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INTRODUCTION:
Shoppers’ Stop (SS) is the leading department store company in India. It has
built robust management systems to capitalize on the growth potential in the
organized retail space, particularly the department store segment. However,
the stock has priced in the bulk of its upside potential leaving little room for
positive surprise, in our view. We recommend an Equal-weight rating on the
stock with a target price of Rs 691.

Shoppers’ Stop enjoys a unique advantage of having a strong presence in

the niche department store segment, which is likely to face limited
competition from both foreign and domestic players. In our view, income
elasticity in this business segment is high, and as India’s per capita incomes
grows, Shoppers’ Stop should capitalize on its growth potential. The
company has a strong, loyal customer base, relatively high earnings visibility
and low business risk, in our view. Efficient business systems,
better/standard companywide business practices and a balanced portfolio
lowers Shoppers’ Stop’s business risk.

Shoppers’ Stop plans to enter new segments such as home improvement

and hypermarkets (not captured in our earnings estimates). These can give
up further upside to the stock if successful.

Shoppers' Stop was the first to redefine shopping experience and creating a
niche for itself in the service industry. As India's first specialty chain with
outlets in Mumbai, Bangalore, Delhi, Hyderabad, Jaipur and Chennai,
Shoppers' Stop offers a complete range of garments and accessories for the
entire family. More than 25,000 customers walk into Shoppers Stop everyday
to feel the experience of shopping. The first store to be opened in India was
in Andheri, Mumbai. The initiative of this store was taken by B. S. Nagesh at
a time when the concept of retail industry was just coming into the market.

As on today, the current investors in Shoppers’ Stop are ICICI, IL&FS

Investments and Zodiac clothing. Their combined shareholding in Shoppers
Stop is 19% while79% is held by Raheja group. The balance 2% is held by
employees.

Given the 30% growth predicted in organized retail and Shoppers’ Stop
Limited’s retail expansion plans, the company expects to record a revenue
CAGR of 31.6% on a consolidated basis over the next 3 years. The stock is
currently trading at 58x our FY07E EPS of Rs.10 and 41x FY08E EPS of Rs.14.
We estimate the DCF value of the company at Rs691. Since the stock is
trading at around Rs660 it leaves a limited upside of 4.69 %.

HISTORY:
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"The tapestry of history has no point at which you can cut it and leave the
design intelligible."

The foundation of Shoppers' Stop was laid on October 27, 1991 by the K.
Raheja Corporation group of companies. One of India's biggest hospitality
and real estate players, the Group crossed yet another milestone with its
lifestyle venture-Shoppers' Stop. With its immense expertise in the service
industry and creditability, Shoppers' Stop today boasts of 10 retail outlets
across the country and is planning to spread its wings with futuristic
expansion plans to meet the challenges of the retail industry. A benchmark
for the Indian retail industry to follow, Shoppers' Stop has progressed from a
single brand shop to a Fashion & Lifestyle store for the family. Shoppers' Stop
is a household name, known for its superior quality products, services and
above all,a complete shopping experience.

A glance at Shoppers Stop’s history –

Year
1991 Opened the 1st Store at Andheri(Mumbai), selling only
Menswear.
1992 Introduced Ladieswear.
1993 Added Children’s and non-apparel section.
1994 Loyalty programme titled First Citizen was launched.
1995 Opened the 2nd store in Bangaluru.
1997 Launched their co-branded credit card for their loyalty
members in association with HSBC.
1998 Opened the 3rd store in Hyderabad.
1999 Implemented JDA Retail ERP(a global leader in retail ERP
package).
Opened their 4th & 5th stores in Jaiur and Delhi.
2000 Opened the 6th & 7th stores at Chennai & Chembur,Mumbai.
Acquired Crossword- India’s leading retail Book chain.
2001 Opened 8th & 9th stores in Pune & Bandra.
2002 Opened the 10th store in Kandiveli (Mumbai).
2003 Opened the 11th, 12th & 13th stores in Mulund west (Mumbai),
Gurgaon, Kolkata.
2004 Opened the 14th, 15th & 16th stores in Malad west (Mumbai),
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Kolkata & Bangaluru.

