Shopper's Stop Limited - Securities and Exchange Board of India

are mere irritants, others significantly impact the economics and viability of the business
Availability of quality retail space has been one of the main constraints for development of
organized formats in India. In the past, negative yield spread on leased property and lack of
bank funding due to unorganized property market resulted in a dearth of quality retail space in
the country. The spread between yield on property and its financing cost has turned positive
with the fall in interest rates. Attractive yields on investments have resulted in sharp increase in
property development.
Consumerism and brand proliferation has been another enabler for organised retailing in India.
Most of the world’s leading brands are now present in India.
Challenges for organized retail
However, organised retail has to overcome significant challenges in terms of regulations and
infrastructural barriers in order to realise its full potential. Although some of these bottlenecks
are mere irritants, others significantly impact the economics and viability of the business.
In India there exist differential sales tax rates across states. Besides, there is multiple-point
octroi collection. All these add to cost and complexity of distribution as this necessitates
multiple warehouses and does not allow for centralization of certain procurements given the
incidence of local levies. At the same time, there is large-scale sales tax evasion by smaller
stores who derive significant cost advantage through such evasion. Implementation of VAT will
streamline the complexities in the tax structure besides narrowing the cost disadvantage
between organised and unorganised retailers.
The retail sector has not been granted industry status, limiting funding from banks and financial
institutions. The capital requirements for a retailer are in the real estate (which banks have
historically restricted lending to) and for working capital requirements. While some of the
leading retailers are still able to get bank funding, the smaller ones are constrained for growth
funding. Similarly, equity options are also restricted with Foreign Direct Investment not being
permitted in the retail sector. FDI restrictions have also restricted entry of international majors
in retailing in India, which could have otherwise helped the industry develop with funding as
well as bringing in of best practices and systems.
The availability of trained manpower poses a key risk for the retail sector. With growing
opportunities in the emerging service sectors such as ITES, the ability of the retail business to
hire and retain quality people is under pressure.
Supply chain management (SCM) efficiencies are essential to retailers to maintain and
improve margins. In India, both vendor management and logistics management are still
undeveloped. However, with growing size of operations, supply chain efficiencies will become
a key differentiator of profitability in retail.
Department stores
These large stores retail primarily non-food items such as apparel, footwear, accessories,
cosmetics and household products. They stock multiple brands across product categories,
though some of them focus on their own store label (on the lines of Marks & Spencer’s and St.
Michael). These stores are found on high streets and as anchors of shopping malls.
Several local department store chains have opened shop in India in the past five years. The
convenience factor coupled with the aspirational perception of shopping in a department store
has contributed to their growth. The larger chains of department stores (Namely Shoppers’
Stop, Westside, Pantaloons’ and Lifestyle) have presence in the metros and mini metros.
Company Overview
We are one of India’s leading retailers and have been promoted by the K Raheja Corp Group
(Chandru L Raheja Group), one of the leading players in the country in the business of real
estate development and hotels. We operate a chain of department stores in India and
currently have 15 stores across the country.
We are among the pioneers in setting up a nation-wide chain of large format department stores
in India with a professional management. We believe that the various initiatives taken by us
have played a key role in enhancing the standards of retail in the country. Our focus on
bringing in the international best practices into our retail operations, and providing the
customer with a unique shopping experience has helped us become one of the industry
leaders.
We are a professionally managed, systems driven organization. We believe our strong focus
on customers supported by systems and processes and a committed work force are the key
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