INTRODUCTION TO RETAIL INDUSTRY

The Indian retail industry is the fifth largest in the world. Comprising of organized and
unorganized sectors, India retail industry is one of the fastest growing industries in India,
especially over the last few years. Though initially, the retail industry in India was mostly
unorganized, however with the change of tastes and preferences of the consumers, the industry is
getting more popular these days and getting organized as well. With growing market demand, the
industry is expected to grow at a pace of 25-30% annually. The India retail industry is expected
to grow from Rs. 35,000 crore in 2004-05 to Rs. 109,000 crore by the year 2010.

Growth of Indian Retail

According to the 8th Annual Global Retail Development Index (GRDI) of AT Kearney, India
retail industry is the most promising emerging market for investment. In 2007, the retail trade in
India had a share of 8-10% in the GDP (Gross Domestic Product) of the country. In 2009, it rose
to 12%. It is also expected to reach 22% by 2010.

According to a report by Northbride Capita, the India retail industry is expected to grow to US$
700 billion by 2010. By the same time, the organized sector will be 20% of the total market
share. It can be mentioned here that, the share of organized sector in 2007 was 7.5% of the total
retail market.

RETAIL FORMAT IN INDIA

Hypermarts/supermarkets: large self-servicing outlets offering products from a variety of
categories.

 Mom-and-pop stores: they are family owned business catering to small sections; they are
individually handled retail outlets and have a personal touch.
 Departmental stores: are general retail merchandisers offering quality products and
services.
 Convenience stores: are located in residential areas with slightly higher prices goods due
to the convenience offered.
 Shopping malls: the biggest form of retail in India, malls offers customers a mix of all
types of products and services including entertainment and food under a single roof.
 E-trailers: are retailers providing online buying and selling of products and services.
 Discount stores: these are factory outlets that give discount on the MRP.
 Vending: it is a relatively new entry, in the retail sector. Here beverages, snacks and other
small items can be bought via vending machine.
 Category killers: small specialty stores that offer a variety of categories. They are known
as category killers as they focus on specific categories, such as electronics and sporting
goods. This is also known as Multi Brand Outlets or MBO's.
  Specialty stores: are retail chains dealing in specific categories and provide deep
assortment. Mumbai's Crossword Book Store and RPG's Music World are a couple of
examples.

Challenges facing Indian retail industry

 The tax structure in India favors small retail business

 Lack of adequate infrastructure facilities
 High cost of real estate
 Dissimilarity in consumer groups
 Restrictions in Foreign Direct Investment
 Shortage of retail study options
 Shortage of trained manpower
 Low retail management skill

The Future

The retail industry in India is currently growing at a great pace and is expected to go up to US$
833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at a
CAGR of 10%. As the country has got a high growth rates, the consumer spending has also gone
up and is also expected to go up further in the future. In the last four year, the consumer spending
in India climbed up to 75%. As a result, the India retail industry is expected to grow further in
the future days. By the year 2013, the organized sector is also expected to grow at a CAGR of
40%.
 Introduction to SHOPPER’S STOP

Shoppers Stop is an Indian department store chain promoted by the K Raheja Corp Group
(Chandru L Raheja Group), started in the year 1991 with its first store in Andheri, Mumbai
Shoppers Stop Ltd has been awarded "the Hall of Fame" and won "the Emerging Market Retailer
of the Year Award", by World Retail Congress at Barcelona, on April 10, 2008. Shoppers Stop is
listed on the BSE. With the launch of the Navi Mumbai departmental store, Shoppers Stop has 34
stores in 15 cities in India.

Store

Shoppers Stop is one of the leading retail stores in India. Shoppers Stop began by operating a
chain of department stores under the name “Shoppers’ Stop” in India. Shoppers Stop has 35
stores across the country and three stores under the name HomeStop.

Shoppers Stop retails a range of branded apparel and private label under the following categories
of apparel, footwear, fashion jewellery, leather products, accessories and home products. These
are complemented by cafe, food, entertainment, personal care and various beauty related
services.

Shoppers Stop launched its e-store with delivery across major cities in India in 2008. The
website retails all the products available at Shoppers Stop stores, including apparel, cosmetics
and accessories. Shoppers Stop opened stores in Amritsar, Bhopal and Aurangabad.

