Business & Economy Magazine IIPM News Edition: SLOWDOWN? OR SHOWDOWN?

Friday, April 09, 2010

SLOWDOWN? OR SHOWDOWN?

When slowdown comes as a blessing, what do you call it? Showdown? Shoppers Stop is one entity that took quick advantage of the bad times

The slowdown fever has even forced the country’s first departmental store – Shopper’s Stop to resort to many changes. And such changes (or ‘adjustments’ as it prefers to call it) range from financial policies to distribution practices. Changes, adjustments or whatever else you may call it, but these most recent moves have really been helping this retailer during times of slowdown. Sure enough, investors too have been particularly pleased with the changes, as during the past 10 months (till September 2009), Shoppers Stop gave back investors a massive return of 68%.

So, was the massive logo change exercise undertaken during 2008, a part of the combat strategy against the slowdown? Question senior officials at Shoppers Stop on this, and all they deny the fact that the move came about as a consequence of recession. Rather, they claim, it was a shift in focus to transform itself into a gen-next brand. But as the financial tale goes, before the year 2008 began, the company had incurred losses during Q2 & Q3, 2007-08. The respective figures stood at Rs.25.6 million & Rs.256 million. Apparently, the slowdown fever that gripped this retail giant forced it to undertake immediate and radical alterations in structure and brand policies to bounce back.

“We thought, we should convey the message of what we have achieved and how we are unique in providing our customers the best of shopping experience. Therefore, if truth be told, the logo change was not due to the slowdown,” B. S. Nagesh, MD, Shoppers Stop told this magazine. Then there was also a change in positioning that was undertaken, doubled-up with a merchandise revamp and increase in retail penetration. This year saw Shoppers Stop do it all. And it did help the group. As compared to just a year back, the decline in same store sales (SSS) for August 2009 was a small 2.5%, an improved figure as compared to the 7.5% decline in June 2009. Losses from other formats such as Crossword, Mothercare and HomeStop have also declined and most of them are nearing break-even levels. Sources in the company also confirm that by 2010, these new formats would start contributing positively to the company’s earnings. Sure enough, the slowdown seems to have come as a blessing in disguise in more ways than one. Here’s a first-hand confession from Nagesh – “There’s a real-estate problem, which all the retail players have to face, but we as a group, came up with strategies that will help us to cash in on the threats,” explains Nagesh. Not a hollow boast, as during 2009, Shoppers Stop has been able to renegotiate new properties at lower rentals, which helped lower its debt burden. Slowdown times? Really? What slowdown?

Angshuman Paul

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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