2005 Opened the 17th, 18th, 19th & 20th stores in Pune, Juhu (Mumbai),
Bangaluru & Ghaziabad.
Launched M.A.C & Homestop.
2006 Opened the 21st & 22nd stores in Mumbai & Lucknow.
Launched Mothercare in India and the F&B outlets Brio & Desi
Caf.
Bought 45% of Timezone in India.
2007 Signed a 50:50 joint venture with the nuance group for Airport
Retailing.
Signed for MoU with the Home Retail Group of UK to enter into a
franchise arrangement for the Argos Formats of Catalogue &
Internet Retailing.

BACKGROUND:
Shoppers’ Stop is promoted by the K. Raheja Corporate Group, one of leading
players in real estate development and hotels. Shoppers’ Stop has
progressed from being a single brand shop to a family orientated fashion and
lifestyle store. Shoppers’ Stop operates under the departmental store format,
and was one of the pioneers of the large format stores in India. Shoppers’
Stop has created a new business unit to manage its specialty businesses like
Crossword, Mother-care, F&B business and MAC. SS started in 1991 with its
first store in Andheri, Mumbai. With a Gross Retail Turnover of Rs. 8996
million, Shopper's Stop has become the highest benchmark for the Indian
Retail Industry.

Shopper’s Stop flagship store

Shopper’s Stop flagship store has 20 stores with just under a 1 million square
feet spread across top 10 cities. Apparel contributes around 60% of sales,
while home, leather accessories, watches, jewellery and others forming the
non apparels segment. SS has a private label program that contributes
around 19-20% of sales.

First Citizen Program

Shoppers’ Stop first citizen program is a membership program where
customers pay Rs150 to become a member and avail value added benefits.

Business 2 Business website

S.S has around 400 vendors supplying around 450brands. Most of the
vendors are connected to S.S B2B site. Each vendor can check the stocks
and movement of his merchandise. They can track which product is selling
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best in which city and which one is not. The vendor need not call SS for
information when all that he wants becomes available by the click of a
mouse.
Realizing the role of IT way back in 1991, Shoppers' Stop was among the
first few retailers to use scanners and barcodes and completely
computerized its operations. Today it is one of the few stores in India to have
retail ERP in place which has now been integrated with Oracle Financials
and the Arthur Planning System, the best retail planning system in the
world. With the help of the ERP, they are able to replicate stores, open new
stores faster and get information about merchandise and customers online,
which reduces the turnaround time in taking quick decision. Shoppers' Stop
has also set up a WAN system to link all units and distribution centers and
facilitating seamless operations across all the outlets.

HOME Venture– Good Potential

Shoppers Stop has recently ventured into the home furnishing segment
through its HOME venture stores.

Experimenting with the Hypermarket Segment

SS’s group company Rainbow Retail Private Ltd set up the first hypermarket
store has opened in Mumbai with 120,000 sq ft of retailing space. It plans to
have 7-8 stores operational by F08. Apart from these Shoppers’ stop is also
present in the books segment through Crossword chain of stores. Shoppers’
Stop tied up with
Mothercare through the franchise route, thus giving Shoppers’ Stop an
advantage of synergy.

Values:
The following are the values of Shoppers Stop. They say,
1. “We shall not take what is not ours.”
2. “The Obligation to Dissent (against a viewpoint that is not
acceptable).”
3. “We shall have an environment conducive to openness.”
4. “We shall believe in innovation.”
5. “We shall have an environment conducive to development.”
6. “We shall have the willingness to apologise and/or forgive.”
7. “We shall respect our customer's rights.”
8. “We shall respect our customer's rights.”
9. “We shall be fair.”
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SHOPS
Shoppers Stop's sister stores are:

Crossword Bookstores is the largest chain of bookstores in India with 52

branches. Shoppers Stop acquired 100 per cent stake in bookstore chain
Crossword. Crossword is positioned as a lifestyle bookstore with their
spacious, well laid out stores which encourages customers ease in browsing
through the merchandise of books, music, stationary and toys.

HomeStop is premium home furnishings home concept store, which offers

products in home decor, furniture and accessories, bath accessories,
bedroom furnishings, mattresses, draperies, carpets, modular kitchens and
health equipment.

Brio has 20 outlets in select cities. Café Coffee Day (CCD), the retail division
of Amalgamated Bean Coffee Trading (ABCTL), has signed an MoU with
Shoppers Stop to run its BRIO outlets.

Desi Café and their operations have been taken over by Café Coffee
Day (CCD), the retail division of Amalgamated Bean Coffee Trading (ABCTL),
has signed an MoU with Shoppers Stop to run its Desi Café outlets.