Products

Shoppers Stop retails products of domestic and international brands such as Louis Philippe,
Pepe, Arrow, BIBA, Gini & Jony, Carbon, Corelle, Magppie, Nike, Reebok, LEGO, and Mattel.
Shoppers Stop retails merchandise under its own labels, such as STOP, Kashish, LIFE and
Vettorio Fratini, Elliza Donatein, Acropolis etc. The company also licensees for Austin Reed
(London), an international brand, who’s men's and women's outerwear are retailed in India
exclusively through the chain. In October 2009, Shoppers Stop has bought the license for
merchandising Zoo zoo the brand mascot for Vodafone India.

Marketing

In April 2008, Shoppers Stop changed its logo and adopted the mantra "Start Something New
mantra.And introduced international brands like CK Jeans, Tommy Hilfiger, FCUK, Mustang,
and Dior across the stores. The focus of the reposition was on the service, ambience up gradation
and customer connect. Shoppers Stop connects with the youth audience through adopting the
communication routes relevant to youth, up the fashion quotient through merchandising, and
create ambience that connects with the mindset. The brand campaign addresses environment-
related issues in a youthful, tongue-in-cheek manner. Shoppers Stop as a brand active on social
media marketing platforms with Facebook and Twitter to connect with this audience.

Merchandising

Merchandising opportunities like the launched Zoozoo merchandise and film merchandise.

Loyalty program

Shoppers Stop’s has a loyalty program called First Citizen. They also offer a co-branded credit
card with Citibank for their members.

Shops

Shoppers Stop's sister stores are

1. Crossword Bookstores

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 encourage customers ease in
browsing through the merchandise of books, music, stationary and toys.

2. HomeStop

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.

3. Brio

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

4. Desi Cafe

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.

5. HyperCity

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.

6. M.A.C.

M.A.C. and Shopper’s Stop Ltd. entered into a nonexclusive 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

7. Arcelia

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.

8. MotherCare

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. The UK-based maternity and kids wear
brand has nine standalone and 13 shop-in-shop formats.

9. Nuance Group

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.

10.HyperCity-Argos

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.

11.Timezone

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.

Balance Sheet of Shoppers Stop

Particulars Years 2010 Years 2009 Years 2008 Years 2007 Years 2006
I ] Sources of funds
A ] Share Holder’s Fund
Equity share capital 34.91 34.87 34.86 34.83 34.38
Share application money 30.72 - - - -
Preference share capital - - - - -
(+)Reserves & surplus 243.26 198.22 261.83 260.34 235.56
Total (A) 308.89 233.09 296.69 295.17 269.94
B ] Borrowed Funds
Secured loans 176.41 178.22 106.83 113.14 55.95
Unsecured loans 15.00 29.54 66.10 - 2.60
Total (B) 191.41 207.76 172.93 113.14 58.55
Total Capital Employed (A+ B) 500.30 440.85 469.63 408.31 328.49
II] Application of Fund
Fixed assets
Gross block (a) 457.66 403.45 325.34 199.74 161.01
Less : revaluation reserve - - - - -
Less : accumulated depreciation (b) 186.66 167.94 107.82 69.01 44.60
Net block (a - b) (A) 271.00 235.51 217.52 130.73 116.41
Capital work-in-progress (B) 27.68 23.23 22.86 21.43 6.12
Investments (C) 119.67 97.45 80.72 48.90 35.06
Net current assets
Current assets, loans & advances (1) 386.42 375.72 360.22 346.45 255.41
Less : current liabilities & provisions (2) 304.46 291.04 211.69 139.20 84.51
Total net current assets (1 – 2) (D) 81.96 84.67 148.53 207.25 170.91
Miscellaneous expenses not written - - - - -
Total (A+B+C+D) 500.30 440.85 469.63 408.31 328.49
 Profit And Loss Account of Shoppers Stop

