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

Shopper’s Stop business has grown from one store in Mumbai in 1991 occupying an area of 2,800 sq. ft.
to 15 stores located in the cities of Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Pune,
Jaipur and Gurgaon occupying an aggregate area of 687,250 sq. ft.
Our growth strategy is based on increasing our reach and penetration across the country by opening new
stores, and furthering Shoppers’ Stop as an experiential retail brand through unique national and
international promotions. We also look at enhancing our merchandise width by adding new product
categories and services, and strengthen our offerings by adding new brands and private labels to offer a
better depth in each category.
We also endeavour to enhance our base of loyal customers through our First Citizen Club. We believe
that as we grow in size and scale and expand our reach further, economies of scale would be available to
us. We also continue to focus on at enhancing our operational efficiencies and human capital, which is
critical in any service driven industry such as retail.
Our Vision
“To be a global retailer in India and maintain its No. 1 position in the Indian Market in the Department
Store Category.”
We are clearly focusing on the Indian market, which we believe offers tremendous opportunities to
department stores. At the same time, we benchmark ourselves with the leading retailers in our segment
worldwide. It is our constant endeavour to bring in global best practices into our business and
consistently upgrade ourselves to offer to our customers an international shopping experience.
Our Background
Ivory Properties & Hotels Ltd (“IPHL”), commenced its retail operations in the year 1991 under the brand
name ‘Shoppers’ Stop’ with its first store at Andheri, Mumbai. It started off with ready to wear men’s wear
and thereafter added women’s wear in 1992, children’s section and cosmetics, perfumes and accessories
in 1993.
The retail business division of IPHL launched a loyalty program for its customers in 1994 under the name
of First Citizen’s Club and opened its second store in Bangalore in 1995.
Prior to incorporation, two of our existing stores at Mumbai and Bangalore were run by a division of Ivory
Properties & Hotels Limited (IPHL)under the brand named Shoppers’ Stop. Soon after our incorporation,
IPHL executed a conducting agreement with us dated November 3, 1997 giving us a right to participate in
running the departmental stores. This agreement was terminated and a fresh Conducting Agreement
was executed with IPHL dated March 31, 2000. The brands, trademarks and goodwill of Shopper’s Stop
division of IPHL were also assigned through a separate agreement.
Our third store was opened in 1998 at Hyderabad. In the same year, we were inducted as a member of
the Intercontinental Group of Departmental Stores (IGDS).
As we expanded, we decided to enhance our technology platform, and started implementing the JDA
Retail Merchandise Management System and Windows Distributed Store System in 1999, one of the
leading ERP systems globally for the retail industry. In the same year, we opened our fourth and fifth
stores at Jaipur and Delhi respectively.
‘We also opened our sixth & seventh stores in Chennai and Chembur, Mumbai respectively in 2000.
We placed 3,750,000 Equity Shares of Rs 10/- each by way of a private placement at a price of Rs 160
per Equity Share to raise Rs 600 mn. For further details, please refer to Section titled “Capital Structure”
on page number 19 of draft Red Herring Prospectus. We received the Images Fashion Award for the
Most Admired Retailer of the Year in 2000.
We went through difficult times in FY 2000, and FY 2001 and reported losses in both the years. These
were the years when we pursued an aggressive growth plan, by launching 4 new stores in a time span of
15 months between September 1999 and December 2000 on a base of 3 stores, simultaneously
changing our technology, logistics and distribution system and entering into new ventures such as
Shoppers’ Stop .Com and Shoppers’ Stop Services and our acquisition of Crossword. These initiatives
were then not backed up by the requisite systems and processes and management band width to
manage this growth.
Since our ERP implementation had not stabilized, we did not have adequate information on our inventory
levels across the stores and distribution centers, which led to overbuying. Coupled with a slowdown in the
economy and retail spend in the second half of FY 2001, this led to an overstocking situation and we had
to resort to significant markdowns to clear our inventory.
Our gross margins were impacted while overheads had increased due to new initiatives, leading us to
report our first ever loss of Rs 83 mn in FY 2000 and Rs 230 mn in FY 2001.
46