Shoppers Stop Ltd Management Discussions

Economic Overview

In 2023, the global economy exhibited remarkable resilience, bouncing back amidst various challenges. While inflation peaked in 2022 and has been receding faster than anticipated, this resulted in a lower impact on employment and economic activity. However, overall demand remained soft during the year due to the high inflationary environment and the clearing of pent-up demand that had accumulated during the pandemic era. Amid these global economic headwinds, Indias economy has proven particularly resilient over the past three fiscal years. India has solidified its position as the worlds third- largest fintech economy, trailing only the USA and the UK. Indias GDP growth is expected to be 6.6% for 2024 and 2025.

Indian Retail Industry

Indias retail industry is undergoing a dynamic transition, propelled by changing consumer preferences and digital advancements. Recently we have been witnessing diverse trends such as a K shape recovery on the premium goods and at the same time, value format has been growing at a faster pace owing to better offering and at competitive prices. Overall, the sector remains robust.

Shoppers Stop Approach

Shoppers Stop is adeptly navigating Indias dynamic retail landscape, marked by shifting consumer preferences and rapid digital advancements. The companys strategic emphasis on premiumisation, evidenced by its focus on premium products and expanded store network, aligns seamlessly with industry trends towards more discretionary and luxury spending. Expansion is a key strategic pillar for Shoppers Stop, with 55 new stores opened in FY 2023-24. The company has invested significantly in footprint expansion, with a capital expenditure of 246 Crores, Additionally, Shoppers Stop renovated 13 stores, including 7 department stores, 5 beauty stores, and 1 HomeStop, bringing 71% of department stores under the new brand identity. By bolstering its omnichannel capabilities and cultivating robust customer loyalty through the First Citizen program, Shoppers Stop showcases its resilience and adaptability. As the retail sector continues to evolve, Shoppers Stop is well- positioned to leverage these changes, capturing growth opportunities and reinforcing its market leadership.

Indian Fashion Market

The Indian fashion and lifestyle industry is on an exciting trajectory, poised for dynamic growth and innovation in 2024. (Estimated to be US$ 15.58 billion +10.7% growth and expect go be US$25.85B by 2029). Driving this advancement are factors like growing disposable incomes, a rising middle class, and increasing penetration of smart devices and online shopping platforms. Furthermore, fashion brands are adopting innovative strategies, technological advancements, and sustainable practices to meet the ever-changing preferences of Indian consumers.

Shoppers Stop Approach

Shoppers Stop is poised to capitalise on the growth of the Indian fashion market through its strategic focus on both its private brands, such as STOP, Fratini, Life, Bandeya, Kashish, Haute Curry, Arcelia, Karrot, Insense, U R You and an extensive portfolio of national brands, focusing on premiumisation. By enhancing its private labels, Shopper Stop offers unique, tailored products that cater to diverse customer preferences. Simultaneously, the Company collaborates with renowned national brands to provide a comprehensive and curated shopping experience. In addition to this the company has also launched INTUNE on the value fashion segment, a sector growing rapidly with 22 stores in FY24.

Some of the market trends are:

Attention towards sustainability and eco-friendly practices, reflecting customers growing environmental awareness. Brands are incorporating these sustainable practices. Premium segment is witnessing growth with the entry of several international brands to tap into the rising affluent consumer base.

Value fashion segment is expanding rapidly driven by increasing disposable incomes and aspirational mindsets of the increasing middle class, prompting the Companys foray into this space.

Market

The Indian Beauty and Personal Care market experienced significant growth, reaching US$ 28.0 billion in FY 2023- 24. Moving forward, the market is expected to sustain its growth trend, with projections indicating an increase to US$ 46.6 billion by FY 2031-2032, exhibiting a CAGR of 5.6% during 2024- 2032 period. Several factors are driving this growth, including the availability of a diverse product range, increasing demand for natural and organic products, and the growing penetration of e-commerce platforms. A pivotal force driving this market forward is the increased awareness among Indian consumers regarding Beauty and Personal Care items through urbanisation, widespread use of social media platforms and influencer marketing has further amplified exposure to global beauty trends.

Shoppers Stop Approach

Shoppers Stop is well-positioned to capitalise on the growing Indian Beauty and Personal Care market. The beauty segment, contributing 18% to sales and growing 10% in FY 2023-24, outperformed other categories. The Company aggressively expanded its beauty offerings with 16 new stores, including Indias largest at Quest Mall, Kolkata, This premiumisation, footprint growth, new store investments, and data analytics- driven customer experiences strategically position it to leverage the expanding Beauty and Personal Care demand. The Companys innovative initiatives solidify its position as an industry trendsetter, unlocking growth and customer delight.

1 Experience over Possession

Younger consumers value rich, immersive experiences over material possessions. Social media and personal satisfaction are driving forces behind this trend.

2 Sustainable and Informed Choices

Over 60% of consumers are willing to pay a premium for sustainable products.

Buying decisions are influenced by product research, including reviews and feature comparisons.

3 Personalisation Preference

69% of consumers prefer brands that offer personalized experiences.

Customization is particularly appealing to women and millennials.

4 Exclusivity Appeal

37% of urban consumers favour brands offering exclusive products.

Limited-edition items and exclusivity boost brand appeal and customer satisfaction.

5 Homegrown Love

Theres increasing preference for locally made brands.

Local brands are adapting to meet the specific needs and preferences of Indian consumers.

6 Gender Dynamics

Women now make the majority of household purchasing decisions.

They rely on reviews and online research to make informed choices.

7 Trendy Choices

Consumers are increasingly purchasing trendy products.

Following the latest trends significantly influences their buying behaviour.

8 Time-Saving Solutions

Demand for convenience has led to the growth of services like online shopping and delivery. Consumers prefer options that save time and offer flexibility.

9 Affluence Shift

Gen Z and millennials show a preference for branded products.

This shift is evident in both metro cities and smaller towns.

10 Digital Shopping Surge

Online shopping is growing due to its convenience.

Small businesses benefit from online promotions and increased visibility.