Particulars Year 2006 Year 2007 Year 2008 Year 2009 Year 2010
Gross Sales
Cash 619.68 838.69 1146.01 1327.51 1568.37
Credit - - - - -
Less: Sales Return - - - - -
Net Sales 619.68 838.69 1146.01 1300 1568.37
(+) Other Income 10.98 49.43 54.85 27.51 4.91
Total (A) 630.66 888.12 1200.86 1327.51 1573.28
LESS: Cost Of Goods Sold
Opening Stock - - - - -
+ Purchases 387.33 560.24 751.71 787.09 899.73
+ Employee Cost 39.91 58.37 78.14 87.11 87.59
+ Other Exp. 6.96 10.85 12.49 14.91 104.16
(-) Closing Stock - - - - -
Total (B) 434.2 629.46 842.34 889.11 1091.48
Gross Profit (A - B) [C] 196.46 258.66 358.52 438.4 481.8
LESS: Operating Expense
Administration Exp. (I) 64.30 86.39 132.69 147.05 149.45
Selling Exp. (II)
Finance Exp. (III) 32.22 40.76 67.24 111.72 76.20
Total (I+II+III) [D] 96.52 127.15 199.93 258.77 225.65
Operating Net Profit ( C – D ) 99.94 131.51 158.59 179.63 256.15
ADD: Non-Operating Income 7.27 10.84 8.31 - 8.18
107.21 142.35 166.90 179.63 264.33
LESS: Non-Operating Exp. - - - 18.7 -
107.21 142.35 166.90 160.93 264.33
PBDIT 107.21 142.35 166.90 160.93 264.33
Interest 52.94 68.01 113.11 155.64 160.11
PBDT 54.18 74.34 53.79 5.29 104.22
Depreciation 13.94 25.63 39.27 63.13 31.03
Other written Off - - - - -
PBT 40.24 48.71 14.52 (57.84) 73.19
Extra Ordinary Items - - (1.27) - (1.84)
PBT (Post Extra Ordinary Items) 40.24 48.71 13.25 (57.84) 71.35
Tax 13.14 22.52 6.28 5.89 21.13
Reported Net Profit 27.11 26.20 6.97 (63.72) 50.23
Trend Analysis of Balance Sheet of Shoppers Stop
Particulars Years 2010 Years 2009 Years 2008
I ] Sources of funds
A ] Share Holder’s Fund
Equity share capital 34.91 100.14 34.87 100.03 34.86 100
Preference share capital - - -
(+)Reserves & surplus 273.98 104.64 198.22 75.71 261.83 100
Total (A) 308.89 104.11 233.09 78.56 296.69 100
B ] Borrowed Funds
Secured loans 176.41 165.13 178.22 166.83 106.83 100
Unsecured loans 15.00 22.69 29.54 44.69 66.10 100
Total (B) 191.41 110.69 207.76 120.14 172.93 100
Total Capital Employed (A+ B) 500.30 106.53 440.85 93.87 469.63 100
II] Application of Fund
Fixed assets
Gross block (a) 457.66 140.67 403.45 124.01 325.34 100
Less : revaluation reserve - - -
Less : accumulated depreciation (b) 186.66 173.12 167.94 155.76 107.82 100
Net block (a - b) (A) 271.00 124.59 235.51 108.27 217.52 100
Capital work-in-progress (B) 27.68 121.11 23.23 101.62 22.86 100
Investments (C) 119.67 148.25 97.45 120.73 80.72 100
Net current assets
Current assets, loans & advances (1) 386.42 107.27 375.72 104.30 360.22
Less:current liabilities & provisions 143.82 137.48 100
304.46 291.04 211.69
(2)
Total net current assets (1 – 2) (D) 81.96 55.18 84.67 57.01 148.53 100
Miscellaneous expenses not written - - -
Total (A+B+C+D) 500.30 106.53 440.85 93.87 469.63 100