HyperCity provides customers a wide variety of range of products for

shopping in a large and modern retail environment. It offers a contemporary
range of products, sourced from both local and international markets. The
product range covers: Foods and Grocery, Homeware, Home Entertainment,
Hi-Tech, Appliances, Furniture, Sports, Toys & Fashion.

M.A.C. and Shopper’s Stop Ltd. entered into a non exclusive retail
agreement with cosmetics major Estee Lauder to open up M.A.C. Cosmetics
stores in India. M.A.C. Makeup-Art Cosmetics - the professional brand of
choice, is the first brand under the Estee lauder Group of Companies
portfolio to enter the Indian retail market. Currently there are 9 M.A.C. stores
operating.

Arcelia is a new retail concept aiming at the growing accessories and

cosmetics segment, with a strong emphasis on experience and indulgence
and primarily caters to discerning women shoppers. It retails cosmetics,
fragrances, fine jewelry, footwear, handbags.
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MotherCare and Shoppers Stop come together to introduce products for

infant and toddler care which stocks a variety of products for mother and
babies, toddlers and children till eight years of age with the focus being on
style, function and safety. [16] The UK-based maternity and kidswear brand
has nine standalone and 13 shop-in-shop formats.

Nuance Group with Shoppers Stop makes an entry into airport retailing.
The alliance is marked with a joint venture with The Nuance Group AG of
Switzerland, the world’s leading airport retailer. Shopper's Stop Ltd. is
handling the retail operations at the duty free zones in international
terminals. The joint venture company, called Nuance Group (India) Private
Limited. is operating outlets at the International airports at Bengaluru and
Hyderabad.

HyperCity-Argos and Shoppers Stop, the two retail ventures of K Raheja

group had signed a memorandum of understanding with UK’s leading retail
chain Home Retail group to develop the Argos (retailer) retail format stores
in India. Two years later, Shoppers Stop Ltd has informed Bombay Stock
Exchange shall wind down and discontinue its catalogue retail operations
under the Hypercity-Argos brand.

Shoppers Stop forayed into the Entertainment sector by acquiring 45% stake
in Timezone Entertainment Private Limited which is in the business of
setting up and operating Family Entertainment Centres (FECs). It has 5
outlets in Ahmedabad, Hyderabad, Kolkata, Navi Mumbai and Mumbai.

SWOT ANALYSIS:
STRENGTHS:
• Loyal Customer Base of 7,82,000 First Citizen members
• Increasing Footfalls and Conversion Rates
• Strong and Well Established Management Team
• Systems and Processes

WEAKNESSES:
• Employee Retention
• Inadequate Promotional Strategies
• Uneven Distribution Network
• Follows Low – Risk Strategy

OPPORTUNITIES:
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• Geographical Reach.
• Preferred Partner for Foreign Players.
• Hyper city – An entry into Value Retail.

THREATS:
• Threat of New Entrants.
• Competitive Rivalry in the Industry.
• Economic Slowdown.

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.

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.

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.

MARKETING MIX:

PRODUCT
• Identified the need for and created a suite of brands that reflect Styles,
International Class and Fashion
• Private Brands have been introduced and developed after a careful
analysis of Customer Requirement.
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PROMOTIONAL
• Communication Strategy-Reaching out to the customers in their own
style and language
E.g.- The first Shoppers Stop store in Lucknow was named
“Tehzeeb”.
• Festive Promotion Campaign “PARIKRAMA” Customers getting
opportunity to interact with local artisans.
• Organizes major Promotional Events from time to time e.g. “Fly to
Santa Land”, “Gear up for the school” and “Salwar Kameez Dupatta
Exchange” etc.
• Organizes Local Festivals like Durga Puja in Kolkata, Onam in South
and Dhanteras in North.

DISTRIBUTION:
• Shoppers Stop Ltd. exudes Class, Comfort, Convenience where ever it
is located.
• Shoppers Stop Ltd. not only concentrates on the location of the stores
but also emphasizes on the ambience and service excellence.
• Shoppers Stop is Indian largest chain of Super Stores with an
aggregate acquired area of 11 lakh sq. feet.

PRICING:
Shoppers Stop follows Premium Pricing Strategy that includes selling of High
Quality Products at a reasonably high price.

