last couple of years, thus its net debt to equity ratio stands at comfortable level of ~0.5.With low & inconsistent margins and high investment, the company has been unable to create value for its share holders. ROE and ROIC have been very inconsistent and below to its cost of capital in most of the years. It indicates that the management of the company couldn‟t utilize its fund very efficiently.

Thus, considering above points we can say that the 10 YEAR X-RAY of Shopper’s Stop Ltd. is Red (Not Good).

Growth rate

SWOT Analysis of the Company

SWOT Analysis

1. It has lesser promotional strategies on both ATL and BTL level compared to global leaders 2. It always follows low risk strategy in business or Weakness entering into new segment

1. Due to global slowdown consumers‟ purchase power has reduced for top high value brands 2.Increasing brand awareness among consumers Threats across all socio-economic classes

4.3 Secondary Data Analysis.

Analysis Questionnaire

1. What are the strengths and weaknesses of company ?

SWOT Analysis

1. It has lesser promotional strategies on both ATL and BTL level compared to global leaders 2. It always follows low risk strategy in business or Weakness entering into new segment

1. Due to global slowdown consumers‟ purchase power has reduced for top high value brands 2.Increasing brand awareness among consumers Threats across all socio-economic classes

2. What is the performance analysis of company ?

Shopper's Stop Ltd, a Raheja Group company, is one of the largest retailing

companies in India. The company has more than 200 stores in 23 cities with total

area of more than 4.9 mn. sq. ft. Around ~37 million people visited shopper stop‟s

stores in FY12 with conversion ratio of ~23%. Shoppers Stop‟s around 2.5 mn loyal

customers (first citizen members) contribute around 70% to the total sales of

Shopper Stop. Apparels segment is the major contributor (around 62%) to the total

sales of the company. The table given below explains the business model of the

company.

3. What is the growth rate of company ?

4.What is the reason for expansion?

Planning to add around 20 stores across its brands during the period

Mumbai-based Shopper's Stop Ltd, a premier department store chain promoted by the K Raheja Corp Group, is planning to invest Rs 125 crore this year, to expand its various brands of retail stores. The company is planning to add around 20 stores across its brands during the period, said a senior executive from the company.

The company is planning to expand its department stores with around 8-10 more outlets, the large format hyper market HyperCity with 2-3 stores and its premier home solution chain HomeShop with another 2-3 shops and five speciality stores across its other brands.

"We will be investing Rs 125 crore this year for expansion. The investment would be from internal accruals and we can always arrange for debt if it requires," said Govind Shrikhande, managing director and customer care associate, Shoppers Stop Ltd. He was in Chennai to open the 13th HomeStop outlet in the city.

The compay would focus on tier I cities, though it is expanding into the cities like Surat, Agra and Thane, where it expects more customer attraction. It is opening the 56th Shoppers Stop and 14th HomeStop, in Chandigarh on Saturday.

Shoppers Stop Ltd also has 12 HyperCity outlets, a business which the company is bringing in changes to make it profitable. The format would be Ebitda (Earnings Before Interest, Taxes, Depreciation, and Amortization) positive in store level in next two years, he said.

The company is implementing right sizing of the stores, downsizing some of the stores which have larger space and increasing the share of fasion products in the mix. The fashion products share has been increased from five% earlier to 9.5% at present and is expected to reach 15% in future. The margin on fashion products, which is higher at 19% is expected to go up to 21% in next 24 months, said Shirkhande.

At present the department store business has around 16% private label products, while in home segment, it is 25%. This is expected to grow to 18% and 28%, respectively, in the next two years.

Shoppers Stop, on a consolidated basis, has posted a revenue of Rs 2,400 crore in the third quarter of the fiscal year ended December 31, 2012, and it is expected to close at around Rs 3,000 crore by the end of March 31, 2013, for the period which the results are yet to be announced. The projects, which include the fourth terminal at the JNPT and Chennai Port's mega container terminal, will augment the capacity by 280 mtpa

4. Discuss the industry analysis of company?

Industry Overview – (Growth rate of Industry, Contribution to GDP

*Indian Retail Market Share:30%ofGDP

*Share of retail in private consumption:53.3%

*Total retail market:Rs.1,948,916cr.

*Organized retail market:Rs.126,680cr.(6.5%oftotalmarket)

*Growth rate of organized retail:17.39%YOY

Looking at the financial performance of retail players, namely Trent and Shoppers Stop in September 2012 quarter, one can conclude that it is better to grow at a modest rate and maintain profitability than being aggressive, especially in the current stressed environment. While Shoppers Stop reported better growth of 16.6 per cent in standalone sales (accounted for 70 per cent of its consolidated sales in 2011-12) compared to Trent‟s 1.1 per cent, the former‟s profitability was impacted.

Its operating profit and net profit declined 26 per cent and 67 per cent, respectively mainly due to higher operating expenses (namely lease rentals, which shot up 27 per cent). Secondly, interest and depreciation costs jumped 35 per cent and 62 per cent to Rs 7.7 crore and Rs 14.3 crore, respectively. Part of these can be attributed to the company opening four new stores. On a consolidated basis, Shoppers Stop's net retail sales grew 13.6 per cent year-on-year to Rs 848 crore in September 2012 quarter while it incurred a net loss of Rs 5.6 crore compared to a profit of Rs 10.2 crore in the same quarter last year.

