Shoppers Stop takes a luxurious step back

India's oldest fashion departmental store chain, Shoppers Stop is turning its focus back on the premium segment to compete with offline and online retailers. The company was started in 1991 by K Raheja Corp Group in Mumbai and has approximately 84 departmental stores across 40 cities in India. The brand sells everything from women’s ethnic wear and men's formals to kid's apparel, handbags, accessories and beauty products.

The brand recently opened a 50,000 sq.ft outlet in Gurugram, which will offer premium brands such as Armani Exchange, FCUK, Jones, New York Coach and many others. As per reports, the store will also have coffee chain Starbucks and toy retailer Hamley’s.

The main reason behind the large format retailer going back to premium brands after a decade is to improve its profitability in the business and to attract millennials who seek latest trends.

Uma Talreja, chief of marketing and customer officer, Shoppers Stop spoke to afaqs! about the need to open premium outlets once again.

Talreja says, “There is a white space in the market for departmental stores that offer luxury and offer a bridge to luxury brands. We’ve identified catchments where the customers have a demand for premium brands and experiences.”

The company has developed three store formats to cater the evolving needs of customers. “The first format has been designed for our value conscious customers, the second format is a modern aesthetic department store, offering a mix of product assortment from mid-to-premium range, and the third format is our recently opened luxury store, primarily targeted for top metros” she explained.

The brand is also upgrading the beauty products on its shelf. It recently launched a beauty only store 'Arcelia' in Hyderabad, which hosts luxury beauty brands such as Guerlain, Dior and Tom Ford. Until now, the retail chain operated beauty brands such as MAC, Clinique, Bobbi Brown, Smashbox and Estee Lauder. It has revamped about half-a-dozen existing stores and plans to overhaul the beauty sections in over 15 locations.

The company saw a 45 per cent decline in its standalone net profit for the March quarter of FY19. However, the company had posted a net profit of Rs 20.78 crore in the same quarter a year ago.

The brand also shut down stores and discontinued a few brands that weren’t able to generate profits. Shoppers Stop also re-sized a few outlets to grow the business scale.

Talreja declined to share any specific numbers on how many new premium stores they aim to open, but said, “We have opened our first luxury department store in Gurugram, which we will test for six months, see what is working and what is not and then fine tune it. The next few stores will be modern and in-line with changing customer aspirations. We aim to open at least one luxury concept store in the top metros in the coming years.”

At a time when the whole country is grappling with major economic slowdown, it would be interesting to see if the customers are ready to shell out for premium offerings.

About the market research done by the company before settling on this decision, she replies, “The appetite for premium exists, and consumers are making choices for quality experiences. While this is not a strategy that can be widely applied, it is working for us in relevant locations.”