EBM Assignment
ON
Analysis of Business Models &
Revenue Models of Shopper’s Stop
Submitted By:
Prerna Rathor
Roll No. 1776093
About Shopper’s Stop
The K. Raheja Corp. group of companies laid the foundation of Shoppers
Stop on October 27, 1991. Being amongst India's biggest hospitality and
real estate players, the Group crossed yet another milestone with its
lifestyle venture.
From inception, Shoppers Stop has progressed from being a single brand
shop to becoming a Fashion & Lifestyle store for the family. Today,
Shoppers stop is a household name, known for its superior quality
products, services and above all, for providing a complete shopping
experience.
With an immense amount of expertise and credibility, Shoppers stop has
become the highest benchmark for the Indian retail industry. In fact, the
company's continuing expansion plans aim to help Shoppers Stop meet
the challenges of the retail industry in an even better manner than it
does today
Business Models of Shopper’s Stop
Shopper’s Stop started its journey in the retail market with a Brick-and-
Mortar business model and had a great run in the fashion retail market
earning good revenues. Brick and mortar refers to a physical presence of
an organization or business in a building or other structure. The term
brick-and-mortar business is often used to refer to a company that
possesses or leases retail shops, factory production facilities, or
warehouses for its operations.
With the entry of e-commerce retailers like Myntra, Jabong etc.,
Shopper’s Stop endured losses in revenue and then rethought of its
strategies.
In 2008, the company finally launched its own e-commerce website to
tackle the stiff competition from other e-retailers. This model of having
both offline and online presence is known as Brick-and-Click business
model. Brick-and-Click is a business model in which a company operates
both an online store (the clicks) and an offline store (the bricks) and
integrates the two into a single retail strategy.
Adopting this business model enabled Shopper’s Stop to regain the
revenues it lost in the preceding years due to completion.
Reason for Business Model Change
The main reason why the company moved online was because of their
loss making retail outlets that did not generate much revenue but also
had additional expenses like rent of the outlets, electricity bills etc.
In order to improve its profitability, Shoppers Stop has shut at least five
loss-making retail stores in FY18, while it has re-sized a few. The
company has been selling off loss-making businesses and shutting loss-
making stores over the past couple of years to lower losses and bring
down its debt. On April 2, Shoppers Stop shut one Home Stop store at E-
city Mall, Coimbatore, as it failed to deliver on business and Profitability.
The Company has closed the stores in Coimbatore and Bengaluru as
well. With the closure of the store, the company now has 13 operational
Home Stop stores, down from 16 at the end of last fiscal.
Cost control and debt repayment were the key contributors to
operating/bottom-line margin expansion, respectively. Also online mode
was convenient for the customers to shop from anywhere, which will
increase sales. The company will be able to do market research my
taking customer feedback. In addition, company will be able to establish
its visibility .By moving towards online mode the company wanted to
fight with its competitors. In addition, integration of operations with
Amazon did bolster the visibility of Shoppers Stop as a brand. Presently,
80 percent of the company’s products are already available on the e-
commerce major’s website
ROI
A forerunner in the Indian fashion retail industry, Shoppers Stop
victoriously journeys from offline to online, while redefining industry
benchmarks with its quality of products and services. One of India’s
biggest fashion retail chains, Shoppers Stop started their online journey
in the online retail in early 2008 with user acquisition as their primary
goal. In order to accomplish the goal the team worked on creating
awareness, driving app installs, boosting traffic and optimizing
conversions, all of which helped in successfully achieving the set
objective.
Shoppers Stop entered into an exclusive commercial agreement with
ecommerce giant Amazon India. The collaboration is a win-win for both
the company’s as it will help Shoppers Stop Ltd achieve its target of 25
percent profitability in this financial year while helping Amazon India
scale up its fashion portfolio to take on rivals Myntra, Flipkart and
Jabong in the ecommerce space.
A glance at Shoppers Stop’s store outlet count at the consolidated level
indicates that the company’s presence is robust primarily in metros and
other commercially big cities across India. However, its supply network
in the tier 2/3 regions of the country is relatively small.
The deal, therefore, will enable the company to capitalise on the
logistical capabilities of Amazon and help tap customers from
underserved/unserved areas. Consequently, the company can take a leaf
out of Amazon’s book by learning to manage its inventory procurement
and disbursement processes far more effectively.
In addition, Amazon will offer an exclusive space on its webpage for
Shoppers Stop’s products, thus enhancing the visibility of the latter is
products and aiding top-line growth.
Revenue Models of Shopper’s Stop
Shopper’s Stop belong to fraction of businesses, which are
fundamentally in the business of trading, and are at the penultimate
stage of the distribution chain. In simple terms, they buy products
(Merchandise), from manufacturers, brands, and then sell it to
customers. What they buy is a function of how these businesses
strategically define as their concept.
Shopper’s Stop has adopted a Retail Revenue Model (Brick-and-Mortar)
as well as an E-Commerce Revenue Model, which has helped it to edge
out its competitors such as Lifestyle, Pantaloons, etc. in
Retail is the process of selling consumer goods or services to customers
through multiple channels of distribution to earn a profit. Demand is
identified and then satisfied through a supply chain. Attempts are made
to increase demand through advertising.
An e-commerce revenue model is a plan for generating revenue for an
online business. While e-commerce revenue models share many
similarities with brick-and-mortar businesses, they also enable you to
reach customers around the globe and offer more diverse methods of
generating sales.
The product portfolio offered by Shoppers Stop is huge as it is a retailer
for fashion. The various segments of products Shoppers Stop offers are
women, men, kids, gifts and home furnishings and décor. According to
the company, the personal shopper service contributed 14 percent to
sales and continues to grow with the customers average spend
increasing through relevant selection and assistance.
Shoppers Stop posted a jump of 171 percent in net profit to Rs.44.3
crore for the third quarter of financial year 2018-19 ending December
31, 2018. The company had posted a net profit of Rs.16.3 crore during
the same period the previous year.
In order to ease shopping and make Shoppers Stop’s fashion and
beauty collections available to maximum number of customers through
its online platforms, the company is offering Click & Collect service in
over 50 stores and serves over 25,000 pin codes in India through its
Omni-channel presence. The company boasts of 5.9 million First Citizen
members actively engaged through its successful Loyalty program as of
Q3 of financial year 2019.
