We are making exclusive brands stronger, wider: Govind Shrikhande

Q&A with Govind Srikhande, managing director, Shoppers Stop

Rahejas-owned retailer Shoppers Stop posted the highest like to like growth in many quarters during the three month period ended December 2012 in department stores though its overall profitability was dragged down by its hypermarket chain Hypercity. Its managing director Govind Shrikhande talked to Raghavendra Kamath about the company’s turnaround plans for Hypercity and retail scenario. Edited excerpts:

Coming from 12.5% like to like growth in December quarter, where does it stand now?

In the fourth quarter also, we are seeing double digit numbers. I will not go by January numbers as we have preponed sales by 10 days. Things will be much clearer by March. We are expecting the LTL sales growth in 9 to 10% region.

Since most overseas retailers are still not comfortable with government riders in FDI in multi brand retail, how will that impact your plans to sell stake in Hypercity?

Our plans will not be impacted. We are and we will be chasing profitability whether FDI in multi brand retail materializes or not.  Hypercity has to be a profitable format come what may.

You said Hypercity break even will now happen by FY 2016. What is the reason for the delay?

We had a three point action plan. We wanted to right size four stores by the end of FY 2013. We could do only one. We reduced the size of Amritsar store from 150,000 sq ft to 50,000 sq ft. Our plan was to have a total space of 1 million sq ft for 12 Hypercity stores from 1.2 million sq ft earlier. It will reduce rent and operating costs and bring efficiencies. We are running two to three quarters behind on this front as the process to reduce size is taking time.

Second, we wanted to increase share of fashion from 7.5% to 15%. We achieved 10% this year. We will hit the target in 24 months. It will push our margins by 150 basis points. Third is controlling operating costs. Operating costs have degrown. The like to like profitability has gone up. We are on track to achieve profitability except on the first part where we are lagging behind by 2-3 quarters.

What is the progress in store additions in Shoppers Stop department stores?

In 2013-14, we are likely to have more stores due to carry forward effect. We had targeted 8 stores in 2012-13. We have opened five so far and we are likely to end the year with seven stores. Next year, we will open 11 stores due to carry forward effect.

The Share of private labels has increased in the last quarter. Are you deliberately increasing the share to cater to value conscious shoppers?

No. we are making exclusive brands stronger and wider across categories. Haute curry which was an apparel brand earlier has also been extended to jewellery and footwear.