DISTRIBUTION NETWORK OF SHOPPERS’ STOP:

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MARKET SEGMENTATION:
Shoppers Stop’s total market is essentially segmented into smaller, relatively
homogeneous groups. The company is dealing with Consumer Products -
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goods or services purchased by an ultimate consumer for personal use. The

market segmentation of Shoppers Stop’s is analysed briefly as it follows:

DEMOGRAPHIC SEGMENTATION:
• Dividing consumer groups according to characteristics such as sex,
age, income, occupation, household size and education etc.

• SHOPPERS STOP have segmented their respective markets in terms of

Age and Sex (e.g. Clothing for Men, Women and Kids). Shoppers’ Stop
has 4 division the Men’s apparels, ladies apparels, kids wear and the
Non-apparels. Following is their contribution to the turnover.
Men’s 43% of sales
Women’s 18% of sales
Kids 8% of sales
Non-Apparels 31% of sale

• Segmenting by Income and Expenditure patterns. Shoppers Stop

follows Premium Pricing Strategy that includes selling of High Quality
Products at a reasonably high price.

PSYCHOGRAPHIC SEGMENTATION:
• Divides a population into groups that have similar psychological
characteristics, values, and lifestyles.
• SHOPPERS STOP targets customers with high standard of living. In
other words, their target group is basically the urban population.

BEHAVOURAL SEGMENTATION:
• Loyalty status: A national presence with over 3,00,000
square feet of retail space and stocking over 450 brands of
garments & accessories, Shoppers' Stop has clearly become
a one stop shop for all customers, with a customer entry of
about 20,000/day.

GEOGRAPHIC SEGMENTATION:
• Dividing an overall market into homogeneous groups on the basis of
their locations.
• Majority of the Indian youths in the Metros or tire II cities are working
for call centers or other technology firms, and increasing living a more
western life style of consumption. They are in their mid 20's and still
live with their parents. They have little or no bills to pay for and in
most cases spend about 60%-70% of their income shopping. Shoppers’
Stop has more than 20 stores in the metros, including these tire-II
cities of India.
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GEOGRAPHIC SEGMENTATION MAP OF

SHOPPERS’ STOP continues..
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TARGETING CUSTOMERS:
• Market Specialization
• The Shoppers Stop concentrates on serving many needs of a
particular customer group and in this way the Shopper Stop
aims to gain a strong reputation in serving their customers,
who belong to the middle and upper class.
POSITIONING:
• Shopper Stop positions itself as a Global premium Retailer
outlet.
• Shoppers’ Stop is positioned as a family store delivering a
complete shopping experience.

INTERATED MARKETING COMMUNICATION:

IMC refers to a co-coordinated communications program that is
customer-focused and internally consistent
The different IMC elements are
• Direct marketing.
• Advertising
• Sales promotion.
• Public Relation.
• Point of Purchase.
• Publicity.
• Special Events.
• Packaging.

The elements of IMC are discussed as follows –

DIRECT MARKETING:

The name "First Citizen" reflects their commitment to offering

their customers the ultimate shopping experience

As a First Citizen, customers shopping experience becomes even

more enjoyable with:

• Reward Points for every time you shop at Shoppers Stop.

• Exclusive benefits & privileges

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• Exclusive offers ever so often

• Updates on what you can look forward to shop for at

Shoppers Stop

Exclusive cash counters at Shoppers Stop so you can spend more

time shopping than waiting in a line.
ADVERTIZING:
Shoppers Stop’s has been very actively involved in quality
Advertizing.

• MEDIA ADVERTISMENTS
• OUTDOOR ADS

SALES PROMOTION:
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• GIFT VOUCHERS:Shoppers Stop offer Gift Vouchers of

denomination ranging from Rs 250 to Rs 5000.

• VARIOUS FESTIVE OFFERS:

• CONTEST: Contests like a 101-day Shopping Bonanza to

pull in customers into the stores. Also Lucky draw winners of
the contest will get to see one of the Seven Wonders of the
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World and two lucky couples who get the grand prize will be
treated to a round-trip which will cover all the Seven
Wonders of the World.

• POP MATERIAL: Shoppers’ Stop has also been promoting the

pop culture by bringing out new trends of pop culture clothes
and apparels.