Common Size Statement of Shoppers Stop

Particulars Years 10 % 10 Years 09 % 09 Years 08 % 08

I ] Sources of funds
A ] Share Holder’s Fund
Equity share capital 34.91 6.98 34.87 7.91 34.86 7.42
Share application money 30.72 6.14 - - - -
Preference share capital - - - - - -
(+)Reserves & surplus 243.26 48.62 198.22 44.96 261.83 55.75
Total (A) 308.89 61.74 233.09 52.87 296.69 63.18
B ] Borrowed Funds
Secured loans 176.41 45.26 178.22 40.43 106.83 22.75
Unsecured loans 15.00 2.99 29.54 6.70 66.10 14.07
Total (B) 191.41 38.26 207.76 47.13 172.93 36.82
Total Capital Employed (A+ B) 500.30 100 440.85 100 469.63 100
II] Application of Fund
Fixed assets
Gross block (a) 457.66 91.48 403.45 91.52 325.34 69.28
Less : revaluation reserve - - - - - -
Less : accumulated depreciation (b) 186.66 37.31 167.94 38.09 107.82 22.96
Net block (a - b) (A) 271.00 54.17 235.51 53.42 217.52 46.32
Capital work-in-progress (B) 27.68 5.53 23.23 5.27 22.86 4.87
Investments (C) 119.67 23.92 97.45 22.11 80.72 17.19
Net current assets
Current assets, loans & advances (1) 386.42 77.24 375.72 85.23 360.22 76.70
Less : current liabilities & provisions
304.46 60.86 291.04 66.02 211.69 45.08
(2)
Total net current assets (1 – 2) (D) 81.96 16.38 84.67 19.21 148.53 31.63
Miscellaneous expenses not written - - - - - -
Total (A+B+C+D) 500.30 100 440.85 100 469.63 100

Comparative Statement of Shoppers Stop (Year 2008 – 2009)

Particulars Year 08 Year 09 Change (Rs.) %tage inc or dec

 I ] Sources of funds
A ] Share Holder’s Fund
Equity share capital 34.86 34.87 0.01 0.029
Share application money - -
Preference share capital - -
(+)Reserves & surplus 261.83 198.22 (63.61) (24.29)
Total (A) 296.69 233.09 (63.6) (27.29)
B ] Borrowed Funds
Secured loans 106.83 178.22 71.39 66.83
Unsecured loans 66.10 29.54 (36.56) (55.31)
Total (B) 172.93 207.76 34.83 20.14
Total Capital Employed (A+ B) 469.63 440.85 (28.78) 6.13
II] Application of Fund
Fixed assets
Gross block (a) 325.34 403.45 78.11 24.01
Less : revaluation reserve - -
Less : accumulated depreciation (b) 107.82 167.94 60.12 55.76
Net block (a - b) (A) 217.52 235.51 17.99 8.28
Capital work-in-progress (B) 22.86 23.23 0.37 1.62
Investments (C) 80.72 97.45 16.73 20.73
Net current assets
Current assets, loans & advances (1) 360.22 375.72 15.5 4.30
Less:current liabilities & provisions 79.35 37.48
211.69 291.04
(2)
Total net current assets (1 – 2) (D) 148.53 84.67 (63.86) 42.99
Miscellaneous expenses not written - -
Total (A+B+C+D) 469.63 440.85 (28.78) 6.13

Comparative Statement of Shoppers Stop (Year 2009 – 2010)

Particulars Year 09 Year 10 Change (Rs.) %tage inc or dec

I ] Sources of funds
A ] Share Holder’s Fund
Equity share capital 34.87 34.91 0.04 0.11
Share application money - 30.72 30.72 100
Preference share capital - -
(+)Reserves & surplus 198.22 243.26 45.04 22.72
Total (A) 233.09 308.89 75.8 32.52
B ] Borrowed Funds
Secured loans 178.22 176.41 (1.81) 1.02
Unsecured loans 29.54 15.00 (14.54) 49.22
Total (B) 207.76 191.41 (16.35) 7.87
Total Capital Employed (A+ B) 440.85 500.30 59.45 13.49
II] Application of Fund
Fixed assets
Gross block (a) 403.45 457.66 54.21 13.44
Less : revaluation reserve - -
Less : accumulated depreciation (b) 167.94 186.66 18.72 11.15
Net block (a - b) (A) 235.51 271.00 35.49 15.07
Capital work-in-progress (B) 23.23 27.68 4.45 19.16
Investments (C) 97.45 119.67 22.22 22.80
Net current assets
Current assets, loans & advances (1) 375.72 386.42 10.7 2.85
Less:current liabilities & provisions 13.42 4.61
291.04 304.46
(2)
Total net current assets (1 – 2) (D) 84.67 81.96 (2.71) 3.20
Miscellaneous expenses not written - -
Total (A+B+C+D) 440.85 500.30 59.45 13.49