On the other hand, Trent reported an operating profit compared to a loss in same quarter last year and net profit surged 164 per cent as the company substantially brought down its advertising to sales expenses from 8.1 per cent in Q2‟FY12 to 3.3 per cent in Q2‟FY13. Also, while the company did not open any new store in the quarter, it had also earlier discontinued some non-profitable operations, which added to margins. Thus, the September 2012 quarter saw the company report an operating profit (excluding other income) of Rs 4.3 crore (loss of Rs 7.4 crore in year ago quarter). Given the company‟s focus on improving profitability, analysts expect margins to improve going ahead. Historically, the company‟s other income has been the key driver of profits, but with core retail business doing well it is a positive sign.

Despite diverse financial performance, market punished both the stocks. Going

ahead, Shoppers management says there is good traction in October sales, which

if it continues could lead to 8-10 per cent Like-to-Like sales growth in December

quarter (and 7 per cent for FY13). While the gains of festival sales (and expansion

for Shoppers Stop) will reflect in the current quarter for both the companies,

analysts, however, feel Trent seems to be better placed than Shoppers Stop going

ahead at least given the current stressed environment.

Says Hiral Sanghvi, analyst, Dalal Broacha Stock Broking, “There has been a significant improvement in the Trent's performance on a year-on-year basis. We continue to remain positive on the long term business prospects of the company.

We expect the company to post operating margins of 6-7 per cent in the second half of FY13, on the back of higher sales growth due to festive season and expected lower advertisement costs."

However, the outlook for Shoppers Stop continues to be grim. Says Abneesh Roy, analyst, Edelweiss Securities, “We expect cost pressures to continue due to rapid expansion (four more new stores to be added in FY13) and low pricing power due to slowdown in discretionary spend. We remain concerned on the slowdown in sales in HyperCity."

Chapter 5

Findings

The research findings suggest that Mumbai-based Shopper's Stop Ltd, a premier department store chain promoted by the K Raheja Corp Group, is planning to invest Rs 125 crore this year, to expand its various brands of retail stores. The company is planning to add around 20 stores across its brands during the period, said a senior executive from the company.

The company is implementing right sizing of the stores, downsizing some of the stores

49 which have larger space and increasing the share of fasion products in the mix. The fashion products share has been increased from five% earlier to 9.5% at present and is expected to reach 15% in future. The margin on fashion products, which is higher at 19% is expected to go up to 21% in next 24 months, said Shirkhande.

At present the department store business has around 16% private label products, while in home segment, it is 25%. This is expected to grow to 18% and 28%, respectively, in the next two years.

Chapter 6 Conclusions and Suggestions

Conclusions and Suggestions

Most important factors that a customer consider while making a hypermarket as a shopping destination are price factor which explains 26% variance, product- 18.3%, time factor- 17.8%, entertainment- 16.4%. Loyalty program is in critical area and needs the immediate attention because it is high on expectation and low on performance

Factors which are in the moderate area of improvement are Discounts, Variety of merchandise, Quality of apparel, Billing, Display, Parking facility, employee service, cafeteria.Values for money, Variety in price are the strengths of Vishal Megamart while Proximity to home performance is at par with the expectation levelsMajority of customers visiting vishal megamart fall in the age group of 18-40 which is 70 % Majority of customers fall in the income group of 10000-20000 which is 48%. Next income group is 20000-30000 which is 22.5%. Majority of customers 89.5% are buying monthly. Thus the frequency is good to moderate.

From the finding it is evident that 51% customers probably would not recommend the company to others although 80% claims that they will repurchase. These customers are satisfied but not loyal to the company. Even 15% say that they would not visit other stores but also none of the respondent said that they would definitely recommend the company to others. Thus we cannot say that these 15% are loyal customers.

Visual Merchandising Change in the store leads to increase of the secondary sales, which proves the effectiveness of Visual Merchandising. Hence VM Concepts and Standards should be followed seriously.

As the Secondary Sales Data shows the positive effect of Bag and Voucher promo, we can conclude how important it is to keep offering such promotional schemes. Update of the market is also required to choose best of the scheme for the specific period.

Customer feedback also required to judge the success of a promo. It is beneficial to fill the gap to meet customer expectations.

We could see that top ten sellers contributes 20 to 40 percent of the business sales.Hence inventory check is required every week so that refill orders could reach the store on time without hampering the sales.

As we analysed in the target sheet that there is a gap, which could be filled by additional orders left for primary sales. Hence Targets Sheets are really important to keep a track of where we are moving and where we are facing shortfalls, a corrective plan will help in such cases.

Standard operating procedure are really important for franchisee/distributors to understand, so that loses can be controlled by keeping standardize formats.

Apart from that, the Loyalty program should be employed in the stores of RON to Boost Sales.

Bibliography http://www.slideshare.net/pratikvartak/shoppers-stop-2312484 www.shoppersstop.com/‎ http://en.wikipedia.org/wiki/Shoppers_Stop http://www.moneycontrol.com/india/stockpricequote/retail/shoppersstop/SS51 http://economictimes.indiatimes.com/shopper's-stop-ltd/stocks/companyid-2646.cms http://profit.ndtv.com/stock/shoppers-stop-ltd_shoperstop http://corporate.shoppersstop.com/corporate/history.aspx

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