PUBLIC RELATION:

• Shoppers’ Stop entered into agreement with CRY to retail

eco-friendly paper bags designed by underprivileged
children. The part proceeds from the sale of the bags were
donated to project supported by CRY.

• The Wardrobe Exchange saw tremendous response with

80,000 old garments collected from customers, which were
donated to projects of Concern India Foundation.

POINT OF PURCHASE & PUBLICITY:

• BRAND AMBASSADOR

• SPECIAL EVENTS

• PUBLIC AFFAIRS ACTIVITIES

MILESTONES
• Shoppers' Stop was the first to redefine shopping
experience and creating a niche for itself in the service
industry, in many metros in India.
• Shoppers' Stop is the only retailer from India to become a
member of the prestigious Intercontinental Group of
Departmental Stores (IGDS).
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Here are some of the awards achieved by the Shoppers' Stop

–

2000: ‘The most admired Apparel Retailer’ of the year. In the

Images Fashion
Awards.
2001: ‘ Annual Award for Excellence as Top CEO’ for 2001.
Mr. B.S.Nagesh won at the Institute of Marketing
Management.
2002: ‘CMAI Awards 2001-2002’, including,
‘CEO of the Year.’ & ‘Retailer of the Year.’
2003: ‘IT User Award for Best IT Practices’ in Retail
Category.
2004: ‘Most Favoured Retail Destination of the Year’.
2005: ‘CEO of the Year’ awarded to MR. B.S.Nagesh in the 4th
Indira Awards for
Marketing Excellence’ presented by the Indira Group
of Institutes in
January 2005.
2006: ‘Retailer of the Year’ at the Images India Retail
Forum in September 2006.
2007: ‘Retail Destination of the Year’ at the Images
Fashion Forum in January
2007.
2008: ‘Department Store of the Year’ to SS & ‘Debutant
Retailer of the Year’ to
Gourmet City.
2009: ‘Most Admired Fashion Retail Destination of the
Year’ at the Images
Fashion Forum in January 2009.
2010: ‘Loyalty Summit Award’ January 2010. Shoppers Stop
was declared as the
winner for Customer & Brand Loyalty in the Retail
Section.
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With the launch of its latest outlet in Kandivali, Shoppers Stop

adds one more feather to its cap.

CONCLUSION
Shoppers' Stop is the first retail venture by the K. Raheja Corp.
Promoted by Mr. Chandru L. Raheja, Mr. Ravi C. Raheja and Mr.
Neel C. Raheja. The K. Raheja Corporation has been leaders in
the construction business for over 48 years. With its wide range of
merchandise, exclusive shop-in-shop counters of international
brands and world class customer-service, Shoppers' Stop brought
international standards of shopping to the Indian consumer
providing them with a complete shopping experience.

Expanding its operations to Bangalore, Hyderabad, Jaipur,

Delhi, Chennai, Ghatkopar, Pune and most recently to
Kolkata, Shoppers' Stop is today recognized as India's premier
shopping destination. With a customer entry of about 20,000/day,
a national presence with over 3,00,000 square feet of retail space
and stocking over 450 brands of garments & accessories,
Shoppers' Stop has clearly become a one stop shop for all
customers.

Shoppers' Stop's core customers represent a strong SEC A and B+

skew. They fall between the age group of 16 to 40, the majority of
them being families and young couples with a monthly household
income above Rs. 10,000.

The stores offer a complete range of apparel and life- style

accessories for the entire family. From apparel brands like
Provogue, Colour Plus, Arrow, Levi's, Scullers, Zodiac to cosmetic
brands like Lakme, Chambor, Le Teint Ricci etc., Shoppers' Stop
caters to every lifestyle need. Shoppers' Stop has also introduced
its own line of clothing in the classic, value classic and value
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fashion segments. These are LIFE, STOP, KARROT and KASHISH

that are available across different categories. The merchandise at
Shoppers' Stop is sold at a quality and price assurance backed by
its guarantee stamp on every bill.

Shoppers’ Stop had started its operation as a retail store in the

year 1991 and has grown to the position of one of the retail giants
in India. In less than 20 years, that is a major achievement for any
Indian retailer. Shoppers’ Stop have not only grown for its own
sake but also have contributed much to the development of the
taste of people as with the changing economic and cultural
scenario people are getting more open to lifestyle changes.
Looking at the history of Shoppers’ Stop’s growth, we can
anticipate much more success in its future endeavors.
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T
he end.